The Return of Bottom-up Liberalism

This week left-of-center bloggers have been abuzz over this lengthy treatise about the supposed absence of genuinely left-wing voices in the online conversation. Freddie DeBoer complains that the lefty blogosphere is dominated by “neoliberals” like Matt Yglesias, Jonathan Chait and Kevin Drum who show inadequate fealty to labor unions, big government, and the dictatorship of the proletariat.

What I find most interesting about DeBoer’s post is what it says about the successes of libertarian ideas over the last half-century. It has become a cliché in libertarian circles that we’re constantly playing defense against the ever-expanding welfare state. Yet if that were true, welfare state advocates like DeBoer wouldn’t be so gloomy.

I think DeBoer is basically right. We obviously don’t live in a perfectly libertarian world, but libertarians have had a pretty impressive winning streak in recent decades, especially on economic policy. Income tax rates are way down. Numerous industries have been deregulated. Most price controls have been abandoned. Competitive labor markets have steadily displaced top-down collective bargaining. Trade has been steadily liberalized.

Simultaneously, the intellectual climate has shifted to be dramatically more favorable to libertarian insights. Wage and price controls were a standard tool of economic policymaking in the 1970s. No one seriously advocates bringing them back today. The top income tax bracket in the 1950s was north of 90 percent. Today, the debate is whether the top rate will be 35 percent or 39 percent. There’s plenty to criticize about proposals for government-mandated network neutrality, but no one is seriously proposing that we return to the monopoly model of telecommunications that existed for most of the 20th century. At mid-century, intellectuals idealized large, bureaucratic firms like General Motors and AT&T. Today, intellectuals across the political spectrum argue that their preferred proposals will promote competition and foster the creation of small businesses.

This isn’t to say there are no longer disagreements about economic policy; clearly there are. But what’s striking is that the left’s smartest intellectuals and policy advocates now largely make their arguments from libertarians’ intellectual turf. Tech policy scholar Tim Wu explicitly casts himself as a heir to Friedrich Hayek, defending bottom-up competition against the monopolistic tendencies of large corporations. The urbanist left has increasingly focused on the (largely correct!) argument that we’d have a lot more walkable neighborhoods if not for government regulations that tilt the playing field toward suburban living patterns. Environmentalists have begun championing relatively free-market mechanisms like cap and trade as more efficient ways to achieve their goals. The policies being advocated aren’t always libertarian, but many non-libertarians sell their non-libertarian policy proposals using libertarian arguments.

Probably the best illustration of this is Matt’s response to DeBoer’s post. Matt lists 10 economic policy goals that he favors. What’s striking about the list is that about half of them are straight-up libertarianism (less occupational licensure, fewer subsidies for suburbanism) and there’s only one item on the list (“more redistribution of money from the top to the bottom”) that Milton Friedman would have strongly opposed. One way to interpret this is to say that Matt is a moderate libertarian with a redistributionist streak, but I don’t think that’s the right way to look at it. Rather, what’s happened is that liberalism in general has internalized key libertarian critiques of earlier iterations of liberal thought, with the result that a guy with a largely Friedmanite policy agenda can plausibly call himself a liberal. And actually, this shouldn’t surprise us at all, because Friedman called himself a liberal too.

Liberalism in the 19th century focused on opposing concentrated power and entrenched privilege, whether it was monarchy, slaveholding, or protectionism. In the 20th century, the American left became infatuated with concentrating power in the hands of democratically-elected governments. The libertarian movement arose to counter this trend and defend the original, bottom-up conception of liberalism. Since the fall of communism, the left has largely (though not entirely) backed away from its 20th century infatuation with central planning. And the result is what critics call “neoliberalism”: a left-of-center ideology whose egalitarianism is balanced by a healthy skepticism of concentrated power.

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50 Responses to The Return of Bottom-up Liberalism

  1. x.trapnel says:

    I think there’s something to this, but I also think there are important ideas on the radical left–including the radical anarchist/libertarian left–that are completely invisible, and not in a good way. One example of this is the way you characterize “the” debate over wages (“Competitive labor markets have been steadily displaced top-down collective bargaining”)–for the vast majority of wage-earners, wages are indeed set in a “top-down” manner, in comparison to which *workplace-level* (vs. national/regional/etc) cooperative wage-setting would represent a far more bottom-up structure.

    A useful-if-lazy shorthand for what’s missing in mainstream discussions, I’d say, is the sort of ideas covered in the “Real Utopias” series. In addition to the sorts of oppositional thinking that would consider even the RU stuff too committed to existing institutions.

