Previously published in the Orange County Register

I encountered the phrase “A well-ordered anarchist society” in Michael Huemer’s book The Problem of Political Authority. The phrase grabbed my imagination, and it hasn’t really let it go.

For most of us, those words just don’t go together. Our vision of anarchy is chaotic and violent. Huemer, one of our great modern philosophers, argues convincingly that our vision is wrong. He contends that society’s unthinking decision to grant authority to government is misplaced. He starts with a very few basic principles that most of us would agree with, and systematically builds his case.

In his section, “Society Without Authority”, where the phrase is found, Huemer describes how an anarchist society would function. He argues that markets would provide all the services that governments currently provide. This might help us understand the private provision of traditionally government provided services that we see today.

The standard economic discussion of government is one of decreasing returns to scale. Initially, government spending has big returns, providing defense, police, laws, courts, and such. As government grows, it gets harder to find those big returns, and the return on marginal investment gets smaller. I believe that the returns eventually turn negative. My socialist and communist friends disagree.

Total government spending (federal, state, and local) in the United States today is about what it was at the peak of WWII, more than 35 percent of gross product. It is reasonable to believe that we might be in the range where marginal gains are low, and there is evidence. Examples of well-funded, but apparently useless, studies abound, such as the almost $1 million study that found male fruit flies are more attracted to younger female fruit flies than to older female fruit flies.

What happens, though, when governments have to cut back? Cities lay off police officers and close fire stations. California Gov. Jerry Brown recently extracted a major tax increase by threatening more cutbacks on education. When sequestration hit, no one talked about ending studies of fruit fly mating preferences, but we saw talk of cutting air traffic controllers and airport security.

Part of what we see can be explained by powerful constituencies or a desire to punish an uncooperative electorate. But, a big problem is that governments at all levels genuinely have very little flexibility when it comes to spending.

At the federal level, entitlements (mostly Social Security and Medicare) are consuming ever-greater portions of the budget, crowding out all other federally provided government services. In California, prisons, schools, and pensions are crowding out other state-provided services, consuming increasing portions of the budget and apparently yielding little in return. In California cities and counties, ever-increasing personnel costs and pensions are driving out locally provided services.

Government is becoming a wealth-transferring institution, and in the process it is abandoning traditionally provided government services. As if on cue, private markets are stepping in to fill demand.

At least three media outlets (Contra Costa Times, KHOY Houston, Christian Science Monitor) have recently published articles about neighborhoods across the country hiring private security firms to replace police service withdrawn because of budget cutbacks.

Private firms are even providing money. As central banks worldwide vastly increase their money supply, people are questioning the value of their money. Private markets are there to offer an alternative. Bitcoin is a decentralized open-sourced virtual currency that is becoming increasingly popular, and you will soon be able to access it at your local ATM.

We may end up with Huemer’s society where private firms provide traditional government services. The irony is that it could be because of too much government, not a lack of government.