"Externalities result from authority. Authority enables one actor to maximize her personal utility, while making socially suboptimal choices, by imposing the negative consequences of her choices on other actors with less authority."
Sure, but that's why we give power to the people in some respects. Policy-makers, executive leaders, and even judges are elected in the US. What really hurts us isn't authority, but a lack of transparency on its part.
"Those in authority cannot afford to do the most efficient thing — stop interfering with the judgments of those who actually know what they’re doing — because they know their interests are diametrically opposed to ours."
And who, exactly, 'actually knows what they're doing'? Yeah I'd like the nanny state to stay out of my life, but I sure as heck don't think I know what I'm doing. I'm sorry, but this just sounds like so much countercultural whinging.