  2. E.D. Kain says:

    Really excellent post, Tim. I’ve been thinking along these lines since reading Matt’s post but couldn’t quite put it into words. This sums it up nicely. Though I think there is still a pretty serious divide / language barrier between libertarians and liberals despite this convergance.

  3. Right, the growing policy overlap between liberals and libertarians is masked by the fact that our respective political coalitions have diametrically opposed rhetorical styles. But that’s easy enough to fix: it just requires each side to practice speaking the other’s language as we spend more time on issues where we agree.

  4. Rhayader says:

    Interesting stuff. It’s funny though, my girlfriend is doing her PhD in poli-sci, and “libertarian” is a dirty word amongst that bunch. I was amazed at the collective vitriol when I piped up at a party about Milton Friedman. I’m much closer emotionally to a “liberal” outlook than a “conservative” one, but it doesn’t take much to get liberals to write me off. Sort of unfortunate.

    Also, wasn’t Wu the guy who peed on the Dude’s rug?

  5. E.D. Kain says:

    TIM, I agree though I find this harder in practice than in theory.

  6. Brett says:

    At mid-century, intellectuals idealized large, bureaucratic firms like General Motors and AT&T. Today, intellectuals across the political spectrum argue that their preferred proposals will promote competition and foster the creation of small businesses.

    That’s one of the things that I’m grateful to see adopted on a widespread basis. You look at the New Deal Democrats and FDR, and they generally had a pro-cartelist economic position (a lot of FDR’s programs, including NIRA, were intended to basically turn industries into cartels with representation from both the businesses and labor).

    I don’t know if I’d grant Wu his self-perception, but his book was extremely good.

    I think there’s something to this, but I also think there are important ideas on the radical left–including the radical anarchist/libertarian left–that are completely invisible, and not in a good way.

    That’s a good point. I think there’s a pretty large contingent of the harder left that is basically anarchist/libertarian socialist/syndicalist, like Noam Chomsky.

  7. Freddie says:

    Among my many complaints is that the neoliberal doesn’t, actually, like to talk about power, and particularly not the balance of power between competing interests. If traditional leftists are blind to governmental power, institutional libertarianism is blind to corporate power. I am actually not in favor central planning (fancy that); I am, however strongly in favor of a powerful labor movement. This is for a variety of reasons, but one important reason is that the labor movement could act as a third force (labor, government, corporations). These are all, in some ways, antidemocratic forces, but inevitable and necessary. The more of these forces there are, the more ability there is to play their various inherent corruptions against each other. I’m not naive to the dangers of too much government. I am quite annoyed at the tendency (by libertarians and others) to lump labor and government together as one entity. There’s a long tradition of anti-labor action by government, and one reason I maintain a deluded optimism of a libertarian-leftist coalition is because organized labor could work as a check against the excesses of the state.

  8. Freddie says:

    Well, I wrote a long thing and my computer appears to have eaten it. Until I can writr something substantive – empowered labor can act as a check on government as well as corporatism, under the right conditions.

  9. Freddie says:

    Whoops, sorry, it survived.

  10. Brett says:

    one reason I maintain a deluded optimism of a libertarian-leftist coalition is because organized labor could work as a check against the excesses of the state.

    You see some of the above lines of thought among the syndicalists and libertarian socialists (particularly the latter), but I’ve yet to see that happen with traditional labor movements here in the US. More often than not, lobbying and state power are a major part of their programs and goals.

  11. Pete says:

    Whatever anyone thinks about organised labour, I think Freddie’s point about corporate power is well taken. The whole point of the limited liability corporation is that it’s a legal tool for focusing a lot of people and capital through a single point of control. There are advantages to doing this, but they’re by-and-large the same advantages that you get with any centrally planned system – sometimes planning has lower transaction costs.

    If the concern is about concentrations of power, and we don’t want to concentrate power in unions or government, then surely the size of businesses should be a concern in and of itself. This, I think, is what annoys a lot of otherwise sympathetic folk on the left about a lot of libertarianism (although certainly not Tim): corporations are given a relatively free ride because you can shoe-horn them into the category of property.

  12. tom says:

    “The top income tax bracket in the 1950s was north of 90 percent. Today, the debate is whether the top rate will be 35 percent or 39 percent.”

    These sorts of facts are very misleading. While some rates are obviously way different (and lower) today than they were then- the total revenue that the government takes out of the economy has not declined similarly for a variety of reasons. Total state and federal spending as a % of GDP is up, well up, since the 1950s and is up even higher when you consider additional unfunded future liabilities. Long story short DeBoer is “gloomy” because his particular brand of liberalism is out of fashion, but while we don’t have wage and price controls like the 1970s we have massive bailouts of corporations, quantitative easing, and a fed balance sheet near 2.5 trillion.

