Liberaltarianism and mutual improvement

by James K

In my last post I made something of a throwaway comment that liberal and libertarians had a lot to learn from each other.  Herb asked, quite reasonably, for details.  I gave him a quick comment at the time, but since I’m the guy who’s always going around saying that specifics are important, I thought I’d go into more detail about how I think liberalism can improve libertarianism, and vice versa.  I also want to show how my training as an economist affects my political philosophy.

First, in the interest of cross-ideological comity, I’ll by start with what I think libertarians can learn from liberals:

1) The Environment.  This shouldn’t be a tough sell for libertarians, but for historical reasons we seem to be on the wrong side of this as a group.  If you are releasing pollutants into the air, or into open waterways, you are harming other people by exposing them to unpleasant, and in some cases dangerous, substances.  It may not fall precisely within the Theft-Force-Fraud triangle, but you are imposing some harm on others and libertarian theory generally holds that this is a legitimate reason to permit government action.  Some libertarians are OK with environmental protection mediated through the courts, but I don’t see why the courts should be considered an ideal libertarian mechanism.  Sure it’s traditional, but we’re not conservatives.  We allow for government in other areas where private coordination would be difficult or impossible (armies, law enforcement), so why not here?  That’s not to say a libertarian needs to like any possible response to environmental problems, but I think opposition to any form of government environmental protection is misguided.  And there are a lot of market-based approaches to environmental problems.  Pigouvian taxes (such as carbon taxation) use market mechanisms to spread the cost of pollution abatement in the most efficient manner.  And tradeable permits for fishing are a much superior option to prevent overfishing than the methods used by most governments.  But it’ll be hard to convince people to take us seriously when we sound like we don’t care if people are harmed by pollution, just so long as we’re not inconvenienced.  I mean, people already think of us as raging narcissists, how about we fight the stereotype a bit?

2) Consumer Protection.  Libertarians often object t food safety rules, but once again I don’t think basic rules for food safety are in opposition to libertarian thought.  In this case, I think the key here is the Fraud part of the Theft-Force-Fraud triangle.  Fraud is in essence, profiting by claiming something is x, when it in fact lacks the necessary conditions to be x.  In the common law, it was the everyday common understanding of x that was used to define whether a claim was fraudulent.  I contend that a minimum standard of fitness for human consumption is part of the common understanding of the word “food” (unless you’re specifically talking about animal feed, but that’s a separate issue), and therefore someone who is selling food unfit for human consumption is committing fraud.  And stopping fraud is something libertarians generally agree is a proper role for government.  This can be generalised to other products as well – selling homeopathy as medicine requires either fraudulent intent, or at least the sort of epistemological carelessness that suggests negligence.  I don’t see anything wrong with the government taking an interest in that sort of misleading conduct (and I should be clear that I’m not using misleading to mean deliberate deceit necessarily).  As with the environment, not every piece of consumer protection legislation is going to be acceptable, but some kind of performance-based safety standards, or at least labelling requirements would seem to be entirely appropriate.  Information asymmetry is a real market failure, and there is nothing wrong with admitting it.

3) Welfare, I touched on in my previous post.  Now I don’t expect other libertarians to agree with my mostly-untroubled stance on welfare, but I will make a couple of suggestions.  First, perhaps some prioritisation is in order.  Welfare has efficiency-reducing effects, but it is mostly a transfer, especially at the level the US practices it.  Equally, welfare doesn’t change the size of government over-much, since the money comes in and then goes right back out.  The warfare state is much more problematic – it expands a wholly government-run industry and it’s outputs are mostly destructive.  The “War on Drugs” is equally wasteful and liberty-destroying.  Now I know libertarians object to both these policies, I’m just saying they’re more fertile targets for libertarian hostility than welfare is.  Secondly, persuading people to get rid of welfare will be easier if you have a well-realised plan to replace it.  There is no mechanism by which private charity will automatically rise to cover for welfare (there are no market forces for charity), so if you want to convince people that removing welfare won’t kill a bunch of folks, some kind of transition strategy might be in order.

Having given a little to my liberal brethren (and sisteren), I’d like to advocate for some of the things libertarians have to offer liberals:

A) Free Trade.  A lot of ink has been spilled on the evils of open trade between nations, and as a trade economist I can tell you pretty much none of it is true.  Free trade will not generate mass unemployment – New Zealand is nearly at the point of free trade and before the recession our unemployment rate was 3.5%.  Even the extent to which trade can suppress wages is very greatly exaggerated.  In practice, if you liberalise trade over a large number of goods the people most likely to lose out are those who own expensive machinery that is difficult to put to new uses.  Some people (those who will find it hard to get new jobs) will lose out, but the way to deal with them is transitional assistance, not trying to freeze the prevailing economic order in place perpetually.  Traditionally liberals have opposed free trade because of unions, but I would point out that unions are a means to an end, not an end in themselves.  By protesting the importation of products from 3rd world countries western unions are effectively trying to enrich people in the 90th income percentile worldwide at the expense of people in the 30th percentile.  There are many names for this, but egalitarian is not one of them.  The original protectionists  were the mercantilists – Adam Smith’s arch nemesis.  They wanted to restrict trade because it would make it easier to engage in colonial oppression and imperial expansion.  They wanted to suppress consumption by the working classes to make it easier to build armies.  That should be enough to give a liberal pause.

B) The “War on Drugs”.  I know liberals don’t like this either, but what I’m asking for is a little prioritisation here.  It speaks ill of the Democratic party that their presidential candidate can respond to questions about removing the federal prohibition on marijuana by laughing it off.  The Republicans have more prominent anti-prohibitionists than the Democrats do right now, that should worry you.

C) Welfare.  Yes, liberals can learn from libertarians on welfare, or at least from one libertarian.  Many moons ago Milton Freidman proposed a welfare system that is markedly superior to any that currently exists.  By combining a flat income tax with a fixed refundable deduction for everyone (the deduction should be large enough to live on) you get a welfare system that is entirely mediated through the tax system.  Don’t have a job?  You can fall back on you deduction.  Want to retire?  Use the deduction, if you want more you’ll have to save for it.  Can’t get a decent job?  The deduction will do most of what you need, and whatever work you can get will supplement that payment.  You won’t have to choose between work and welfare, so everyone has an incentive to get work if they can, without being punished if they can’t.  You can also make the tax system simple enough to fit the tax return on a postcard, while allowing for the full range of redistribution.  You also won’t have the high marginal tax problems that conventional welfare can have.

There’s more that I could say, but I think I’ll leave it at 3 points on each side, and I can consider other subjects in future posts, when the circumstances warrant it.  But I hope this gives a flavour of the potential for a liberaltarian synthesis.

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