Will Wilkinson Tells Me I Am a Friedmanite

He is largely--but not completely--correct:

Will Wilkinson / The Fly Bottle » Blog Archive » Liberaltarianism: Back the Future: Here are the sort of political/economic thinkers whose substantive views I find most congenial: Friedrich Hayek, Milton Friedman, James M. Buchanan. If I tell most highly-educated people that these are the thinkers whose views of desirable institutions are most like mine, they might infer that I am some kind of rabid libertarian ideologue. But when I actually defend something like the arguments for an economic safety net each of these giants of libertarian thought actually set forth, lots of libertarians accuse me of not really being libertarian at all. And many liberals act surprised, as if I’m being saucily iconoclastic by wandering so far off the reservation. I can tell them that Hayek was actually in favor of a guaranteed minimum income and that Friedman basically invented the idea behind the EITC, but they’ll still think I’m some kind of congenial squish. But what I am is a market liberal just like Hayek, Friedman, and Buchanan — the same intellectual role models who make me a rabid libertarian ideologue. So, which is it?

Frankly, “liberaltarianism” and “progressive fusionism” don’t really amount to much beyond what Hayek, Friedman, and Buchanan thought anyway. So the fusionism here isn’t really a fusion of anything. It’s just seeing our way back to a pre-existing economically literate political liberalism.

Here’s my conjecture about why this now looks more like an attractive position than it might have a few years back.

The 20th century libertarian-conservative alliance was based on anti-communism/socialism. The reasonable, sophisticated consequentialist pragmatism of the great 20th century market liberals seemed an insufficient bulwark against the slippery slope from the liberal, capitalist welfare state to full-on illiberal, totalitarian socialism. (Indeed, Hayek himself made the slippery slope argument powerfully, though unsoundly.) So there was a good deal of motivation for radical anti-socialists to coordinate around strongly categorical prohibitions against state coercion.

Misean economics, disinfected of the open-minded empirical consequentialism of Mises’ Liberalism, and filtered through Ayn Rand and Murray Rothbard’s peculiar views of rights and coercion delivers a powerfully moralized brief for capitalism that calls into question even taxation for the purpose of financing genuine public goods. That Rothbardians and Randians have wasted so much time fighting with each other on the question of the minimal state versus anarcho-capitalism obscures their unity on a rights-based bulwark against the slide from the welfare state to socialism. Sadly, “libertarianism” has become identified rather strongly with this ideology — an ideology some of the thinkers most strongly identified with libertarianism, like Hayek and Friedman, never shared.

The death of socialism as a viable competitor to the liberal-capitalist welfare state makes continued slippery-slope-to-socialism thinking look densely anachronistic. Other liberal welfare states, like the UK, Sweden, Denmark, Australia, New Zealand, etc., have moved in a rather more market-liberal direction, becoming rather less of a soft-socialist middle-ground between the American model and full-on economic socialism. The question these days is whether the U.S. will have the good sense to adopt more rational market-based old-age pension policies, like Sweden or Australia, or lower corporate tax rates to a level more in line with the rest of the wealthy world. Slightly higher personal tax rates and slightly more redistribution is a possibility, but a slide into socialism just isn’t on the table. In this context, the negative income tax looks much less like a dangerous concession to the world-historical forces of evil.

Meanwhile, with the obsolescence of the anti-communist alliance with conservatives, many libertarians have sloughed off much of their previously tactically useful sympathy for socially conservative initiatives. Freed to be full-on social liberals, many libertarians are left sensing a much deeper cultural affinity for the left than the right. And this leads naturally to seeing more clearly their ideological affinities with welfare liberals. And then you read thinkers like Hayek, Friedman, and Buchanan, and you think: Oh, yes. This is extremely sensible. And now that the welfare-liberal elite has become rather more economically literate and is no longer sighing over five year plans, there is no reason to think they cannot find this sensible, too.

So that’s where I’m at. An old-fashioned market liberal who thinks Hayek, Friedman, and Buchanan get it right, and who thinks Rawlsian welfare liberals should be able to recognize themselves in these thinkers.

Comments

[Matt]

Well, that argument should put the progressive wing of the Democratic Party out to pasture.

[Neil B.]