    Without even talking about civil liberties and the expansion of government power in numerous sectors we can see with just raw economic data that govenrment power has not waned and those gains you cite have been offset, and then some, but other tax and spending policies.

    If you took a 1950s libertarian and described to them the size of government, their debts, future promises, the expansion of the welfare state (which barely existed in the 1950s by current standards) and threw in the fact that every air traveler has to go through a government checkpoint to get on a plane (which may also include a full body frisk)- do you expect their response to be “oh goody, sounds like libertarianism is making some real headway?

  13. tom,

    Thanks for commenting. A couple of thoughts. First, I’m increasingly skeptical of “size of government” as a metric for economic liberty. All government programs are funded by coercive taxation, so obviously in some sense a larger government restricts liberty more than a small one. But far more important than the number of dollars spent is how they’re used. Given a choice between spending another billion dollars on Social Security or the Drug Enforcement Agency, I’d much prefer the money be spent on Social Security.

    Obviously, our current federal government is far from the libertarian ideal, and there are many federal agencies I’d like to see reformed or abolished. But if you look at changes in federal economic policy since the 1970s, the trends have been almost entirely positive. A number of burdensome regulations were repealed, price controls were abandoned, and regulatory agencies have gotten better at incorporating market mechanisms.

    On tax policy, tax rates are a better measure of economic harm than revenue collected. If we can cut tax rates and still generate roughly the same amount of revenue, that’s a good thing. And I think that’s largely what has happened. The ridiculously confiscatory rates of midcentury have been replaced with rates that still produce plenty of revenue with a much smaller burden on the private sector. I’d like the rates to be lower still, but the fact that these new, lower rates continue to produce lots of revenue isn’t an argument against them.

  14. tom says:

    “On tax policy, tax rates are a better measure of economic harm than revenue collected. If we can cut tax rates and still generate roughly the same amount of revenue, that’s a good thing. And I think that’s largely what has happened. The ridiculously confiscatory rates of midcentury have been replaced with rates that still produce plenty of revenue with a much smaller burden on the private sector. I’d like the rates to be lower still, but the fact that these new, lower rates continue to produce lots of revenue isn’t an argument against them.”

    I would have to disagree that the overall rates are lower. The top marginal rates are clearly lower for the income tax but essentially every other tax has increased. The FICA tax rate has gone from 4% to over 13%- and that 9% increase covers a heck of a lot more individuals and a heck of a lot more gross income than the top marginal rate of the 1950s.

    “Thanks for commenting. A couple of thoughts. First, I’m increasingly skeptical of “size of government” as a metric for economic liberty. All government programs are funded by coercive taxation, so obviously in some sense a larger government restricts liberty more than a small one. But far more important than the number of dollars spent is how they’re used. Given a choice between spending another billion dollars on Social Security or the Drug Enforcement Agency, I’d much prefer the money be spent on Social Security.”

    I can agree with the sentiment, but I don’t agree with the analysis that fewer damaging programs are being funded. The DEA is as well funded as ever and the US is continually setting records for prison population and prisoners per capita.

    “Obviously, our current federal government is far from the libertarian ideal, and there are many federal agencies I’d like to see reformed or abolished. But if you look at changes in federal economic policy since the 1970s, the trends have been almost entirely positive. A number of burdensome regulations were repealed, price controls were abandoned, and regulatory agencies have gotten better at incorporating market mechanisms.”

    Regulating agencies are clearly failing/have failed in the banking, health care and education industries. As you said before, if size of government is no metric for freedom then the number of regulations is no metric. Many of the regulations that were repealed were done so for the good of large corporations, meanwhile the most difficult to maneuver regulation for small businesses- the tax code- has grown more complected and costly to adhere to. An asymmetrical deregulation is no deregulation, its a corporate handout (in these cases).

  15. Stella says:

    Maybe, but we’ve always been missing the free market at which libertarians prostrate themselves. Even under conservative rule.

    I claimed the libertarian ideology as my own around 5 years ago. That was before anyone but a precious few had heard of Bernie Madoff and before the “free” market went into the tank. When I soured on libertarianism, I considered the conservative ideology–I do fit the demographic. But for me, the conservative ideology just seemed foolish because of the way they made it so easy for crooks to take the hard working person’s money. To me, the answer is regulation–the right kind of regulation, not that sissy kind we had for banking in the past several years. And once you believe in regulation, you’re kind of not a libertarian anymore (or a conservative). At this point, I don’t really claim an ideology. I just keep track of issues I care about and vote accordingly.

