Economic Theory

Book review: “Burning Down The House” by Andrew Koppelman

Those of us in the free market movement who spend too much time online are acutely aware that libertarians have a tendency to live in echo chambers. Some of us have been unlucky enough to discover those corners of Twitter and Reddit in which the likes of Ayn Rand, Murray Rothbard, and Hans-Hermann Hoppe are revered to the same extent as a portrait of Kim Il-Sung in a Pyongyang living room.

Where this attitude exists, it is to our movement’s discredit: we should always be open to engaging with our critics, if only for the self-serving purpose of improving our arguments and spreading our beliefs to a wider audience.

Some critics of free market liberalism — like Edmund Burke or John Rawls — are insightful and thought-provoking, while others — like Nancy MacLean or Thomas Piketty — tend to be wide off the mark. In Burning Down the House: How Libertarian Philosophy Was Corrupted by Delusion and Greed, Andrew Koppelman falls somewhere in between the two.

Koppelman’s critique centres around the story of the Cranick family in Tennessee whose house was left to burn down by their city’s fire department. This was a consequence of the local government’s decision to change the funding of the fire department from general taxation to an optional subscription. The Cranicks forgot to pay the $75 fee and, despite their pleas, were left to watch their house burn.

This, he argues, is symptomatic of libertarianism gone awry. For Koppelman, a philosophy that allows houses to burn without intervention is untenable, even if the underlying principle (that a person does not have the right to appropriate someone else’s labour or property) is a noble one.

He draws a line between different libertarians based on this tragic story. On one side, you have F.A. Hayek, who favoured taxpayer-funded catastrophic event insurance and state provision of emergency services. On the other, you have the likes of Rothbard — whose dogmatic defence of property rights rules out such provision — and Rand, who Koppelman characterises as having disdain for the weak and vulnerable.

The good

Koppelman undoubtedly approaches his critique of libertarianism in good faith, even to the extent of defending the much-maligned 1964 presidential candidate Barry Goldwater against charges of racism, despite disagreeing with his decision to oppose the 1964 Civil Rights Act. Likewise, Koppelman is clearly well-read on several libertarian thinkers, including Hayek, Robert Nozick, Rothbard and Rand.

Koppelman’s critiques of libertarian thinkers are not only limited to those which would appeal to his centre-left readers. For example, he outlines the pitfall of Nozick’s belief that negative externalities should be permitted to the extent that their benefits outweigh their costs, noting that such an approach would require an extensive state bureaucracy to implement. He also effectively challenges Rothbard’s approach to externalities, pointing out that the anarcho-capitalist thinker’s framework would only permit either unrestricted pollution or the prohibition of all polluting activities. While critiques of these perspectives have been made before (including by other libertarians), it does show that he is engaged with several key arguments within libertarianism.

Koppelman is also unafraid to challenge his own side. The book is as much an attempt to criticise the Left for failing to accept the importance of markets as it is an attempt to criticise libertarians for failing to accept the importance of government. Libertarian thinkers like Hayek, Benjamin Tucker, and Don Lavoie offer ideas which challenge the core ideals that most of the Left holds and Koppelman’s work is one of a growing cannon which seeks to synthesise aspects of those ideals with libertarianism.

The flawed

The key flaw of Koppelman’s critique is his interpretation of the story on which it’s based. While reducing local taxes and making fire department coverage voluntary are ostensibly libertarian policies, this story does not reflect a failure of the libertarian firefighting ideal.

In a society with private fire service provision, insurance companies and fire services would be allowed to compete on the open market for subscription payments. In South Fulton City, Tennessee, the local fire service still retained monopoly privileges, even though their funding method had changed. Furthermore, advocates of a free market firefighting system would point out that such a regime would likely be heavily insurance or subscription-based, creating a greater incentive for fire protection providers and property owners to focus on fire prevention than in the existing system.

In a libertarian society, volunteer firefighters would also play a role to protect underserved areas and provide emergency cover in situations like the one Koppelman describes. If this sounds unlikely, it should be noted that as of 2022, 65% of firefighters in America are volunteers.

The Cranick fire gained extensive national coverage. Myriad left-wing outlets, including NPR, Salon, and The Atlantic seized on the incident, as Koppelman does, to criticise libertarianism. However, there are also a plethora of instances in which houses have been allowed to burn through the neglect or malice of government fire departments. These include 70-year-old Dorothy Higginbotham, whose property was in flames when Detroit firefighters posed for pictures outside.

That said, many will see this as a ‘real libertarianism has never been tried’ argument, so I will be charitable. Koppelman’s core message from the Cranick fire is that people should not be left without assistance if their house is on fire, even if that means taking something from somebody else.

By highlighting this example, Koppelman is appeals to our moral intuitions, so for the same purpose, I will pose a question highlighting the other extreme: if a house was on fire and nobody was willing to put it out, would it be legitimate to enslave a person to do so? The issue raised by Koppelman is a compelling one, but the question of voluntary provision of fire services is not as open and shut as his appeal to intuition would suggest.