Brad, you should reconsider. This writer, like most libertarians, wrongly thinks that the existing economy, money economy, and property rights claims are a priori "natural" and that only over government interference is real interference. But that is demonstrably false. Just consider how would we get property claims "off the ground", how few contemporary claims represent a true succession of pass-down from an original land-use enabler etc. How did so and so get the claim to all the minerals under a plot of land? Property claims were hashed out, usually (an irony that libertarians love to avoid) with the force of government deciding who got what, long ago by now dead people just like the claimed powers of governments and the public at large, what's the difference? Also look at the money supply, sustained by public agreement, and increased as fiat by monetization of debt. The latter is a political decision about who should get "new money", it is not a true market like people exchanging goods for a hard currency. Additionally, the Federal Reserve manipulates money supply by actions that often put many out of work (often deliberately), which is not an outcome of "private choices" and is like flooding homes etc. for a dam. Employees thus deserve an unemployment safety net for this reason alone.

Then there's the special privilege of legal personhood and limited liability granted to corporations, the public has every right to "charge" a price for granting that since it is not (pace the phony SCOTUS decision that is actually based on misrepresentation of the judgment anyway) a natural right. Also, those acquiring gains could not have, could not even talk or use numbers, without the "intellectual property" of all prior civilization." The public thus has the right to demand quid pro quo for the general welfare for such a gift.

I could go on, but one thing you can be sure of: although articles in Wikipedia about libertarianism, anarcho-capitalism etc, will reveal these sorts of little caveats, public expressions by libertarians carefully and fallaciously spin the point to make it seem like there's no quid pro quo, no unnaturalness in the "private" economy to justify compensatory government "interference", to produce quite rightly the classic modern liberal state with its safety-nets

tyrannogenius

[jerry]

Neil, I found that a really enlightening rebuttal. Thank you.

[Q the Enchanter]

Neil B., your points are all interesting, but I don't think you've said much that Wilkinson would disagree with. E.g., he supports the idea of a social safety net. He's not very sympathetic to "natural rights," either.

Brad, do you think WW's historical account here of the material reasons for the obsessive resistance to the moral liberal-ish strains of thought in Hayek, et al., is true?

[Q the Enchanter]

Good grief: that's "more liberal-ish" (not "moral liberal-ish").

[Denis Drew]

Just as with most "progressive" economic thinkers, most libertarian thinkers can get through a "comprehensive" discussion about the different ways of running an economy without once mentioning the word "UNION!".

Many are called and few are chosen/most people are just out for their own good. If a discussion does not contain elements of how we are to keep some of us from getting at the throats of the rest of us it must discuss the state of labor unionization: the all important checks and balances part of the discussion.

The discussion above says to me that Europe has got the union part mostly right (sector-wide bargaining) but some other things wrong -- and -- that America may have got many other things right but has still gotten the union thing mostly wrong.

[Denis Drew]

Hayek’s criticism of central planning that “vital information about an economy is inherently local” and that central planners are too distant to be able to access that information in any nearly useful way can be flip-flopped on “dispersed planners” which is what we may fairly call the Hayeks and Milton Friedmans of the world.

Unfettered local economic actors (those countless hidden hands) are too far distant from the sight of the urgent central needs of society to leave the accomplishment of such goals to their shortsighted hands. Trusting the unfettered free market automatically to bring about the best overall (central?) social outcomes amounts magical thinking [*].

Neither local actors nor central planners know enough about each other’s milieu to act efficiently on each other’s behalf, so, we must choose a practical balance to get the best of both worlds – in a word “compromise” between giving all power to one or the other. [This is a very general first thought on the subject – perhaps much more general than I suspect – it may take a couple of weeks to a couple of years to flesh it all out – still sounds to me like a classic answer to “dispersed planners” enthusiasts.]

From recent reading [Skousen] on how Keynes pointed out what classical economists missed (fiscal expansion is better than contraction in a recession) and how Friedman figured out what Keynes missed (monetary expansion works even better) I have come to see, what seems to the amateur, as the too tentative nature of big economic theorizing. Leading to the notion that where to come down should always and only be decided by what experience discovers works in the everyday world – theory corrected by experiment just like any other science – the need for correction doesn’t seem to worry generations of economists enough for my money. Another way to say the same thing might be to see these elaborate models which economists work up as mere education with which they should attempt to identify what is going on when they visit the real world.