    Also, we decided long ago (long before I was born, anyhow) that it is not in the best interests of our society to simply abandon those who cannot/will_not care for themselves. Whether you believe government does it out of the goodness of its heart or out of fear of class warfare does not matter. They do it because our society has decided it will be done. Again, this is not a libertarian idea, but it is something I have always supported even when I pretended to be one.

  16. Sol says:

    Sad how regularly the same dreary complaints come up, though a shout-out for ‘dictatorship of the proletariat’…now that’s refreshingly quaint and archaic. When has that ever worked? Last time I looked, a power mad maniac showed up lickety-split and took over, claiming to embody the voice of the proletariat.

    DeBoer seems to think that there is An Answer, that there is a System, an Ideology, a Something that will be reliably fair to the masses, tap the creativity and initiative of individualists, (re)distribute the goods justly, bring equality to diverse members of society, etc.

    Baloney, of course. Every system can, and probably will, be corrupted over time. Revolutions eat their own, we know, with a ferocious appetite. Was it really Mao, that maniac, who brilliantly reminded us of the need for a permanent revolution? That’s the right answer, in some form or another, regardless of the system that needs rehabbing or overturning.

    There is no Answer. We have to be ready to fight for everything, all the time. Again and again. There are no permanent victories. A bloody battle leads to a union, which is corrupted some time later. Workers not yet organized workers urgently need unions. Is there a system out there that will clean up corrupt unions and organize new ones? Or does it take men and women of character to do the hard work, regardless of the system?

    Maybe DeBoer has no idea how people really behave, how idealism never translates to the ‘hood the way the late night bull sessions say it would ‘if we were in power’.

    There are plenty of bad guys out there, for sure, but looking for a magic ideology will only make them happy because they know it diverts attention from the constant ripoffs they perpetrate. Liberals who organize to improve the schools, clean up the air, move the system closer to getting medical coverage for everyone, etc. are doing God’s work. Progressive ideologues who sit around calling them Libertarians aren’t pulling their weight.

    To change society for the better, give me a Liberal every time.

  17. TooManyJens says:

    “libertarians have had a pretty impressive winning streak in recent decades, especially on economic policy. Income tax rates are way down. Numerous industries have been deregulated. Most price controls have been abandoned. Competitive labor markets have steadily displaced top-down collective bargaining. Trade has been steadily liberalized.”

    Recent decades have also seen stagnant wages, a hugely disproportionate increase in the wealth and power of the wealthiest few percent of Americans, the mass exportation of jobs, the deterioration of our physical infrastructure, higher education costs spiraling wildly out of control relative to median income, and one of our two major political parties pretending climate change doesn’t exist and thwarting any effort to do anything about it.

    Do you think that any of this is related to the libertarian winning streak? If so, do you think there’s a problem with that?

  18. Kevin Carson says:

    There’s nothing unlibertarian about redistributing income from top to bottom, if it results in removing statist monopolies which benefit those at the top. Hell, implementing those “straight-up libertarian” policies would probably result in a downward income redistribution. Last I heard, incumbent landowners, IP owners and licensees tend to BE at the top.

  19. NonConformist says:

    Selfview is neither liberal nor libertarian, although I have voted for libertarians more than Dem’s. However, history methinks, states that Jimmy Carter (never voted for him) de-regulated more industries in his 4 years than Reagan (did vote for) in his 8 years. Carter deregulated Airlines (Major) and Telecom (the Bell breakup). Both of these deregulating actions have impact on our lives even today. Reagan broke the air traffic control union. Snoooozzzz. Why do Libertarians get credit for historical American deReg?

    Please explain how I am wrong.

  20. Chris says:

    “price controls were a standard tool of economic policymaking in the 1970s. No one seriously advocates bringing them back today”

    have you not heard of the healthcare reform?

  21. Evan L says:

    Fascinating article Tim, thank you. I think sometimes logic just comes out on top!

    Pete (and others), you should read Ronald Coase for an examination of why firms exist. As you point out, it comes down (according to Coase) to transaction costs. It just may be more efficient to have ‘central planning’ on the small-scale. But that was Hayek’s point – he wasn’t against central planning from an ideological perspective; he actually thought that planning was okay, but not on the large, economy-wide, scale. Any benefit from transaction costs from planning across the economy are greatly outweighed by the information required. Competition between centrally planned organisations will always be more efficent than central planning from a central agency.

