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The Case Against Hierarchy

Dan Ariely: How equal do we want the world to be? You’d be surprised

WissensWerte: Fleisch und Nachhaltigkeit

The Libertarian Delusion

The stubborn appeal of the libertarian idea persists, despite mountains of evidence that the free market is neither efficient, nor fair, nor free from periodic catastrophe. In an Adam Smith world, the interplay of supply and demand yields a price that signals producers what to make and investors where to put their capital. The more that government interferes with this sublime discipline, the more bureaucrats deflect the market from its true path.

But in the world where we actually live, markets do not produce the “right” price. There are many small examples of this failure, but also three immense ones that should have discredited the libertarian premise by now. Global climate change is the most momentous. The price of carbon-based energy is “correct” — it reflects what consumers will pay and what producers can supply — if you leave out the fact that carbon is destroying a livable planet. Markets are not competent to price this problem. Only governments can do that. In formal economics, this anomaly is described by the bloodless word “externality” — meaning costs (or benefits) external to the immediate transaction. Libertarian economists treat externalities as minor exceptions.

The other great catastrophe of our time is the financial collapse. Supposedly self-regulating markets could not discern that the securities created by financial engineers were toxic. Markets were not competent to adjust prices accordingly. The details of the bonds were opaque; they were designed to enrich middlemen; the securities were subject to investor herd-instincts; and their prices were prone to crash once a wave of panic-selling hit. Only government could provide regulations against fraudulent or deceptive financial products, as it did to good effect until the regulatory process became corrupted beginning in the 1970s. Deregulation arguably created small efficiencies by steering capital to suitable uses — but any such gains were obliterated many times over by the more than $10 trillion of GDP lost in the 2008 crash.

A third grotesque case of market failure is the income distribution. In the period between about 1935 and 1980, America became steadily more equal. This just happened to be the period of our most sustained economic growth. In that era, more than two-thirds of all the income gains were captured by the bottom 90 percent, and the bottom half actually gained income at a slightly higher rate than the top half. By contrast, in the period between 1997 and 2012, the top 10 percent captured more than 100 percent of all the income gains. The bottom 90 percent lost an average of nearly $3,000 per household. The reason for this drastic disjuncture is that in the earlier period, public policy anchored in a solid popular politics kept the market in check. Strong labor institutions made sure working families captured their share of productivity gains. Regulations limited monopolies. Government played a far more direct role in the economy via public investment, which in turn stimulated innovation. The financial part of the economy was well controlled. All of this meant more income for the middle and the bottom and less rapacity at the top.

Clearly, a more equal economy performed better than a more unequal one. Families with decent incomes could recycle that purchasing power back into the economy. Well-regulated financial institutions could do their job of supplying investment capital to the real economy rather than enriching their own executives with speculative schemes — ones that left the rest of the society to take the loss when the wise guys were long gone. In the case of labor, there was not a single, “accurate,” market-determined wage for each job, but a wide range of possible wages and social bargains that would attract competent workers and steadily increase the economy’s productivity.

The free market doesn’t live up to its billing because of several contradictions between what libertarians contend and the way the real world actually works.

The free market doesn’t live up to its billing because of several contradictions between what libertarians contend and the way the real world actually works. Fundamentally, the free-market model assumes away inconvenient facts. Libertarians presume no disparities of information between buyer and seller, no serious externalities, no public goods that markets can’t properly price (Joan Fitzgerald’s piece in our special report in the Winter 2015 issue of The American Prospect magazine discusses one — water), and above all no disparities of power. But in today’s substantially deregulated economy, bankers have far more knowledge and power than bank customers (witness the subprime deception); corporations have far more power than employees; insurers have more power than citizens seeking health insurance. Labor markets can’t compensate for disparities of power. The health insurance “markets” created by the Affordable Care Act can’t fully address the deeper problem of misplaced resources and excessive costs in our medical system.

The conditions of the idealized market model do describe ordinary retail markets, where there are plenty of restaurants, supermarkets, dry cleaners and hardware stores, and consumers are competent to shop around for price and quality. They don’t accurately characterize the markets in health, education, labor, finance, or technological innovation, to name just five. (What is efficient about a hedge fund mogul taking home $2 billion, or a life-saving pill that retails for $5,000 a dose?)