The motto of policy makers should be the same as doctors' (another group that has to come up with answers in real time; not in a hundred years when the perfect answer finally arrives): First, do no harm. IOW, if you haven’t enough (experimental?) practical success with some procedure, limit yourself to recommendations at most. For example, the IMF has no business forcing the Philippines into becoming a net importer of rice. There is no reason to believe that the IMF – unlike the rest of humanity and history – is just chock full of folks who are able enough to run countries; can just hire them off the street and drop them off anywhere needed – that’s the level of presumption that forcing their ideology down others’ throats amounts to.

[* ...and is a pretty reliable tip off that such goals do not press anxiously upon the temples of said unfettered free marketeers. More precisely such social needs anxieties are not originating from within their midbrains, A.K.A., limbic systems, A.K.A., the literally pea sized seat of human emotions -- for their forebrains to deal with.

[Just as carbon monoxide makes you too dumb to realize how dumb carbon monoxide is making you – why you do not go back into a fire to rescue your HDTV – our midbrains can make the smartest of us high-IQ wise too dumb to realize how dumb our (lacking?) motivations are.]

[Bruce Webb]

I think much of Friedman's thought comes clear when you understand that he defined 'liberty' and 'freedom' as 'freedom for capital and hence capitalists'. The economic right has no problem at all with the concept of redistribution, as long as that redistribution is from worker to worker. Hence their support of the EITC while arguing against minimum wage while simultaneously pushing for zero corporate income tax, minimal to zero tax on dividends or gains on capital, and elimination of the estate tax. I don't think most of them have any deep commitment to small government or individual liberties per se, they just don't think that they should have to pay for any of it out of capital.

For example many of these same people would replace Social Security with a system of coerced savings. From the standpoint of the worker there is not much of a distinction between a government promise to pay benefits and a government controlled PRA on the LMS model. But those PRAs have two advantages from the Friedman perspective. One, they are a nice source of tappable capital. Two the programs are designed to remove any obligation for capital to bail out the system if and when. Seen in this way privatization is just another means of tax avoidance on capital.

You can really explain a lot by understanding that Friedmanites come at just about everything on the basis of 'tax for thee (worker), not for me (capitalist)'

[Student]

Neil, on the property rights issue I recomend Jan Narveson's "The Libertarian Idea" and on your point of the current state of property rights and how we might connect them with those of the people who had true previous claims Rothbard's "The Ethics of Liberty" is pretty good. The rest of your post, as far as it relates to "governments did it originally" or "governments give priviledge x to y", doesn't really apply to the anarcho-capitalist version of libertarianism so there is no need for a response. On intellectual property, to save you reading time, "The Ethics of Liberty" has a decent treatment of it.

Of course, for all this an open mind is a necessary prerequisite...

[William Smith]

Prof DeLong,
The best way to summarize the economic position of many liberal economists is to say "The Market Works*" but to put a strong emphasis on the asterisks, because, while markets work, they don't work easily, by default or the in total absence of government. The assumptions that go into markets working are numerous and, at times, dubious to say the least. On economists and government intervention, tt's a matter of degree, caution, reliance on reality-over-theory, and willingness to experiment that should be used to distinguish between them.

[Joe V.]

Wilkinson and his ilk (the Ilkinsons?) are asking to be admitted to the better clubs and restaurants despite their long dalliance with the Barbarians who, with the Ilkinsons' support, have lately ravaged the city and its countryside. In recent years the Ilkinsons have come to see the Barbarians as less dashing and glamorous than they had once thought, and far more destructive than they had believed they would be. Their hope now is that, if they can minimize these embarrassing connections they've formed, the citizens who have suffered losses- in which Ilkinsonian folly played some part- will not only readmit them to the city's polite society, but will allow them to save face.

To this end they say that, after all, we do have much in common, and (not that they're going to press the point-- merely bring it up) some other members of polite society have in the past dallied with other Barbarians- and foreign Barbarians, at that- and yet are now accepted, even in the faculty lounges of the city's great Universities.

Well, they do have a point, I suppose. And I suppose their company can't be all that bad. They might even be useful allies in some situations. I say let them in, on a trial basis. But I think we should draw the line at admitting the bastard offspring they begot on Barbarian women: Absolutely no television pundolts should be allowed inside the city gates!

[David Lloyd-Jones]

One of the most interesting things about Sidelsky's biography of Keynes is the correspondence he reproduces between Keynes and Hayek at the time Hayek had escaped from the fascists and was teaching at the London School of Economics.

Long story short: liberalism is not the stoo-pid thing the American right makes it out to be.