    I am by no means a historical expert on the subject, but it seems as though labour unions were traditionally against both corporate and government monopolies – as a means of balancing the bargaining power. But surely these days, two or three big companies in a market are much better than one in diminishing corporate power – as they all compete for labour. I just wonder whether labour unions would naturally develop, as a necessity, in the modern day.

    And finally, isn’t NonConformist’s view exactly what Tim is arguing? A supposed left-leaning liberal channeling libertarian objectives?

  22. Consumatopia says:

    It’s odd that there isn’t more support for central planning in the last few years. Wall Street’s credibility has fallen, and Beijing’s has risen. In an innovation-centric economy with high fixed costs and low marginal costs, the market might not be as efficient as it used to be. I would love to see the government spend far more money on public goods like research and infrastructure.

  23. bmull says:

    Early 20th century-style liberals and early 20th century-style libertarians are going to agree on a lot, just not on how to go about achieving those ends. As I understand it a neoliberal is best defined as a market-oriented liberal. Some people really believe in neoliberalism. For others it’s just a practical concession to the way things are in our center-right Wall Street-dominated country. In any case there is still a hard left, even if it isn’t as strident and cohesive as it used to be. Libertarians have similar issues with corporate Republicans stealing their mantle, so maybe you should title your next post “The Return of Top-Down Libertarianism.”

  24. rootless_e says:

    Friedman, in fact, supported a general social welfare system with payments to all
    http://economistsview.typepad.com/economistsview/2006/11/milton_friedman_1.html

    The main problem with libertarianism, however, is that its advocates are ridiculously hypocritical. Both Hayek and Friedman got blood on their hands with their support of the “economic liberty” of Pinochet – an “economic liberty” which involved brutal torture. Economics is a great medium for justifying all sorts of horrors.

  25. rootless_e, I don’t think you know what you’re talking about.

  26. rootless_e says:

    Look it up

    Wikipedia.

    Hayek’s comments about Chile have drawn criticism from NYU historian Greg Grandin, who brings attention to a letter Hayek published in the London Times in which Hayek reported that he had ‘not been able to find a single person in much-maligned Chile who did not agree that personal freedom was much greater under Pinochet than it had been under Allende.’ “of course,” writes Grandin, “the thousands executed and tens of thousands tortured by Pinochet’s regime weren’t talking.”[43]

    Hayek’s interview in El Mercurio
    http://www.fahayek.org/index.php?option=com_content&task=view&id=121

    Well, I would say that, as long-term institutions, I am totally against dictatorships. But a dictatorship may be a necessary system for a transitional period. At times it is necessary for a country to have, for a time, some form or other of dictatorial power. As you will understand, it is possible for a dictator to govern in a liberal way. And it is also possible for a democracy to govern with a total lack of liberalism. Personally I prefer a liberal dictator to democratic government lacking liberalism. My personal impression ? and this is valid for South America – is that in Chile, for example, we will witness a transition from a dictatorial government to a liberal government. And during this transition it may be necessary to maintain certain dictatorial powers, not as something permanent, but as a temporary arrangement.

    Look up the Amnesty International reports on what was going on in Chile at the time.
    The most common physical tortures described in testimonies available to Amnesty International (some collected by an Amnesty International mission to Chile in 1982) were: beating; administration of electric shocks and burns on the head and sensitive parts of the body; rape and other sexual abuse of women; non-therapeutic use of drugs; sleep deprivation; use of a form of torture known as el teléfono, the telephone, consisting of blows with the palms of the hands on both ears simultaneously; la parrilla, the metal grill, consisting of electric shocks on the most sensitive parts of the victim’s body (usually the genitals, mouth, temples, toes, wrists) while he or she is tied to a metal bed frame; the pau de arara, parrot’s perch, in which the victim is trussed into a crouching position, with the arms hugging the legs, a pole being then passed through the narrow gap between the bent knees and the elbows, the ends resting on two trestles or desks – with the victhn in a position in which the head hangs downwards, electric current is then administered to sensitive parts of the body, and water squirted under high pressure into the mouth and nose until the victim is on the verge of suffocation; the submarino or bañera, in which the victim’s head is held under water almost to the point of suffocation.
    http://www.remember-chile.org.uk/inside/ai84eight.htm

    I guess the ends justify the means or something.

  27. I don’t know if I agree with Hayek’s view here, and I’m certainly against torture, but the passages you quote here don’t strike me as especially shocking. His specific prediction here clearly turned out to be correct: Chile transitioned relatively quickly from dictatorship to liberal democracy.