The ugly

While I appreciate Koppelman’s attempt to sell Hayekian thought to the Left, it is clear that he underestimates Hayek’s liberalism and/or the Left’s illiberalism. For example, his implication that an ideological coalition including Hayek and Bernie Sanders could ever exist is simply fanciful.

Koppelman repeats the common myth that Sanders is only left-wing by American standards and that his ideology is rooted in liberalism in the same way as many European centre-left parties. As the Cato Institute’s Ryan Bourne highlights, Sanders’ policy platform goes far beyond any European social democracy.

Koppelman contends that Hayek can be reconciled with the left because he did not oppose basic social safety nets and thought it acceptable for the government to engineer social goals in a market-friendly fashion. Bernie Sanders’ ideology cannot be reconciled with that interpretation.

Furthermore, Koppelman’s interpretation of Hayek’s pro-welfare credentials are highly questionable. He claims that Hayek would have approved of the Affordable Care Act of 2010 (‘Obamacare’), because the measure sought to provide universal insurance against catastrophic healthcare events and to do so in co-operation with the free market.

Although it did not seek to replace the American healthcare market with a state monopoly, the way Obamacare intervened in the market would not have met with Hayek’s approval. The law mandated a minimum standard of insurance, which hamstrung the market’s ability to vary prices and healthcare plans. It created a new centrally planned insurance marketplace and capped the price of healthcare premiums as a percentage of income.

It forced employers with more than 50 employees to offer insurance programmes to its workers, further distorting the labour market, while also imposing a whole host of new regulations on care quality which increased barriers to market entry and further consolidated the healthcare market in the hands of a few large market incumbents armed with hordes of lobbyists.

Had the law been a simple expansion of subsidies for the poorest, with assistance gradually withdrawn as incomes rose, then perhaps Hayek would have approved. This is not, however, what Obamacare was.

In summary, Burning Down the House is a good faith attempt to highlight areas in which libertarianism has gone astray, while simultaneously demonstrating the appeal of libertarian viewpoints in other areas to a left-wing audience. It contains some valuable insights and challenges to libertarians and I encourage people to read it.

That said, Koppelman’s critique could have engaged with a wider breadth of libertarian thought. For example, Ronald Coase’s libertarian dissent against the Pigouvian consensus on negative externalities warranted more discussion. Likewise, Koppelman rarely interrogates his rather charitable prior assumptions of what government is, how it operates, and the incentives which inform the decisions of individuals within it: the work of David Friedman on government failure and Bryan Caplan on rational voting, could have made for a more rigorous and complete interrogation.

Finally, Koppelman’s major flaw comes in generally assuming the worst of libertarians and the best of left-liberals. Through his introductory analogy of the Cranick house fire, he highlights a potential flaw in property-based libertarianism without engaging with either libertarian responses or the drawbacks of the alternative to free markets (in this case, state-provided fire services). This sets the tone for much of the book, he overestimates the degree to which the mainstream American Left has adopted free-market principles, underrates the extent of Hayek’s objections to many cornerstone left-wing policy proposals, and under-analyses the radical libertarian objections to the same.

3 thoughts on “Book review: “Burning Down The House” by Andrew Koppelman”

  1. Posted 09/01/2023 at 21:42 | Permalink

    Nice review! Excellent points! I would add that libertarians never claim that no house would ever burn down. Koppelman is guilty of the nirvana fallacy. Libertarians only claim that a libertarian society would be better than any existing real world non-libertarian society because a house burning down once in a while is far better than the massive destruction caused by well meaning but ignorant politicians.

  2. Posted 12/01/2023 at 13:16 | Permalink

    In what libertarian society would the local government have a monopoly on fire services?
    In what libertarian society would there not be an entrepreneurial person negotiating with the Cranick family on the spot offering to fight the fire?
    The statists always use strawmen arguments. They also assume that all leftist intentions are benevolent and that Rothbard, Hoppe, Rand etc. act out of malice.
    I don’t think Koppelman’s book is a good faith attempt at all.

  3. Posted 06/02/2023 at 04:24 | Permalink

    The review doesn’t mention Koppelman’s pretty extensive account of Charles Koch and the influence that libertarianism has had in recent US politics, in Koch’s and the Republican party’s battle against the Affordable Care Act, and their politics of climate denial. To American readers, this is one of the most useful parts of the book, since the Affordable Care Act and climate denial affect and will affect more people, more directly, than probably any other issue in which self-described libertarians have ever intervened. Libertarianism in recent years has become a potent political force in the US, and Koppelman’s discussion of this development is more helpful for those of us who are engaged in contemporary politics, than any amount of libertarian theorizing. (Though Koppelman’s discussions of Hayek , Rothbard, and the rest are also very helpful for those of us who aren’t immersed in that literature.) One has to wonder what thoughts a more sophisticated libertarian than Koch might have about the influence that self-described libertarians such as Koch are having on the future of our species on this planet.

Leave a Reply

Your email address will not be published. Required fields are marked *