To produce an economy that is more equitable as well as more efficient, government uses a variety of tools. It regulates to counteract market failure. It taxes to provide revenues to pay for public goods that markets under-provide at affordable prices — everything from education to health to research and development. Sometimes government passes laws to sustain other elements of a social contract, such as the laws protecting workers’ rights to form unions and to collectively bargain.

Government can invent things that markets never would have imagined. Apple has created wonders, but it has piggybacked on government investment in advanced semiconductors and the Internet. America’s biotech industry’s success was reliant on massive government investment in the Human Genome Project and other basic research. Later in the special report in the magazine’s Winter issue, Fred Block’s piece describes the indispensable government role in innovation. Commercial broadcasters were disinvesting in radio as a serious medium of news, public affairs, culture and humor, when along came public radio, partly underwritten by government and partly by listener-subscribers. NPR demonstrated that ingenious and high-quality noncommercial programming could attract an audience that for-profit companies did not know was there.

There is another, more fundamental point ignored by libertarians: The market itself is a creature of government.

There is another, more fundamental point ignored by libertarians: The market itself is a creature of government. As Karl Polanyi famously wrote in a seeming oxymoron, “laissez-faire was planned.” Markets could not exist without states defining the terms of property ownership and commerce, creating money, enforcing contracts, protecting patents and trademarks, and providing basic public institutions. A Robinson Crusoe world never existed. So the real issue is not whether government “intrudes” on the market — the capitalist system is impossible without government. The practical question is whose interests the state serves.

So the core libertarian claim that markets are efficient stands demolished by historical evidence. However, libertarians make a second claim: Free markets are the sublime expression of human liberty. This second contention gives libertarian ideology much of its persuasive power. In the resurrection of free-market theory after its first burial in the wake of the Great Depression, a remnant of libertarian economists led by Friedrich Hayek engaged in a technical duel with John Maynard Keynes about whether markets were self-correcting after all. Hayek won few converts. But in the 1940s, Hayek hit pay dirt with his argument that markets epitomized freedom. This claim was taken a step further by Milton Friedman a generation later.

The Road to Serfdom book cover

In the idealized libertarian world, individuals are “free to choose” — never mind that some are born with far more resources with which to choose than others. In the Hayek-Friedman world, government, except for its minimal role of keeping the peace and protecting property values, is the enemy of freedom. Hayek went so far as to write a book in 1944, The Road to Serfdom, contending that democratic forms of planning were destined to lead down the same road to totalitarianism that ended with Stalin and Hitler. Hayek remained a revered figure to libertarians — he even won a Nobel Prize — despite the fact that there is not a single case where democratic planning led to dictatorship, but countless instances where market turbulence led displaced citizens to turn to anti-democratic strongmen. Adding insult to injury, the Hayek-Friedman remedy for when markets don’t work is: We need even more market. We saw how well that worked in the financial collapse.

Beyond assuming away inherited disparities, the Hayek-Friedman equation of markets and freedom leaves out the role of government in promoting affirmative liberties. A young person from a poor family who does not need to incur crippling debt to attend university is a freer person. A low-income mother who cannot afford to pay the doctor attains a new degree of freedom when she and her children are covered by Medicaid. A worker who might be compelled to choose between his job and his physical safety becomes freer if government health and safety regulations are enforced. The employee of a big-box store who can take paid family leave when a child gets sick is freer than one whose entire life is at the whim of the boss; likewise a worker with a union contract that provides protection from arbitrary dismissal or theft of wages. An elderly person saved from destitution by a government-organized Social Security pension has a lot more liberty than one bagging groceries at age 80 to make ends meet, or one choosing between supper and filling a prescription. An aspiring homeowner who doesn’t need to spend countless hours making sure that the mortgage won’t explode is freer to spend leisure time on other activities if government is certifying which financial products are sound and is prohibiting other kinds.

Clearly, there will never be enough charity, benign employer paternalism, or self-correction on the part of markets to solve these problems.