    Hayek doesn’t specifically address torture accusations in this passage. Does he address it elsewhere? Is there evidence that he knew about the extent of the torture when he made these statements? If not, I think it’s a pretty big stretch to say he has “blood on his hands” for failing to condemn crimes he may or may not have known about. Is everyone who says something positive about health care in Cuba or transportation policy in China responsible for the crimes of those regimes?

  28. TGGP says:

    John Quiggin on Hayek vs Friedman on Pinochet’s Chile.

    I’m also disturbed by the greater revenues of government enabling it to lock up more people, spawn narco-wars in latin america and the “global war on terror” elsewhere. I’m no fan of redistribution, but I completely agree on the importance of what the government does with its stolen money. That’s precisely why I’m not that bothered by corporate power: they are more interested in merely redistributing to themselves than destroying things (and generally don’t have the legal authority or practical ability to do nearly as much of the latter as governments). Carson has used the analogy of the bagman and the gunman, and its the gunman that is the source of my worries. I don’t really have an issue with private-sector labor unions, but I see no rationale for them in the public sector.

  29. AH says:

    “Though I think there is still a pretty serious divide / language barrier between libertarians and liberals despite this convergance.”

    I think a big part of this problem is economics, libertarians tend to be Austrians, while liberals are Keynesians. Speaking as a liberal Keynesian I really have nothing constructive to say to someone in the Austrian tradition beyond, “you’re wrong”. It’s impossible to have a policy debate when the priors are so different.

    I can talk with Friedmanites though, since Monetarism came from the Keynesian tradition.

  30. rootless_e says:

    Chile transitioned relatively quickly from dictatorship to liberal democracy.

    So did Nazi Germany. It’s not a particularly subtle situation. Hayek was giving an interview to the official state newspaper of a military dictatorship that had just murdered the elected President and was busily putting anyone who disagreed into torture chambers and mass graves. If you give an interview to the official newspaper of a torture based dictatorship, as it rounds up tens of thousands of people to inflict torture and murder on them, and you say you approve, then you are a scumball torture apologist: “However, when I refer to this dictatorial power, I am talking of a transitional period, solely. As a means of establishing a stable democracy and liberty, clean of impurities. ”

    Disgusting. Those “impurities” were real human beings who were raped, shocked, drowned, and dumped in lime filled mass graves. All that talk about individual liberty and an enthusiastic round of applause for the secret police to let us know what he really meant. Too bad for the “impurities” and their families, but we have an ice-pick, a power cord, and a collection of uniformed sadists ready to protect them from socialism.

  31. Again, I’m not defending his comments. But Hayek’s failure to condemn torture he may or may not have known about doesn’t make him complicit in it.

  32. les says:

    I guess TooManyJens slipped by; if you’re going to claim libertarian policy victories over the last few decades, it seems to me you get at least partial ownership of the current economic/social fiasco. Or are eight years of economic boom with zero job growth, decades of wage stagnation, the disappearance of the middle class and the greatest income/wealth disparities since the twenties, an anemic and jobless “recovery” from the biggest economic recession in 70 years–due in no small part to your beloved deregulation–are these the desired outcome of libertarian policy?

  33. les, I think the economic record of the US in the period 1980-2010 compares favorably both to earlier periods in US history and to the economic records of other advanced economies. The last decade hasn’t been great, but it was preceded by two decades of broad-based economic growth. For example, the corporatist policies of the previous decades performed relatively well in the 50s and 60s, but did extremely poorly in the 1970s.

  34. Wonks Anonymous says:

    Monetarism is rooted in the “classical” tradition that Keynes mocked, though modern “New Keynesians” have essentially returned to it. Austrian economics was in something of a different world from the Anglo-American stream (arguing with the German Historical School). It crossed over thanks to Hitler and wound up being embraced by elements of the “Old Right” reacting against the New Deal.

  35. les says:

    Well, Timothy, I guess it depends on your notion of “broad based.” The libertarian-beloved decline in top income tax brackets, including ludicrous rates on capital gain, dividends and carried interests, has made income taxes markedly less progressive; combined with state and local increased reliance on sales taxes, there’s been a major shift in funding government to the middle and working class. The 80′s, 90′s and 00′s show worse job creation than any decade in the 40′s through 60′s. Incomes, non-farm payrolls and GDP growth in that period are all the worst since the 40′s. And, as I noted, wealth and income disparity is the worst since the 20′s. Congratulations.

  36. Pete says:

    Evan L –

    I know the theory – “lumps of butter in a bucket of milk” and all that – and it’s fine as far as it goes. But there are clearly other reasons for firms to want to get big, the most worrying being that it gives you political influence. That’s true both in terms of direct lobbying, and in more subtle ways – if GM is losing jobs or business – that’s a bigger political concern than the equivalent loss from small businesses.

