If you’re a free market idealist like me, then there are two major challenges when considering how to approach a particular policy issue.

The first is how can we get from where we are today to free markets. It would be lovely if we could just flip a switch, but that’s no where a part of reality. Any attempt to shift suddenly to free markets would lead to widespread economic devastation. Whole industries would collapse and the darkest visions of anarchy would likely start to play out. For practical purposes, some incremental path toward greater freedom would need to be adopted.

The second is related to the first and that is that incremental changes toward freedom can result in adverse outcomes that mean less freedom for some.

That second point is hard to understand, so let me illustrate with an example from real life.

The Trump administration took its hardest line yet to legalize anti-gay discrimination on Friday when it asked the Supreme Court to declare that federal law allows private companies to fire workers based only on their sexual orientation.


In a free market, this is acceptable because irrationalism creates economic opportunity for competitors and consumers could withhold their business from people who do things that offend them. If a company does something that riles enough of their customers, it could present an existential threat.

So, even though I’m gay, I have no principled objection to private companies who want to behave in this way. I don’t like when companies do it, but I do think it’s their prerogative.

The problem is that we do not live in a free market society. We live in a mixed economy, one in which the government routinely offers preferential treatment to some businesses and industries over others. Religious institutions are given tax exemption. Subsidies are handed out. Regulations and licensure laws create barriers to entry.

So, when the government argues that private companies should be allowed to be bigoted and is also literally giving some businesses money to stay in business, the government is, in those situations, endorsing and funding bigotry.

It may not be as overt as Jim Crow, but it is such a long-standing interference in trade in such a way that business structures, practices, and institutions have built up around it and a sudden change would be economically disastrous. Everything would be fine in the long run, but in the near to mid-term real people would have some real problems and we would all feel the pain.

Sidebar: This is actually why I think the Civil Rights Act and other efforts to undo state-backed racism was the right thing to do. So much of private economic activity was legally mandated racism. And state actions were similarly prejudiced. So, I think it was right for the government to step in and take an active role in undoing those practices.

I don’t have a solution to this. I suspect that in order to minimize the negative impacts, you’d have to undo all the economic interference in something close to the reverse order in which it was implemented. That’s almost a century and a half or more of legislation and practice. So, it’s a major problem.

So, when thinking about an issue like this anti-gay discrimination case, I have to wonder:

  • Are my tax dollars funding bigotry in the private sector? (Seems likely.)
  • Are my tax dollars funding bigotry in the public sector? (Also, seems probable.)

Given an affirmative on the first point especially, it seems like one ought not agree with the Trump Administration’s brief.

There is a lot of room for reasonable people to disagree about whether one should land on one side or the other on this.

Some people have argued that we need tighter immigration laws because of our massive welfare and entitlement spending, so we can’t open up our immigration policies while such spending is the practice. Others say that one should not dictate the other and one ought to support the principle of freedom and fix the welfare state separately.

In the case of discrimination against gay people, I’ve present above what I think is a strong argument to disallow such discrimination in situations where it can be shown that the state has given some tax break, subsidy, license, or other economic advantage in the market. But I’m uncomfortable with that argument because I think Constitutionally protected freedoms of speech, religion, and association should generally be regarded as sacrosanct.

If you forced me to pick one side or the other, I would be inclined to agree with the argument that private people (never the state, though) should be allowed to discriminate against others. But I wouldn’t be very happy about it.

Again, I don’t have a good solution here. I can completely understand why people might disagree with where I fall on this. But I think it’s important for free marketeers to realize that there are very real reasons why it’s so hard to persuade others to our point of view on this.