Argumentative Synthesis

.docx

School

Liberty University *

*We aren’t endorsed by this school

Course

111

Subject

English

Date

Apr 3, 2024

Type

docx

Pages

Uploaded by CoachBraverySandpiper24

Kramer 1 Carson Kramer Mr. Emerick English 101: Period 3 22 December 2021 Downfalls of Economic Libertarianism Libertarianism, a political ideology founded upon the core principle that liberty is valued above all else. With principles dating back to the Enlightenment, this aim for liberty has been paralleled by a desire for freedom from the government. A central piece of this argument for freedom from the government is reflected in the party’s approach to the economy. The economic platform of the Libertarian Party fails in its radical reversion to the failed economic theory of Laissez-faire, unrealistic expectations towards banking regulation and over-attachment to its fundamental ideals of rational thought. The Libertarian economic theory’s downfall is reflected in its goal to reverse the economy to the failed economic theory of Laissez-faire. Laissez-faire was a popular political philosophy in the late 1800’s to early 1900’s for the United States, utilized heavily to transition our economy from an agrarian to an industrial state (Reynolds). Libertarians support this philosophy as it was based on ideals of individualism, claiming that everyone acting in self- interest maximized mutually beneficial results in an open capitalist economy. A system built upon greed and self-interest was bound to be exploited, reflected by how “Laissez-faire legitimized the accumulation of vast fortunes, the creation of a dispossessed proletariat, and incessant corporate warfare” (Reynolds). This vast accumulation of wealth created the exact opposite conditions for which Laissez-faire was originally intended. In the face of growing economic issues with Laissez-faire that would lead to the Great Depression, the government

Kramer 2 would promote even more similarly based efforts. A policy of Rugged Individualism was supported where the people were told to help themselves out of economic struggle. This policy was once again abused as “The denizens of the greatest corporate combines ... extol loudest the virtues of ‘rugged individualism’; the monopolist has learned that he can best maintain monopoly by subsidizing the fiction of ‘Laissez-faire’” (Mendelson 135). The ideals of Laissez- faire that require open markets for mutually beneficial self-interest ultimately lead to monopolistic conditions which undermine the conditions in which Laissez-faire is required to work as intended. The failure in the Libertarian economic approach also reaches to the banking industry, a cornerstone of economic health. Libertarians believe in free-market banking, a system without any regulation on the banking industry, believing that it hinders the free market’s ability to regulate itself. The party officially calls for the “abolition of the Federal Reserve System, Federal Deposit Insurance Corporation, the National Banking System, and all similar interventions” (Gordon). Libertarians simultaneously call for extreme measures against fraud to counteract the abolition of these systems. These claims may seem reasonable in some respects, but the implementation of these Libertarian ideologies has already failed as we look at the 2008 financial crisis. Although Libertarians call for full deregulation itself, the party has never had the electoral power to fully implement its plans. Even so, that same spirit of deregulation spawned neglectful “disbelief in financial regulation as a legitimate [course of action],” which caused the 2008 crisis rather than deregulation itself (Weisberg 45). This disbelief was encouraged by Libertarian- leaning Republicans and self-proclaimed Libertarians in the government whose efforts significantly worsened the recession. Even after seeing the impacts of neglectful regulation on

Kramer 3 the banking industry in 2008, the Libertarian Party still persists in its efforts to deregulate the banking industry. The root of the problem in the Libertarian economic plan stems from the party’s over- attachment to its fundamental ideals of rational thought and its assumptions of human decision making. Libertarians have relied heavily on the idea that humans are rational beings and all decisions we make are based on self-interest or greed. This idea is rooted in utility theory, an idea coined in 1738 by Daniel Bernoulli that means, “pleasure more than anything” (Goode). This theory was determined through him pondering the question: How do people determine risky decisions? His idea was reflected in an example of a merchant thinking through sending a ship from Amsterdam to St. Petersburg. This travel would occur during a time of year when there’s a 5% chance of losing the ship. So, Bernoulli believed that the merchant would analyze the risk of the situation from the perspective of utility and the state of his wealth including, “how much he will have if the ship gets there, if the ship doesn't get there, if he buys insurance, if he doesn't buy insurance” (Goode). However, Nobel Prize winning Israeli psychologists Daniel Kahneman and Amos Tversky disagreed, arguing that no merchant would think in terms of their state of wealth. Instead, the merchant would think in terms of the losses and gains due to our added element of emotional decision making. As psychologists, instead of economists, Kahneman and Tversky coined a new field of study known as behavioral economics that “demonstrated that in some cases people behaved illogically, their choices and judgments impossible to reconcile with a rational model” (Goode). However, the Libertarian Party still bases their core ideals of rational thoughts on the outdated rational model simply due to its longevity and simpler explanations. This is a problem, as people are not simple beings and rational thinking is not enough to explain human motivation.

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help