    I think you’re right about competition and voluntary association being a better regulator than a huge, monolithic labour movement and a regulatory government. But I think the logical end of that is that size should be a concern in business as well. I’d be interested to see what anyone on this blog thinks of Kevin Carson’s stuff. He’s about as far down this road as it’s sensible to go, but often pretty compelling:
    http://c4ss.org/content/5879

  37. Consumatopia says:

    For libertarians, the optimistic take on the last couple years is that people are losing faith in central planning.

    The pessimistic take is that people are losing faith in democracy. They have no faith in legislators so they want the domestic discretionary budget shrunk. But they have complete faith in the military and intelligence agencies, they not only want to increase their budget, they want to remove what little judicial and legal safeguards we have left against misuse of their power. They’re sick of words, they want action.

  38. Steve B. says:

    Hi Tim,
    We met awhile back in STL at SMI, I was an intern under your tutelage–glad to see you’re doing well.

    This is quite an interested blog you’ve got here, this post in particular. I’d like to agree with your general points whole-heartedly, but I have a different perspective on recent history. While I share the goals of traditional Liberalism as I understand it (economic and civil liberties buttressed by a significant social safety net), I generally find traditional Libertarian mechanisms (namely markets, regulated by said government when necessary to maintain my Liberal objectives) to be the most plausible way to achieve those ends. Unfortantely, in my reading of recent history, Libertarian ideas have been…distorted by politicos (including supposedly neutral academic economists) as a tool to divide the populace in service of implicit Corporatism (I really really really want to call it Fascism, but will keep this polite). Both sides of the political isle do this to some degree, but of course its mostly from the Right (libertarian socialism, to me, is nowhere to be found in public discourse beyond the occasional Noam Chomsky appearance on Democracy Now). Republicans do this by preaching the fantasy of the “small business man” self-determined, self-reliant, and destined for success if only the Evil Government would stay out of the way. To me this is a complete fiction–the real enemy of free markets and the “small business man” is actually entrenched large business interests who, now more than ever, outright buy politicians to further their protectionist racket. Unfortunately their is no easier way to snowblind the American voter than to patronize his unrelenting narcissism through the quaint and completely fictional American Exceptionalism. The outcome is as Les describes above–a creeping monopolization of economic and political power by a very tiny minority of Americans who seem increasingly disinterested in (I would say openly hostile towards) the long-term viability of our country and its citizens…particularly the middle and lower classes.

    So…while I’d like to embrace the Libertarian victories you describe, I find it extremely difficult because of the way they’ve been deployed to undermine the values to which I am ultimately loyal.

    A lovely weekend to all,
    SB

  39. rootless_e says:

    Again, I’m not defending his comments. But Hayek’s failure to condemn torture he may or may not have known about doesn’t make him complicit in it.

    And that’s why I could never respect Libertarianism: to consider a high marginal tax rate unspeakable despotism while finding excuses for torture apologists who might not have known what was on the front page of the NYT is just not a road I want to travel down.

  40. Tim Lee says:

    finding excuses for torture apologists who might not have known what was on the front page of the NYT

    Again, failing to mentioning torture doesn’t make you a “torture apologist.”

  41. sam says:

    “Numerous industries have been deregulated. ”

    Color me cynical, but, uh, how’s that working out for the airlines and, more importantly, for the air traveler?

  42. rootless_e says:

    That’s the problem with Libertarians in a nutshell: Hayek visited Chile during a period in which there was worldwide condemnation of the military coup, torture, secret police, and wholesale murder of dissidents, and he told the official media that dictatorships are sometimes necessary to cleanse “impurities” and you want to pretend there is some doubt about his complicity.

    Goodbye.

  43. Tim Lee says:

    Hello rootless_e,

    I’d like to take back one thing I said previously. You clearly do know a fair amount about this–probably more than I do. The events we’re arguing about took place before I was born, and I’m not an expert on the history of Chile. So, for example, I didn’t know that El Mercurio was “official media.” And I don’t really know how to evaluate claims like this:

    Hayek visited Chile during a period in which there was worldwide condemnation of the military coup, torture, secret police, and wholesale murder of dissidents, and he told the official media that dictatorships are sometimes necessary to cleanse “impurities” and you want to pretend there is some doubt about his complicity.

    I have no idea what Hayek knew or believed about these accusations of torture, nor do I know how much evidence was available to him at the time. Maybe the details we now know about the regime hadn’t been widely covered in the English-language press. Maybe he wasn’t following the news carefully. Maybe members of the regime told him that these charges were false or exaggerated and he believed them. Intellectuals aren’t always the most astute judges of human character.