I could go on, but you get the idea. These are not arcane examples, written in the algebraic idiom of formal economics. They are common-sense experiences familiar to us all — and fruits of government spending or regulation. Clearly, there will never be enough charity, benign employer paternalism, or self-correction on the part of markets to solve these problems. Lately, as markets have gained ground at the expense of social counterweights, more of us find ourselves at the mercy of market forces, as played by bosses, insurers and financial engineers.

Why, then, does the libertarian appeal persist? The free-market fantasy violates both the reality of big events like the financial collapse and the lived experience of most Americans. Jeff Madrick, in our Winter issue special report, explains why the free-market model persists among economists — it creates a nice pseudo-science, and society’s most powerful people tend to reward professional economists who solemnly advise that government should keep away. But why does the libertarian ideal seduce so many regular people?

Here, we need to introduce the other main protagonist in this drama — government. To Hayek, Friedman and other libertarian theorists, government is a hopeless case because the state is a monopoly. Even in a democracy, periodic elections are a clumsier form of accountability than the instant discipline of adjustments in price — the market’s version of self-correction. Fellow libertarian theorists such as James Buchanan, another Nobel laureate, added the thought that governments might serve the general interest in theory but in practice bureaucrats were prone to feathering their own nests. Buchanan, missing the irony, termed this behavior “rent-seeking,” which is an old-fashioned economists’ term for pursuit of monopoly profits by market players. Any fair assessment of who is the bigger rent-seeker would point to bankers and corporate monopolies far more than public officials.

However, the story gets more complicated when there is a revolving door between government officials and industries. In that case, it isn’t “the state” or “the market” that is the inefficient culprit, but a corrupt symbiosis between the two. That reality tends to blur the argument. When Hayek and Friedman were first writing, their story was less plausible because government and the larger social contract that it sponsored were delivering for most regular people. That’s less the case today.

In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.

Ann Hagedorn, in her article for this special report, describes privatization as a case of corrupt government-market symbiosis. Chris Christie, governor of New Jersey, steers contracts to a crony to operate government-supported halfway-house prisons. The halfway houses are a disaster — conditions are deplorable; inmates are able to walk away; the vendor is reaping windfall profits. Who is to blame? Voters conclude that the public officials and private contractors are all scoundrels. And such arrangements aren’t devised only by market-loving, government-hating Republicans like Christie. The public is just as cynical when the Obama administration bails out Wall Street. One of Obama’s top White House economic officials, Michael Froman, in a previous career at Citigroup, ran a private equity group that tried to privatize the Pennsylvania Turnpike. In Chicago, parking meter costs have gone through the roof because of a privatization deal promoted by Democrats with Wall Street connections.

As Michael Lipsky writes in a new paper for Demos, “Rulemaking as a Tool of Democracy,” regulation is more popular than many politicians think. It is unpopular in the abstract, but citizens count heavily on government regulation to protect against everything from polluted air, to unsafe food and drugs, to dangerous conditions at work. Nonetheless, the anti-regulators are on the march. Republicans are promoting a general regulatory rollback. Lipsky quotes the libertarian Cato Institute website: “There is no greater impediment to American prosperity than the immense body of regulations chronicled in the Federal Register.” Of course, nearly all of these regulations are there because of some market failure or corporate abuse that resulted in citizen pressure on Congress for reform. Yet even some Democrats are seduced by the supposed inefficiency of regulation. Cass Sunstein, who served for nearly three years as President Obama’s regulatory czar, actually bragged in a recent book that the Obama administration in its first four years had issued fewer regulations than its three predecessors had done — this at a time when new corporate abuses were proliferating.

Unfortunately, the neat story of an inefficient, unjust and calamity-prone market, contrasted with a public-minded government as democratic counterweight, is harder to tell in 2015 than it was, say, in 1965. Half a century ago, there were clearer bright lines between what was public and what was private. The state governed the market, producing economic security, opportunity, and rising living standards for most working families. But today’s reality of revolving doors and corrupt “public-private partnerships” blurs the argument, both as ideology and as politics.

For younger voters, it has been a long time since government provided the economic security and opportunity it offered their parents and grandparents.

For younger voters, it has been a long time since government provided the economic security and opportunity it offered their parents and grandparents. If government is providing little help, young adults are more inclined to bet on the free market and save some tax dollars. Market applications such as Airbnb, which allows travelers to save money by booking rooms in private homes, seem modern and hip. Young people who grew up with iPhone apps like the coolness and convenience of the Uber ride-sharing service (never mind that most drivers can’t make a living).

