A Politics Born to be Subsidized?
From Michael Lind’s NYT Book Review piece on Thomas Frank’s new book, The Wrecking Crew:
Frank’s analysis of why there are so many libertarian think tanks in a country with so few libertarians is dead on: “The reason that we have so many well-funded libertarians in America these days is not because libertarianism suddenly acquired an enormous grass-roots following, but because it appeals to those who are able to fund ideas. … Libertarianism is a politics born to be subsidized.”
Now, I’ll admit up front to not having read Frank’s new book, so feel free to disqualify everything I’m about to say. But it seems to me that Frank’s analysis of libertarian think tanks is crafty, clever, and not at all accurate.
Let’s start by recognizing a couple of things:
1) Many former Republican staffers are now lobbyists for corporate interests, and they trade on their knowledge of how Washington operates and their personal connections within government in order to secure favors for their clients.
2) Many free-market think tanks are funded in some part by corporations. Often, though not always, these corporations have a direct financial interest in some issue which the think tanks in question work on.
3) Most free-market think tanks tend to be more associated, at least by others, with the GOP than with the Democratic party. Some of these think tanks court the association; others try to avoid it.
Frank does a nifty job of conflating these facts. But I still don’t buy his effort to stuff libertarianism into his complaints about GOP mismanagement and corporate favor-trading. As I’ve pointed out before, none of the above means that libertarianism, or most of its professional advocates, partakes in or encourages the lobbyist-driven favor state. That free-marketers often work with, or try to work with, Republican politicians is a function of that fact that Republicans tend to be more favorable — at least rhetorically — to free market ideas. It doesn’t make those think tanks complicit in the handouts that are so often part of the legislative process. And there’s a difference between a staffer-turned-corporate lobbyist pushing for favorable regulation that, say, sets up some sort of market barrier for its competitors and a libertarian think tank accepting corporate support to do what it would do anyway: arguing that the government should, in general, tax and regulate less. Nor does the existence of non-profit advocacy groups, of any ideological variety, undermine or dilute free-market ideas; I doubt you’ll find a single libertarian who’d disagree with the notion that individuals and corporations should be free to donate their money to whatever causes, ideas, and institutions they approve of.
It’s also worth pointing out, I think, that the favor-state Frank seems to despise thrives best under the larger, more intrusive government he favors. As a friend pointed out to me, “Frank’s regulated economy appeals to those who are able to hire lobbyists.” In other words, because of the complexity and political considerations of the regulatory process, those who can afford to hire expensive lobbyists to bend it in their favor are most likely to support it. I’d be surprised, for example, if Frank didn’t support some sort of fairly strong action to address global warming; yet as Jim Manzi has pointed out, climate-change policy is rife with opportunity for corporate gaming (indeed, a lot of major corporations are already spending massive amounts trying to pass climate legislation they believe is in their favor). If Frank is really worried about the corporate-lobbying behemoth in Washington, it seems to me he ought to address the root of the problem: the government’s willingness to set up elaborate bureaucratic systems. The more power the government wields, the more influence rich corporations and individuals will seek over how that power gets used. Lobbyists and the selling of connections and influence are merely inevitable symptoms of a powerful regulatory structure.
I haven’t read Frank’s book either, so I am not defending his argument necessarily. But I always find the libertarian’s response to proposed government regulation off base for two reasons: 1. The idea that government is always and everywhere inefficient and corrupt and 2. That government is the only source of oppression and suffering.
When anyone proposes a regulation to address a problem caused by corporations and/or business practices. The libertarian responds with one or several of the following arguments:
1. Problem X is not really a problem.
2. Government is way more inefficient than the free market. The free market will address the problem X better.
3. Even if problem X is a problem, the legislative process is prone to corruption by special interests. Consequently, even if you could theoretically craft legislation, in practice you could never enact a law that would address problem X.
4. Government Power = Bad
5. Other Power = What other power?
I could in theory see this argument being made in some instances. But libertarians’ don’t make this argument on a case-by-case basis, that’s their response to almost every piece of legislation that would propose to constrain and/or direct the behavior of our economy. In fact, I can’t think of one issue in which libertarians, broadly speaking, have ever been in favor of government regulation, though I could be mistaken.
Reasons 1-3 completely dismiss any concept of good governance i.e. that the government can do anything correctly. Mathew Yglesias addressed this point when responding to someone who complained about the idea of government run health care.
“But look — the government already runs a fleet of air craft carriers. Worse! The government’s taken over our national monetary policy — mistakes can plunge the country into recession or a destructive cycle of inflation. And as if that’s not enough, they run a vast arsenal of nuclear warheads capable of destroying the entire planet. Which is just to say that if it’s not conceivable that there could be a well-managed government agency, then we’re all doomed irrespective of what happens with health care. But in fact if you look across the country or around the world, you see some highly effective public agencies and some highly dysfunctional ones.”
In other words, there is competent and incompetent government, but there’s nothing pre-determined about a government failing at a particular enterprise.
However, I find reasons 4-5 the most startlingly. Oppression and abuse can, has, and will come from society, corporations, and business. In fact, non-governmental oppression and abuse of human beings is a huge problem for a lot of people—namely the people who are being abused. Our government, has in fact, on many occasions curtailed such abuses quite effectively, with yes that’s right government regulations.