    If the situation is as you describe it, then I agree that it was at a minimum a lapse of judgment to give an interview like that without specifically condemning human rights violations. But complicity is a serious charge, and it’s distinct from (and much more serious than) ignorance or naivete. You’ve offered no specific evidence that he endorsed, or even knew about, the human rights abuses of the Pinochet regime. That doesn’t make his actions defensible, but I still think complicity is too strong a charge.

    By the way, my understanding is that the rap against Friedman is even weaker: that he took a single trip to Chile in which he gave lectures on economic policy and had one brief meeting with Pinochet. If there’s additional evidence of Friedman’s complicity, I’d be interested to see it, but what’s on Wikipedia is pretty weak sauce.

  44. Tim Lee says:

    Just to make this a little more concrete: Thomas Friedman periodically writes columns lauding the Chinese political system for its decisiveness and efficiency. He typically glosses over the fact that they’re able to achieve such decisive decision-making only by brutally suppressing internal dissent. I think these columns are both wrong on the merits and morally appalling. But I don’t think he’s complicit in the human rights abuses of the Chinese government. And I certainly don’t think his callous attitude toward human rights in China is a good reason to reject Friedman’s views on energy or trade policy. By the same token, even assuming the worst case—that Hayek actually supported the use of torture to accomplish his economic policy objectives—that’s not a basis for objecting to the pursuit of those same objectives through liberal democratic means.

  45. Stephan says:

    >“neoliberalism”: a left-of-center ideology whose egalitarianism is balanced by a healthy skepticism of concentrated power.

    Left of center ideology? Egalitarianism? No concentrated power? When exactly did you stop reading newspapers? Must be around the 80s? Or perhaps you confined your reading to the op-eds in the Wall Street Journal?

  46. Tom Sydnor says:

    Tim, you are quite wrong when you say that “there’s only one item on the list (“more redistribution of money from the top to the bottom”) that Milton Friedman would have strongly opposed.” As I have noted many times, Milton Friedman, being smarter than certain young bloggers, realized that copyrights and patents are both analogous to most other forms of private property rights, and indispensible if we want to use market forces to encourage the creation of innovation and expressive works. Friedman would thus object most strongly to Matty Y’s Schumpeter-was-wrong claim that we need to reduce the “rents” (aka “profits”) that creators and innovators can earn by producing socially valuable reasources like expression and innovation more effectively than their competitors. Punishing the exceptional to compensate for their otherwise ust-so-unfair propensity to succeed may be as “egalitarian” as Matty Y suggests, but it is neither libertarian nor even rational. Cheers. –Tom Sydnor

  47. Pete says:

    @ Tom Sydnor

    This is presumably not the same Milton Friedman who said that “trivial patents, or patents that would be of dubious legality if contested in court, are often used as a device for maintaining private collusive arrangements that would otherwise be more difficult or impossible to maintain” on page 127 of Capitalism and Freedom.

    And who said on the next page that patent lengths should probably be shorter.

    Because that guy sounds like a man who’s looking for a reduction in the rents associated with privileged intellectual property owners.

  48. What Pete said. Also, I must have imagined Friedman signing an amicus brief in Eldred arguing that copyright terms were too long.

  49. Libby says:

    Hi Tim,
    I’m not so sure that liberals have embraced libertarian ideas; it seems more likely to me that they’ve become more economically literate. To me, that’s not a bad thing, but the difference remains in the end goal of the two groups. Liberals still fight for equality, libertarians for freedom.

  50. Tim Lee says:

    Libby, I think the categories you’re using here “economically literate,” “equality,” “liberty” aren’t as sharp as you think. Liberals have become more sympathetic to the kind of economic arguments Milton Friedman tended to make, as opposed to the kind of arguments that Paul Samuelson preferred. As a libertarian, I think Friedman is usually right, but it’s not like liberal intellectuals circa 1960 were unfamiliar with free-market critiques of their policies–they just found them less persuasive than they do today.

    On equality and freedom: I would argue (following Will Wilkinson) that liberals and libertarians are each committed to both freedom and equality, we just think about the concepts in different ways. Liberals are more focused on equality of access to material resources, whereas libertarians are more focused on equality of political power and equality before the law. Likewise, the libertarian conception of freedom is almost entirely about protecting people against coercion by the state, whereas liberals believe that economic relationships between private actors can be coercive. As a libertarian, I prefer the libertarian conception of freedom, but the liberal conception is just as coherent and they believe in theirs just as strongly as we do in ours.

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