A number of social scientists and journalists, such as Tom Frank (who is both) in his book, What’s the Matter with Kansas?, keep wondering why working-class voters, especially whites, fail to vote their economic self-interest. In surprisingly large numbers, they support Republicans, who would remove the weakened social protections that remain, cut back Social Security and Medicare, make the tax code even more regressive, and make American workers even more vulnerable to low-wage competition from overseas. Frank blames the cultural conservatism of much of the white working class.

But there is a more disconcerting explanation. It has been a long time since government effectively did its job of tempering the market in the interest of ordinary people. A further problem of this blurring between the public and the private is that it adds great complexity. That makes regulations and government programs harder to administer, and diffuses blame when citizens find themselves frustrated with the result. Ultimately, the government tends to take the fall more than the market.

Consider the Affordable Care Act. Because Democrats lacked the votes and political will to fight for a true public program, we were left with a mandate for citizens to buy private insurance, subject to complex regulations, subsidies and enrollment procedures. The launch of the program was a mess. To many citizens, the fiasco confirmed everything they suspected about government and liked about markets. How come it’s so easy to order a book on Amazon and so hard to enroll for health insurance on

You had to be a political scientist to appreciate the full explanation that Obamacare was the bastard child of market institutions (drug and insurance industries) that had become too powerful and a government settling for the best it could get. It was also a product of some moderate Democrats’ misplaced belief that a government-regulated “insurance market” could solve problems in a public good (health care) that markets haven’t solved and can’t solve. At this writing, some government officials are chiding frustrated citizens, who like the coverage but are exasperated by, for their failure to do enough shopping around for insurance. Most citizens would prefer the convenience, reliability and simplicity of a trusted public program like Medicare to the ordeals of comparison shopping and detail-deciphering on their laptops.

Or take the case of the Dodd-Frank Act. More than four years after the act was passed, most of its key provisions have yet to be carried out. That’s because the act requires several hundred separate “rule-makings” by beleaguered and often compromised government agencies. Dodd-Frank is drowning in regulatory complexity because it failed to deal with the underlying complexity of the financial industry. It would have been far better had Congress passed a law setting a few hard-to-evade bright lines, such as bringing back the 1933 Glass-Steagall Act that separated government-insured commercial banking from stock brokerage and investment banking. The more complex the process of government regulation, the less citizens know whom to blame when the economy goes off the rails.

This blurring of accountability was on display in the passage of the December 2014 budget resolution. As their price for not shutting down the government, Republicans demanded and got a watering down of a key provision of Dodd-Frank prohibiting bankers from speculating with government-insured money. In principle, that ploy should have set up a clear, politically useful differentiation — Republicans are toadies of Wall Street and Democrats are for tough regulation to protect taxpayers and investors. Except that 57 House and 32 Senate Democrats, many with close ties to Wall Street, voted for the deal.

Based on the evidence, the case against the libertarian market and for democratic government is stronger than ever. But when government gets into bed with private industry and finance at the expense of regular people, the citizenry loses confidence in government. Republicans bet that if they could just hamstring government, more voters would either stay home or would conclude that they were better off voting for the party that wants to slash government. This cynical Republican view was rewarded with an increase in anti-government attitudes in public opinion. The turnout in 2014 was the lowest since 1942, and much of the falloff was among groups that vote for Democrats when they vote at all — minorities, the poor and the young.

So if we are to win the argument with the libertarians, we need to take back effective government. Friedman was wrong to argue that the cure for market failure is more market. However, the cure for weak or corrupted democracy has to be more democracy. The only way to redeem public confidence in government as a necessary check on the market is to repair faith in democracy itself. It is not difficult to prove that the claim of market efficiency is delusional. Reclaiming our democracy will be harder — but it must be done.

EMSK why the “Red Pill” will kill you inside

TL;DR: It’s unfair that men suffer from sexual strategy, but that doesn’t make it okay to flip it and make women suffer instead. No one deserves to be emotionally abused.

