What's Libertarian About Betting? By Bryan Caplan

I’m a libertarian and a betting man. Is there any connection between the two?

The facile answer is that “Reality has a well-known libertarian bias.” On some level, I believe this. But it’s a subtle, long-run bias. Confidently betting on libertarian stereotypes hardly strikes me as a viable get-rich-quick scheme.

The sound answer is far more complex. It begins with a simple observation: Advocates of government action typically make extreme claims. They make extreme claims about how awful things will be if government does nothing. And they make extreme claims about how much better things will be if government heeds them.

Disagree? Imagine a hawk advocating an invasion of Libya. He could say, “Invading reduces the risk of disaster from 54% to 52%, so it passes a cost-benefit test.” But I’ve never heard a hawk make such an argument. A typical defense is rather, “We can stand here, do nothing, and let Libya collapse into bloody chaos. Or we can take a stand and set things right once and for all.”

Or imagine a proponent of the minimum wage conceding, “There’s a 30% chance that the minimum wage actually hurts the poor by increasing unemployment. But there’s a 70% chance that wage gains outweigh the disemployment effects, so we should totally throw the dice.” That’s not how friends of the minimum wage talk. Instead, they’ll declare something like, “Every hard-working Americans deserves to earn a decent wage, and the minimum wage ensure that every hard-working American gets the decent wage he deserves.”

Why are proponents of government action so prone to hyperbole? Because it’s rhetorically effective, of course. You need wild claims and flowery words to whip up public enthusiasm for government action. Sober weighing of probability, cost, and benefit damns with faint praise – and fails to overcome public apathy.

Now suppose my Betting Norm were universally accepted. Any public figure who refuses to bet large sums on his literal statements is an instant laughingstock, a figure of fun. What happens? Political hyperbole ends for politicians and pundits alike. Hysterical doom-saying and promises of utopia vanish from public discourse. No one serious can afford them! As a result, it becomes very rhetorically difficult to make the case for government to do anything – or at least anything new. Without an inspiring case for government action, government sits still.

Utilitarians will swiftly protest, “As long as expected benefits exceed expected costs, government should act.” They may even add, “Nothing’s more inspiring than passing each and every law with expected net benefits.” But this misses the point. Most people aren’t utilitarians. They’re not even close. Honest, modest utilitarian arguments leave psychologically normal humans unmoved. And without popular support, democracy lies dormant. “Why bother?” kills “Yes we can!”

So what’s libertarian about betting? It stifles hyperbole, the fuel of Big Government. Machiavellian non-libertarians will naturally conclude that honesty is overrated. But this too is a bitter pill. A few can cope with the admission that the policies they love rest on errors and thrive on lies. But everyone else will at least wonder if they should give liberty a chance.