Why ‘people are economically illiterate’ keeps libertarians stuck

I keep seeing libertarians explain failed persuasion the same way: “People are just economically illiterate. If they understood basic economics, they’d see the State is unnecessary.” This framing has dominated libertarian thinking for decades. More Rothbard, more Mises, more Hayek. More education about supply and demand, price signals, opportunity cost, central planning failures.

It hasn’t worked.

The pattern I’ve noticed: Libertarians understand economics intellectually. I’ve watched libertarians accurately explain why central planning fails, why price controls create shortages, why minimum wage laws hurt workers. They can articulate Austrian theory coherently. They know taxation is theft. They understand the logic.

Yet many of these same libertarians still vote hoping this election will be different. They still choose the path of least resistance when it means State approval. They still comply with regulations they know are unjust. They still concede “we need SOME government” without being able to define where the line is. They still feel that voluntary coordination sounds risky, even when they can’t articulate what the risk is.

I’ve watched prominent libertarian thinkers—people who can dismantle statist arguments in debate, who understand Austrian economics deeply—still invest energy in political campaigns, still frame electoral outcomes as mattering, still act like the next election could be different. The intellectual understanding is complete. The psychological liberation isn’t.

This isn’t about whether someone counts as a “real libertarian.” It’s about recognizing there are TWO layers to the problem:

For normies: They’re stuck both intellectually (don’t understand Austrian economics) AND psychologically (trapped by narcissistic system dynamics). Libertarians have been trying to solve the intellectual layer with more economics education. That’s necessary but not sufficient—even if they understand the economics, the psychological barriers remain.

For libertarians: Many have completed the intellectual layer but remain partially stuck on the psychological layer. Understanding narcissistic system dynamics helps libertarians recognize their own lingering doubts, the pull toward political engagement despite knowing it’s theater, the discomfort with full exit.

Understanding this framework helps libertarians in two ways: It explains why their own psychological hesitations persist despite intellectual understanding. And it explains why normies don’t just “get it” when presented with Austrian theory—you’re addressing the intellectual layer while the psychological layer remains untouched.

The barrier isn’t intellectual. It’s psychological.

Here’s what I think is happening: The State operates as a narcissistic system. It creates psychological traps that intellectual understanding alone can’t break:

Manufactured dependency: “You can’t survive without us” gets internalized even when you can explain exactly how voluntary free market alternatives would work. The anxiety about “who would build the roads?” isn’t an economic question. It’s the anxiety people feel about leaving any system that’s convinced them they’re dependent.

Gaslighting: “You’re being irrational/naive/utopian” makes you doubt your own perceptions even when the logic is airtight. People know intellectually that private arbitration works, that reputation systems enforce contracts, that insurance handles risk. But they’ve been taught that believing this makes them crazy.

Trauma bonding: Attachment to the system that harms you. People stay invested in political theater, keep hoping the next election will be different, keep believing reform is possible. Not because they lack economic education, but because intermittent reinforcement (occasional policy “wins”) creates the same psychological trap as slot machines or abusive relationships.

Internalized obligation: The feeling that you MUST vote, MUST stay informed about every outrage cycle, MUST participate in civic rituals. This isn’t rational calculation. It’s conditioned duty that persists even after you intellectually reject State legitimacy.

These mechanisms aren’t solved by better economics education. Smart people stay psychologically trapped despite understanding the theory perfectly well.

This is why the “economic illiteracy” framing keeps libertarians stuck. It misdiagnoses the problem, which means it prescribes the wrong solution. Libertarians keep recommending more books, more theory, more intellectual arguments. Meanwhile, people who’ve read all the books still feel uncomfortable about tax avoidance. People who can dismantle statist arguments in debate still vote and hope for change.

The practical implication: People don’t need more economics. They need psychological liberation. They need to recognize the narcissistic system dynamics that keep them trapped. They need language for the gaslighting they’re experiencing. They need to understand that the manufactured dependency isn’t real, that the anxiety about exit is conditioned, that the obligation is imposed rather than earned.

This is why agorism works better than debate. Counter-economics (using Monero, participating in grey markets, homeschooling, choosing private arbitration) doesn’t just prove voluntary alternatives work. It breaks the psychological dependency through practice. Each voluntary exchange is evidence that you CAN coordinate without permission. Each boundary you set against State extraction is psychological healing, not just economic theory.

When someone says “people are economically illiterate,” they’re seeing the symptom, not the disease. The disease is psychological entrapment in a narcissistic system. Economics education is necessary but not sufficient. Without addressing the psychological mechanisms, you’re handing people the key to their cell while they remain convinced the door is locked.

Rothbard explained WHAT is wrong (the State is criminal). Austrian economics explained HOW it fails (calculation problem, knowledge problem). But libertarians need to explain WHY people stay trapped despite understanding both—and why libertarians themselves sometimes feel the pull back toward political engagement despite knowing better.

Understanding narcissistic system dynamics completes the picture. It explains why normies don’t just accept Austrian economics when it’s explained clearly—the psychological barriers remain even after intellectual comprehension. And it explains why libertarians who fully understand the theory still feel hesitations, still find themselves drawn to voting, still experience discomfort with complete exit.

The framework helps libertarians recognize these psychological mechanisms in themselves AND in the people they’re trying to reach. That’s what enables both groups to act on what they intellectually understand.

Thoughts? Have you noticed this two-layer pattern—intellectual understanding achieved but psychological hesitations persisting?