Edit 3, to all those filling my inbox with “Not All RedPill” messages: I feel that I should point out that I do not wish to demonize any group of people. I do not mean to say that all those who participate in /r/TheRedPill or similar forums are dead inside. What I am speaking out against is the use of sexual strategy and emotional manipulation to render your partner compliant. Don’t participate in that? Great. I don’t have a problem with you. I chose /r/TheRedPillto point out in particular because when I went there, that was what the majority of the posts were about. I know there are other posts in that subreddit, some of which are downright praiseworthy. Obviously I don’t feel the need to address those.

Edit 5: Please don’t go flame /r/TheRedPill or any other subreddit, guys, that’s immature behavior and counterproductive to constructive conversation.

Now, let’s get started.

Foreword: I realize that this isn’t your typical EMSK entry, but I view it as essential advice to any man who wants to be happy in a heterosexual relationship. Nothing against men who want to be in a non-hetero relationship either; this is just addressing those who may be getting pulled in by the “Red Pill” philosophy.

For the uninitiated, “Red Pill” is a term co-opted by the types of people who frequent /r/TheRedPill (enter at your own risk, lots of lady-hate in there). It’s a reference to The Matrix, in which Morpheus offers Neo a choice of one of two pills… a blue pill, which will make him forget and allow him to contentedly go back to a life of brainwashed mediocrity, or a red pill, which will wake him up to an unpleasant truth but grant him great power.

The idea of the “Red Pill” as is commonly used now, is that men are constantly losing a war of what /r/TheRedPill users refer to as “Sexual strategy.” Essentially the premise is that women have what we want (sex), and they can make us bend over backwards to get it. They have us wrapped around their little fingers. Those who “take the Red Pill” awaken to their true male potential and learn to get what they want without having to submit and forfeit their masculinity.

The subreddit is rife with success stories from men who claim they’ve gotten what they want out of their relationship. One guy claims (and I’m paraphrasing), “She does my laundry and dishes, we have sex whenever I want, and she knows that I don’t belong to her, and if she ever slips up or takes me for granted, she’s gone.”

It’s not that I doubt what he’s saying. I believe it. The problem is, what he’s describing is emotional abuse. What the Red Pill advocates is taking advantage of common weak points in the typical female psyche (most of which are present in your typical male psyche as well; everyone has weak points, and most of them are common to all humans, though some are more pronounced in one sex or another) to put pressure on women and bend them to your will. Users advise doing things like keeping her guessing, changing what you want and then berating her for not keeping up with your whims. Several advise that you never show affection for her unless she’s done something to please you. You break them like you’d break an animal.

And it’s damned effective in some cases. It’ll get you what you want if you do it right.

But you shouldn’t want that, and here’s why.

The Red Pill subreddit is also full of “Blue Pill Stories,” in which guys get emotionally abused by their girlfriends. They lament being used for their money, their homes, their emotional support, what have you, and then being left when they weren’t “Alpha” enough to keep their girlfriends around. It’s a shame, it really is. Nobody deserves that kind of abuse.

“Nobody” includes women, though. What the Red Pill strategy does is flip that power dynamic on its head. When it works, now it’s the man who is in power and the woman who is suffering. The man gets the sex without having to commit any real effort to the relationship, aside from making sure that his SO’s emotions are brutally crushed on a regular basis. You haven’t fixed anything, you’ve only made sure it’s your SO who’s suffering and not you. And the reason she stays is the same reason Blue Pill guys stay in their relationships: They don’t want to be alone.

And as long as you keep that power dynamic active, you will never know what love is. Because love means that you feel what your lover feels. If she hurts, you hurt. If you hurt her, you feel all of her pain and all of the shame for knowing that you’re the one that caused it. If you really love someone, you’ll never want to hurt them. And make no mistake, that’s what the Red Pill is: cold, calculated, systematic emotional torture meant to produce a desired response. Methods like keeping your prisoner guessing, changing what you want, keeping them off balance, those are all interrogation techniques meant to break your prisoner down on a mental and emotional level and produce a compliant charge.

Put quite simply, someone couldn’t ever do such a thing to someone they truly loved.

There is one thing that Red Pill has right. Sexual strategy sucks. But the solution isn’t getting better at it than your SO is. The solution is agreeing with one another that you’re not going to play the game. If a game is going to always suck for one player, and both players care about one another, they’re going to find a better game to play.

