If we say that nine times out of 10 a bank robber gets caught, and therefore robbing banks does not work, we’ve made a true statement. But is that enough?
I mean – no, robbing banks doesn’t work, but that’s not the only problem with it, right? There are plenty of moral, safety, and other arguments we could make on why one should not rob a bank.
The same could be said as we look at liberalism, but for now, we’ll stick to liberalism’s practical problems.
The first reason that liberalism doesn’t work is what economists call “the knowledge problem.” Suppose you need a pencil. You go to the store and you pick one up for less than a buck. Did some governing official know that you would need that pencil? Or did the producers know by your willingness to pay? Of course not. It’s impossible for one individual to know every specific need and want of every other individual, let alone have the means to meet those demands. Nobody knows how many people want a pencil at this moment. Only the market, through the price mechanism, can match personal wants with the supply and demand of any good or service at any particular point in time.
The second reason liberalism doesn’t work is “the tragedy of the commons,” or the result of public property. If everybody owns a piece of property, then nobody owns it. And if nobody owns it, there is no incentive to preserve its productive value. For example, if several ranchers share an acre of grassland, they have incentive to let their livestock graze on that acre. But the more often one rancher grazes cattle on that acre, the less the other ranchers gain from that acre. So all ranchers make use of that acre to maximize production, but nobody has the incentive to bear the sole responsibility for preserving the acre. Thus the acre is overused to the point that nobody can gain productive value from the acre, and all ranchers suffer a loss. This analogy holds true in health care, banking and any other sector of the economy in which private property is abolished in the name of the public good.
The final reason liberalism doesn’t work lies in its attempt to distribute wealth rather than create it. In other words, it rewards people according to their need, rather than their ability. Think about it this way: You’re working on a project for school that could increase your grade from an A- to an A. The project includes three other classmates who are sliding by with a C in the class. You get your team together, and then the team takes a vote and decides that you must give part of your higher grade to your teammates. This decision lowers your grade to a B but raises their grades to a B as well. That’s liberalism in action.