Skip to content

This is Why We Can’t Have Nice Things: Directionalists vs. Destinationists

Michael Munger at American Institute for Economic Research

Photo by Jilbert Ebrahimi / Unsplash

In my first essay for AIER, back in July, 2018, I wrote:

I’m a ‘directional’ libertarian. That means that if a proposed new policy or reform of an existing policy cuts spending or increases liberty, I’m for it, even if it isn’t a ‘real’ libertarian policy.

Destinationism insists that any new policy must be the ideal, or oppose it; directionalism is willing to support any move toward the ideal, if the ideal is not on the table as an alternative. Most people take a combination of these views, depending on the context.

But on almost every major policy question — school choice, tax policy, immigration, and so on — we end up fussing with folks who agree with us on almost everything. Tiny points of doctrine (“vouchers mean the government is still involved, and I reject that!”) become the very fulcrum of the faith. We pursue, but give infidels a free pass.

That’s why we can’t have nice things, like coherent party platforms or effective political organization. It’s more fun to fight among ourselves. To be fair, this is hardly new. One of the most famous instances of the never-ending “direction vs destination” battle was the “FEE rent-control pamphlet” incident of the late 1940s.

FEE Hires “Reds”

In 1946, Leonard Read was trying to establish the Foundation for Economic Education (FEE) as a policy-relevant think tank, while retaining a commitment to classical liberal philosophical principles. In August of that year, it had published an essay by F.R. Fairchild explaining that profits were essential for financing investment and creating higher wages. But the essay had little impact, because it either seemed obviously true to market advocates, and absurdly false to readers on the left, who all “knew” that labor was the only source of value.

President Read looked to commission a more policy-relevant paper, and settled on rent control. Given the inflation rates — 8 percent in 1946 and 14 percent in 1947 — politicians wanted to limit rent increases. In fact, more than a few political leaders saw rent controls as a permanent solution to the housing shortage, as hundreds of thousands of enlisted people and wartime workers returned to civilian life.

Read enlisted two then-young college professors, Milton Friedman (Chicago) and George Stigler (then at Brown) to write a monograph. The result was even shorter, at 22 pages total, than the Fairchild piece, which had been 66 pages. The two economists approached the problem as purely a question of welfare economics, the kind of contingent advice directionalists often focus on: given that the objective is [Y], then the most economically efficient way to achieve that end is to use means [X].

In this case, the settled political objective was to reduce inequality. Taking that as given, Friedman and Stigler argued (and correctly, in retrospect, as even Paul Krugman agrees) that rent control makes inequality worse, not better. Friedman and Stigler used a tactic often used by directionalists, stating a goal that we all share, including those on the opposing side, then using economic reasoning to demonstrate that the policy fails to achieve the goal. In the case of rent controls, this means that the policy will lead to housing shortages, and that these shortages will hit the poor worst of all. So if one does care about the poor, rent controls are the last thing he should choose as a policy.

Read the rest