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Are Free Riders Really a Problem for Libertarians?

Updated on July 29, 2017
Garry Reed profile image

Garry Reed combined a professional technical writing career and a passion for all things libertarian to become The Libertarian Opinionizer.

Commentary From Your Libertarian Opinionizer

Definition: A free rider is a person who uses a common resource or collective good without paying for it.

Disclaimer: The free rider issue isn’t just an economic issue but a personal and social issue as well. Not being an economist that’s what The Libertarian Opinionizer will discuss here. For a formal economics-eye-view of this issue one should visit the Mises Institute website where Ben O’Neill claims to be solving the problem of free riding in his article “Solving the ‘Problem’ of Free Riding.”

Claimer: In the context of actually living in society the “Free Rider Problem” isn’t a “problem” unless one chooses to view it as a problem. Consider this: By definition the nearly two billion users of Facebook are “free riders” because they don’t pay for it yet they benefit from it. Does anyone think that Mark Zuckerberg and his billionaire co-founders care about you being a free rider?

The Altruistic Libertarian: Advocate for a Genuinely Free Society
The Altruistic Libertarian: Advocate for a Genuinely Free Society

YOUR LIBERTARIAN OPINIONIZER’S PICK #1: Wheeler begins by defining “Altruism” (The dictionary definition) and “Libertarian” (Ayn Rand’s definition) and comes up with a “proper role of government” that guarantees our “freedom from coercion.”

Wheeler admits that coupling altruism with Ayn Rand might be “incongruous” while anarcho libertarians would say coupling government with free society is incongruous.

So the book is primarily for libertarians who believe in an AynRandian Society rather than a free mutually voluntary society. But he does understand that a Genuinely Free Society “extends well beyond the economic” to include all of humanity’s manifold issues.

 

O’Neill says as much in his article when he points out that Free riders are a problem “only when compared to what might have been done instead.”

That kind of reasoning makes the free rider problem a strictly subjective problem, i.e. if someone is free riding on your efforts or ideas and you don’t care then it isn’t a “problem.” That would apply to everything in everyone’s lives as well. When Sir Isaac Newton said of his own work, “If I have seen further than others, it is by standing upon the shoulders of giants” he was admitting to being a free rider in the broadest sense of the term.

Some economists and politicians call free riding a “market failure.” But if a free market is by definition freely open to everyone who wants to participate in it, producers and free riders included, where’s the failure? It’s simply doing what a market is supposed to do and everyone ought to be aware of that fact before they participate in it.

In one way or another everyone benefits from something someone else does or did without “paying the costs” for it, producers and consumers alike. How have economists and politicians been able to turn a simple fact of human reality into a “market failure” and a “problem?”

Ride Sally Ride

So let’s be actual riders together, like bus riders, and see if we can find the free rider problem as it applies to personal and social situations.

Say you live at A for Apartment and work at B for Business. Points A and B are ten miles apart, too far, rainy, cold, hot to walk every day. With little income and no car you discover that both A and B exist on a direct city bus line, so you ride the bus every workday to and from Apartment and Business.

The Free-Rider Problem
The Free-Rider Problem

YOUR LIBERTARIAN OPINIONIZER’S PICK #2: The author’s solution is a two stage “auction.” The positives for free marketeers are (1) it offers “a private and voluntary solution to the free‐rider problem,” (2) “The areas for application of this template are manifold” including the tragedy of the commons problem, (3) it’s short (14 pages/908KB) and (4) it’s only $1.00 on Kindle.

The negatives for many are (1) it’s full of equations and formulas suitable for mathematically-minded economics majors, (2) it’s full of possibilities, probabilities and uncertainties and (3) has nothing to offer lovers of coercive big governments.

 

But then you notice that some people don’t pay a bus fare like you do. The bus driver is letting his friends on without paying. Others are using their government social welfare services “Free” Bus Pass.

But why should you care? Are you going to stop riding because some others are riding free? What if everyone but you is riding free? What if nobody else is riding the bus at all? You might feel that it’s “unfair” that others ride free while you must pay but the bus is still giving you the service you want and need, and you bought a Frequent Rider Card that reduces your cost, so why not just keep riding?

Your other options, after all, are the real problems: It’s too far to walk, you can’t afford a car, or a taxi, or a Uber, and there’s no one to ride share with. All things rationally considered bus riding is a solution, not a problem, and for that reason free riders ought to be totally irrelevant to you.