You want a healthy, stable relationship that is going to be rewarding? Here’s the secret. Remember that your SO is just as complex, intelligent and vulnerable a human being as you are. She has needs just like you do. While she might place different values on her various needs, while she might express them differently, they’re every bit as important to her as yours are to you. Life is a war. But if you want to win it, you and your SO need to be on the same side.

You don’t need to break your girlfriend or wife. You need to talk to them. If they’re doing something that hurts you, you need to tell them. And not “I wish you would quit that.” Tell them “This hurts me when you do that.” If they care about you, they’ll take action to prevent causing you pain. To position and strategize to get what you want out of your marriage is to deny your most potent asset: An intelligent human being who cares about you and wants to see you happy above all else, and who wants to be happy alongside you.

And if you don’t have that in your SO, you either need to get to that point or get out. There are many, many worse things than being single. One of them is being in an abusive or emotionally vacant relationship (on either side, abuser or victim). Don’t view your time as being single as a sexless desert. View it as a time to grow and realize who you are. You need to be able to define yourself as an individual before you’re ready for a relationship.

Human beings are as diverse as life on this planet. For every type, there is a countertype. There is someone out there for just about everyone. However, none of your relationships will work out in a healthy manner until you realize that women are people too, not animals to be broken. You don’t need to be an Alpha. You’re not a damned dog. You’re a human being. Human beings can communicate complex concepts, rebel against their base instincts to find better ways of doing things, and above all, reflect on their actions and empathize. You don’t need to establish dominance, you just need to find somebody that’s willing to actively pursue your happiness alongside their own; and you need to be willing to do the same for them. If you’re not ready to do that, you’re not ready to have a healthy relationship.

But there’s good news… Something else human beings are good at is changing. You want someone to be willing to change for you, you have to make sure you’re willing to change yourself a bit. Everything’s a two-way street. Just make sure you’re changing for the better. Being willing to change doesn’t mean flopping over and doing whatever is asked of you. Here, change is a bad word for this. Be willing to improve yourself. Nobody’s perfect. Spot those places that need work (I assure you, they’re there, and if you can’t spot them, I guarantee the people around you can), and start improving on those things.

In order to have a healthy relationship, you have to be a healthy human being first. A healthy human being doesn’t use sexual strategy. You’ll only ever have a healthy relationship if both parties refuse to play that game.

I mentioned earlier that Morpheus’s “Red Pill” was originally symbolism for awakening, both to truth and to power, while the “Blue Pill” was a metaphor for staying asleep and maintaining the status quo.

In truth, the Red Pill as they represent it isn’t a true awakening at all. It’s a capitulation to a false dichotomy. A true awakening is realizing that the people around you are more than just faces, that they all have their own stories, their own thoughts, hopes and dreams, and that they are just as complex as you are. A true awakening is realizing that you don’t have to win the fight (and thereby habitually hurt someone you ostensibly care about), or lose it. That you can take your ball and go home.

The Morpheus of sexual strategy is offering you two pills: Red and blue. Win sexual strategy, or lose it.

Punch him in the face and tell him you’re not playing his bullshit game.

Edit: /u/TheCrash84 pointed out that I had not used the proper subreddit name. It is /r/TheRedPill, not /r/RedPill as I had originally shared.

Edit 4: Moved the tl;dr and edit 3 to the top for visibility (seriously, I get it, not all /r/TheRedPill stuff is bad). Obligatory edit for holy cow thanks for my first Reddit Gold ever! And my second, third, fourth and fifth!

Edit 6: I’m floored, I’ve never seen this much gold in one place before! Thanks so much, and I’m glad I made enough of an impression to prompt such a response! And thanks for all the love I’ve been getting in my inbox! It helps me ignore the hate.

Edit 7: Thanks so much for all of the support! I intended for this to just be a one-shot article, but I’ve been getting some inbox messages and comments asking me to make a subreddit dedicated to the kind of relationship I outline here, and how to build and maintain them. Considering that there are subreddits dedicated to much more frivolous things, I hereby present… /r/PunchingMorpheus.

“Science isn’t a democracy. It’s a dictatorship. Evidence does the dictating.”

– John Reisman