— Joseph · Aug 18, 01:13 AM · #
Re: Frank . . . given how many people seem ignorant of this point, I’m thinking our schools should teach about George Stigler’s famous article “The Theory of Economic Regulation” in high schools. http://faculty.msb.edu/murphydd/cric/readings/Stigler—Th%20of%20Econ%20Regulation%201971.pdf
— Stuart Buck · Aug 18, 09:26 AM · #
“In fact, I can’t think of one issue in which libertarians, broadly speaking, have ever been in favor of government regulation, though I could be mistaken.”
That one is easy – both Milton Friedman and Reason have had nothing but good things to say about the FDA.
— Mark · Aug 18, 09:38 AM · #
Mark, I don’t know about Friedman’s position on the FDA, but Reason sure hasn’t been unequivocally supportive. See Ron Bailey’s piece on The FDA VS. Dying Patients and Todd Seavey’s 04 piece, Is the FDA Necessary? to start with.
— Peter Suderman · Aug 18, 10:14 AM · #
From pages 205-206 of my copy of Free to Choose.
“By now considerable evidence has accumulated that FDA regulation is counterproductive, that it has done more harm by retarding progress in the production and distribution of valuable drugs than it has done good by preventing the distribution of harmful or ineffective drugs.”
On the other hand, I think Joseph is attacking straw men. What he says might be true of intellectually lazy libertarians, but if you read anything by a Milton Friedman, you find that his arguments are empirical and only rarely the result of abstract principle. The quote above actually bolsters this: Friedman’s argument against the FDA isn’t government=bad, but that he believes there is good reason to believe that in not approving certain drugs, it does significant damage to the population’s health. You may find fault with the studies he cites, but you cannot argue that it is mere sloganeering.
— Blar · Aug 18, 11:21 AM · #
My apologies, might have mixed up something I read about Herbert Stein with Milton Friedman.
— Mark · Aug 18, 11:26 AM · #
Peter Suderman seems to view regulation as the practices of dispensing favors. If it were, the Chamber of Commerce would be pro-regulatory. To most of us, regulation is about restricting the freedom of action of business. This isn’t a favor to business.
Most of the corruption stems from appropriations (including tax expenditures, and arguably IP grants), not regulation. These goodies come from Congress, not the pointy-headed bureaucrats.
— Joe S. · Aug 18, 12:02 PM · #
I’m sure Peter can defend himself, but what the heck. There is actually a pretty sordid history of corporations encouraging government regulation as a way of entrenching their position by artificially creating barriers to entry. For example, the Interstate Commerce Commission, when it was first created, was essentially stacked by the Robber Barons to rule in favor of existing railways.
Companies supporting Green legislation, as Peter cites, is a recent example of this phenomenon.
— Blar · Aug 18, 12:13 PM · #
Re: Frank . . . given how many people seem ignorant of this point, I’m thinking our schools should teach about George Stigler’s famous article “The Theory of Economic Regulation” in high schools. http://faculty.msb.edu/murphydd/cric/readings/Stigler—Th%20of%20Econ%20Regulation%201971.pdf
This, I would argue, is the perfect parody of libertarian argumentation: take a simplistic economic rule and argue that applying it in the broadest sense possible undercuts anyone else’s policy position. Repeat.
Ho ho! You stupid liberals! You clearly don’t understand Econ 101 principle X! It completely demolishes the wisdom of liberal policy position Y. Case closed.
— Freddie · Aug 18, 01:49 PM · #
Freddie — as often seems to be the case (at least in our past disputes over school vouchers), you’re battling against a complete strawman there. The point here is not that the economic theory of regulation is “Econ 101” or that it is true in all cases. The point is that liberals should be at least aware of the possibility that big businesses are often in favor of regulations that create barriers to entry, etc., rather than arguing based on the uninformed stereotype that all businesses oppose all regulation. You might also find instructive the book “Clean Coal, Dirty Air” by Bruce Ackerman and William Hassler (subtitle: “How the Clean Air Act Became a Multibillion-Dollar Bail-Out for High-Sulfur Coal Producers”).
— Stuart Buck · Aug 18, 02:53 PM · #
Maybe it’s the marxist in me, but I have no problem agreeing with you that a good portion of the state’s function is to advance the interests of the business class. That said, it’s hardly accurate to say that energy companies are the foremost advocates of climate change legislation. They spent the last decade fighting against any legislation at all. Once the tide turns and something’s clearly going to pass, they use their might and take advantage of the “favor state” to influence it. But the alternative of no regulation is clearly the status they’d favor.
— Wrongshore · Aug 18, 03:33 PM · #
In a highly regulated state there may be opportunities available to large corporations that aren’t there to smaller, poorer corporations – but it doesn’t follow from this that such a state is the most conducive to corporate power. Frank’s whole point is that corporations support those think tanks whose philosophy best suits their interests…if he’s right, it seems like their money demonstrates their preference a lot more than your hypothetical.
Moreover, you seem to think that “the problem” here is relatively unfettered corporate power in the government while Frank thinks it’s relatively unfettered corporate power per se. Taking government regulation out of the equation certainly isn’t going to thwart corporate power – it’s is going to expand it.
— berger · Aug 18, 04:11 PM · #