Economists will insist that free riding is a problem whether anyone cares or not because free riding occurs on public goods and too much free riding may cause those goods to disappear entirely, such as too many farmers sucking irrigation water out of the same river causing the river to run dry.

Because this leads to real problems like the possible total depletion of public goods and to the “tragedy of the commons” most people justify direct government coercion as the solution. But to libertarians that isn’t a solution, it’s just replacing one problem with an even bigger, more destructive problem. As Malini Kochhar points out at The Atlas Society, “To force payment without consent is not only a violation of rights, it destroys value rather than creating it.”

Do the people in the dining car think this free rider is a problem?
Do the people in the dining car think this free rider is a problem?

Free Market Riders

So let’s go back to our free riding bus riders.

In a true laissez-faire libertarian society with its consumer-driven “governance” that replaces coercive, crony, statist, fascist corporatist political-driven “governments” all legitimate human interactions occur on a mutually voluntary basis.

(Another definition: “legitimate human interactions” occur when the libertarian non-aggression principle is followed. All actions involving coercion, intimidation and fraud are illegitimate human interactions.)

Remember first that bus lines compete with other bus lines, as well as shuttle buses, streetcars, trollies, jitneys, car pools, van pools, ride sharing, Uber, Lyft, Google driverless vehicles, pogo sticks, the Jettson’s flying car and everything else creative people in a free society might come up with, including eliminating buses altogether.

So maybe a privately-owned bus line will offer free passes to the proven needy through voluntary social service organizations and publicize it as a competitive policy: “We’re the LUV LINE – Bus With US.” And pay for it with slightly higher paid fares or more inside and outside ads on their buses, or by some other method like supplying vans and shuttles emblazoned with their logos to churches and charities and other nonprofits as a public relations strategy.

On a Bicycle Built For Three

A free rider isn't a problem if no one is complaining.
A free rider isn't a problem if no one is complaining.

Or arrange with merchants along their lines to hand out One Way Ride Cards with every purchase of X amount spent in their stores.

Or maybe merchants take the initiative themselves by validating people’s bus cards/apps as many businesses today validate parking tickets.

Or partner with major shopping malls and big box stores to disgorge as many people as possible to their front doors.

Or maybe in dozens, scores, hundreds of other ways nobody has imagined yet since coercive government intervention stifles good ideas right along with the bad ideas.

The goal of a profit-maker is to make a profit and there are as many indirect ways as direct ways to accomplish that. In a coercive society, a free rider is a freeloader; in a free society all free riders are also consumers and therefore always potential paying customers.

Fair Rider or Fare Rider?

The true bottom line is this: If you are satisfied with the goods or services you’re getting and no one is forcing, bullying or manipulating you into paying for anyone else’s goods and services why would you care if someone else is riding “free” or not? You might even be helping those “free riders” yourself, without even knowing it when you pick up something for lunch on your way to your morning bus stop and 5% went to the very “We’re the LUV LINE – Bus with US” company that you ride with every workday.

Yes you’re paying an extra 5% or so for your lunch but nobody forced you to buy it. You did that all on your own. There ain’t no such thing as a free lunch after all.

So if no one is coercing, bullying or defrauding you into paying for the things others may get without paying why would you possibly care? Libertarians are as generous as anyone else and being altruistic doesn’t violate the non-aggression principle.

"The classic solution to the Tragedy of the Commons is private property" that "provides individuals with an incentive to use the resource wisely" -- Internet Encyclopedia of Philosophy/Libertarianism
"The classic solution to the Tragedy of the Commons is private property" that "provides individuals with an incentive to use the resource wisely" -- Internet Encyclopedia of Philosophy/Libertarianism

As usual there will be unimaginative government-huggers who can’t even explain how the existing status quo coercion-driven ruling regime actually works (it’s based on cynical cronyism, not high school Economics 101 lessons) but nonetheless will demand intricately, explicitly, highly detailed disquisitions on how some theoretical “future utopian libertarian state” (SIC) can possibly work.

How can libertarians go on about free riders on city buses when they can’t even explain how non-taxing stateless societies can possibly solve the biggest and most important free rider issues of all, like providing such public goods as police, firefighting and military defense?

Free Market vs. Forced Market

One free market solution is linking the public good to a desirable private good for which people knowingly or unknowingly pay voluntarily. Example: Insurance companies will go broke without minimizing threats to life, health and property. So the entire insurance industry funds a non-profit institution based on a percentage of every type of insurance policy sold and the institution in turn funds police, fire and military operations not covered in other ways.

