Similarly, legislation and court rulings have blocked various forms of voluntary, contractual risk sharing. One of our most important priorities is the creation of new forms of contract that would allow private parties to experiment with relationships that are currently outside the bounds of government regulation. Such contracts would define the conditions for meaningful prior consent and include language limiting subsequent liability claims. This would encourage insurers to enter the field, further mitigating risk by private parties that are ostensibly, though very inefficiently, covered by current government restrictions and penalties.
This process—for example, in the case of medical innovation—might take several iterations. Congress could pass a reform bill allowing greater access to new drugs and devices without prior government approval, with consumers retaining the right to initiate civil litigation in cases of true fraud or negligence. Such a change would create a body of precedent and practice which would guide the adoption of yet further reforms. In the spirit of federalism, Congress could also explicitly allow states to adopt their own access and safeguard guidelines. The resulting patterns of consumer behavior and health outcomes would yield an extremely valuable market discovery process that could produce insights for medical treatment, drug and device marketing, investment risk management, and legal practice. The right to accept risk is a basic freedom and one now denied Americans in many areas—especially in the case of life and death decisions involving medical treatment.
There have been times in modern political history when dramatic liberalizations have taken place suddenly: German economic minister Ludwig Erhard’s ending of post-World War II price controls, Ronald Reagan’s firing of striking air traffic controller workers, Czechoslovakia’s Velvet Revolution. Most reforms, however, are incremental and akin to pushing a knot along a tangled string or twisting a Rubik’s cube—progress can require taking what looks like a step backward on the way to taking two steps forward. The key is keeping in mind the ultimate goal of a voluntary system of exchange and contract. We should favor even imperfect incremental reforms that create privatization options and more space for non-coercive economic relationships.
Every federal resource management agency should be empowered (or required) to entertain modern homesteading petitions to move some of its resources into the private sphere. The Bureau of Land Management and U.S. Forest Service could allow private spelunking groups to manage access to caves, for example. Local environmental or other private groups could adopt threatened species under the contractual obligation that they provide viable habitat. Indeed, the edges of airport runways, like that of roads, might provide the runoff needed to develop fringe wetlands. The dual language of such contracts would specify how the two conflicting goals would be reconciled. Airline and airport partnerships could bid for property rights to air corridors—say from New York City to Los Angeles, with an allowance made for congestion pricing during peak “rush hour” air travel times. We should also encourage privatization of bridges and high-density roadways that pay their own costs via tolls and fast passes.
We need to consider both incremental improvements to existing institutions and dramatic reforms that challenge those institutions. Further, this two-pronged approach must also be informed by a savvy market analysis. The public policy world does not need a 27th study making the same case for supply-side tax reform or a 34th monograph on the virtues of a balanced budget amendment. We could use, however, some conceptual background on why government became so heavily involved in various areas—such as transportation, healthcare, and finance—in the first place.
Capitalism and markets do not operate in a vacuum. Rather, they require a support structure consisting of the rule of law, a tolerant society, property rights protections, and an extensive system of enforceable contracts. These institutions evolve in free societies, but the activists of the original Progressive movement started to derail that process at the end of the 19th Century. Since then, no significant resources have moved from political management to the private sphere (though the prospect of private ownership of asteroids could become a fascinating counter-example).
Thus, regardless of whether we are discussing telecommunication or environmental policy, we must focus on how government has crippled markets rather than how to make the political intervention, based on spurious assumptions of market failure, less burdensome. We should present our conventional recommendations, but also include an “outside-the-box” reframing of the issue. Wildcard options outside the current boundaries of the debate will spark fresh debate and open up those sectors to entrepreneurial experimentation. More importantly, they will reinforce the coherent framework we have for restoring economic liberty.