Hypothetical Answer On Political Parties
What would happen in a country that was made up of 50% libertarians and 50% big government advocates? The following is my best guess though I am open to persuasion.
That country would end up with two political parties each splitting support from half of the libertarians and half of the big government advocates. The result would be big government.
In politics, power is rewarded to those who give a return on investment. A corporation can make money for itself in two basic ways.
- It can invest resources in the free market: by creating a better product, a more efficient manufacturing process, smarter advertising, etc. If it invests wisely, it will achieve a positive return on investment.
- It can invest resources in the government. It can give campaign donations to political parties to get politicians elected who then pass legislation that benefit the corporation. Politicians can get away with this because the laws cost the average person very little individually but yield a large benefit to the corporation as an aggregate.
As an example, suppose ACME, Inc has $1 million to invest. What should it do?
It can invest $1 million in the free market and its management believes that will yield a 20% return on investment, i.e., it will end up with $1.2 million.
As an alternative, management perceives that it can invest $1 million in the government which will then pass tariffs against foreign competition. For the average american buyer of the ACME's widgets, this will mean $1 in higher prices in widgets. If there are 2 million buyers, this means $2 million in revenues for the corporation. Its return on investment in the government will be 100%.
Note the difference between the amount of cost to each consumer vs the profit for the corporation.
Whether the ACME invests in the free market or in the government will usually depend on where management believes the return on investment is higher.
It is in a politician's interests to cater to corporations because the money invested by corporations in government is needed to run campaigns, advertise, and win elections. Politicians can afford to do this because voters won't get angry at such a small rise in prices. They'll barely notice it. But the corporation will notice the benefit of the large return. Why play fair in the free market when it can bend the rules via the government and achieve a higher return?
This strategy is not just open to corporations, but also to any group. A union can bribe politicians to pass laws that ward off competition from other workers. The costs that the average American incurs are very small individually, but the unions benefit greatly through increased job security from the captured monopoly on labor. The same tactic can be used by any special interests group - trade organizations, environmentalists, moral authoritarians, etc. It is often in these groups' interests to invest in government for a focal benefit whose costs are dispersed enough that it doesn't hurt the popularity of the government in power.
In my hypothetical country, political parties will have the same incentive to reward focal benefits to special interests. That is how they will fund their own rise to power. Any starting point will likely lead to the same situation down the road.
Consider the case in which the starting point is one party of big government advocates and one party of libertarians. If the party of libertarian party wants to stay in power, it will have start offering a higher return on investment to the interest groups that are investing in big government party. Otherwise, it will lose elections.
As a result, some focal interests will abandon the big government party in favor of the pro-libertarian party. Perhaps at this point, some purist libertarian voters will protest and go over to big government party to 'punish' the pro-libertarian party in hopes that it may take the libertarian contingent more seriously in the next election. Sooner or later, an equilibrium will be reached where the two parties will be nearly indistinguishable, each catering to a multitude of special interests while the libertarians are split between the two parties, powerless in their ambitions. Some libertarians might even try to break off from both parties and start their own third party, but the third party will find it difficult to garner resources to run campaigns, spread its message, and create publicity. This situation would be likely true with an even higher percentage of libertarians in the hypothetical society.
I think this situation is very much like what is happening in the US today. A large swath of Americans are broadly politically libertarian - defined as socially liberal and fiscally conservative - but still big government reigns. As should be obvious, the two parties are virtually identical. Both candidates voted for the Patriot Act, supported the prescription drug bill, hold the same views on entitlement spending, and voted for the Iraq War. Kerry was not going to repeal Bush's tax cuts nor change the policy in Iraq. Any actual differences between the parties split libertarians in half, with the socially libertarian platform on the Democrats' side and the fiscally libertarian platform on the Republicans' side. Despite the media's infatuation with the red/blue split, the two parties are only different cosmetically. The election was about identity, not policy.
Even with a large libertarian population, the odds of libertarians being a strong political party in government are essentially nil, as getting rid of tariffs, ending union privilege, deregulating, and allowing people to choose their own paths in life have small dispersed benefits to everyone and large focal costs to privileged special interests - exactly the opposite of what yields a good return on investment via government. They will find few investors because party politics is about focal power aggrandizement. Liberty is a difficult to supply public good.