Similar solutions can be found when, for another example, the entire environmental movement stops demanding government coercion and joins together to solve issues of clean air and water and even global warming/cooling.

And maybe free minds can find a strategy in common for the Tragedy of the Commons.

The point is that no one individual, or even large groups of individuals, can possibly have enough knowledge to supply all of the answers. Not a politician or group of politicians, bureaucrats, technocrats, specialists, experts or professional central planners with unlimited coercive powers.

Libertarians understand that all information, all ideas, all wisdom, all expertise, all knowledge is diffused throughout humanity, contained in a multitude of individual brains. And the only way to tap into all of that knowledge is to eliminate the mechanisms that squelch open imaginative enquiry – namely governments – and allow all thinkers to think and share their thoughts with one another.

None of this is new to libertarians. Ideas for answers and solutions have been kicked around for a very long time. It’s nation-states and the politicians who run their governments that create the need for national defenses against one another in the first place. Asking governments to solve a problem created by governments sounds like an endless oxymoronic loop.

Issues from defense to public goods to the free rider problem can never be solved by governments for the simple reason that governments aren’t about solutions, they’re always and everywhere about expanding the power, coercion and ego puffery for the elitists who run those governments.

So instead of being a knee-jerk nay-sayer and pessimistically complaining “it can’t work” or “there is no better way” libertarians invite everyone to help create the free, open, questioning, voluntary libertarian society and find the solutions to these questions as we all go along.

Yes free riders will exist in free societies as well – there are no utopias – but free minds in a free market is the only real hope that humanity has for finding solutions to any of its problems. The more freedom we have, the more knowledge we can share and accumulate the more solutions we can discover together.

Libertarians don’t have all the answers to everything? Guess what. Neither do you.

-END-

References:

Solving the "Problem" of Free Riding
Externalities and the Free Rider Problem (Atlas Society)
Is a Voluntary Libertarian Government an Oxymoron?

Freedom = Knowledge = Innovation in All Aspects of Human Endeavor

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    • Garry Reed profile image
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      Garry Reed 5 months ago from Dallas/Fort Worth, Texas

      Everything I've read on the subject of free riders ALWAYS treats it as a purely economic issue. And yet my whole point was to get people to think outside the politico-economic box and consider the issue from the viewpoint of how you interact with others in a social context. If you want to help others without expecting any reward in return would you really care about price signals?

      Too many people think all libertarians are greedy "right libertarian" capitalists and have no concern about helping others. This article is my counter-argument to the oft-repeated charge "Libertarianism means I got mine so screw you."

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      Jim 5 months ago

      You completely misunderstanding the problem of free riders. Economists are not complaining that someone gets something for nothing. Prices serve as signals to someone to produce something. The problem of the free rider is that the proper signals are not sent to producers to produce the good.

      Take your bus example. Suppose there are 100 potential riders that would happily pay $1 for their bus ride rather than do without. And suppose that the $100 is more than enough to induce the bus owner to provide the bus ride. Everything is wonderful as the bus riders and bus owner are happy. Now suppose that half of those bus riders discover that they can get away without paying. Now the bus trip only generates $50 in revenue which is not enough for the owner to cover his costs and the bus service is cancelled. That is the cost of the free riding. The market signals are no longer provided to the owner to provide the good so it doesn't exist.

      The bus isn't really a good example of a public good though. A public good has two characteristics. If it is produced, there is joint consumption of the good. Multiple people benefit and one person't consumption doesn't reduce another person's consumption. The second is that there is not a viable way to exclude somebody from getting that benefit. With the bus, as more people try to get on the bus, they take up seats that others can use so the first condition isn't really met. And if you can have a door to stop people from getting on without paying, the second condition is not met.

      But look at National Defense. If we have a military that defends the border and stops invasion of those that would take away our rights, we can all benefit. My enjoyment of being protected doesn't reduce the benefits to you of being protected. Taht is joint consumption. IF the border is defended, you can't really stop somebody from getting those benefits. So the market has a problem providing the good. Everyone quickly realizes that their contribution is so insignificant that it doesn't make any difference in the provision of national defense, so they decide that they would rather spend the money on something else. If the benefits cannot be denied to them, they have no incentive to pay. So markets are unlikely to provide much national defense. The government solution is to make everybody pay.

      The Facebook example is not a free good issue either. An alternative method has been found to pay for it. You may not realize it, but you are not the consumer of Facebook. It is paid for by advertising. Facebook is happy for you to be online because they get to show you more ads and make more money.