The Case for Case-by-Case Evaluation

I find Steve Horwitz’s claim that “Markets, including Wal-Mart, have done more for poor Americans than any government program, at least in the long run if not the short run” to be a bit puzzling. If this means that the absence of governance à la Joseph Stalin is a more important determinant of our well-being than is, say, the existence of unemployment insurance then, yes, of course this is true. But the question facing government programs is not whether they are more or less beneficial than the existence of a market economy, the question is whether the programs are more beneficial than would be the absence of programs.

And of course the answer, to me, comes up differently according to the program. And this is where things get tricky. Horwitz cites minimum wage laws and occupational licensure requirements as examples of non-beneficial programs. I’m not sold either way on the minimum wage, but definitely agree about the licensing. At the same time, things like rules that prevent dental hygienists from practicing without being supervised by a dentist aren’t being perpetrated by “the left,” they’re being perpetrated by dentists. It’s a classic example of concentrated benefits and diffuse costs. And the question, to my mind, is what is to be done about it. If it were the case that electing politicians who are given to waxing effusive about the virtues of free markets (i.e., Republicans) was likely to mitigate such abuses, I would look more kindly on such politicians. But in practice, it doesn’t seem to make much of a difference.

And then there’s a different set of regulatory issues, notably those dealing with the environment, where the benefits of regulation are diffuse and the costs are concentrated on the polluting firms. Here I side against the free marketers, but this is where market rhetoric seems to have a lot of efficacy. Which isn’t to point to a flaw in market rhetoric per se, but merely to the reality that any set of rhetorical strategies is more likely to succeed when it has a lot of money and political influence behind it. But if you want to convince people on the left that an alliance is worthwhile, you need to make the case not merely that market principles could in theory help the poor by dismantling some barriers to economic opportunity, but find some concrete projects on which to collaborate. Otherwise, market and anti-regulatory rhetoric will continue to be associated with what it accomplishes in practice—serve the ends of politically powerful entities when it’s convenient to them.

Also from this issue

Lead Essay

  • In this month’s lead essay, philosopher and libertarian theorist Roderick T. Long draws a sharp contrast between corporatism and libertarianism properly understood. He argues that liberals, conservatives, and even libertarians have all been guilty to some degree of obscuring this difference, and that the quality of our political discourse has suffered accordingly. He suggests that libertarians should guard themselves against falling into the trap of “vulgar libertarianism,” in which all things good spring from business, and particularly from business as usual. Corporations, he argues, should be no more free from scrutiny than any other institution in society, and often businesses have done more than their share to hamper free economic relations in the industrialized world.

    One implication of all of this is that the truly free market is farther away than we imagine. Long suggests several ways in which a freed market would be different from what we see around us today. Notably, nearly all of these differences are to the benefit of the consumer and the small or start-up business. These likely outcomes of laissez faire suggest new grounds for left-liberals and libertarians to revise their thinking on economic issues and on politics more generally.

Response Essays

  • In his response to Long, Matthew Yglesias argues that although corporations naturally seek to win special privileges from the state, libertarianism is far from the obvious solution to the problem. Instead, he reiterates the charge that libertarians often act as corporate apologists and suggests that the net effect of any “free market” advocacy will tend strongly toward corporate power. Liberals may have much to learn from libertarians on certain issues and in some policy areas, but the laissez-faire solution to corporate political influence is unworkable.

  • Steven Horwitz offers several examples of so-called “de-regulation” that only served to benefit corporations, while leaving the government, and therefore the taxpayers, to shoulder the risks of the market. He argues that market competition is a form of regulation, albeit a kind worth wanting, as it forces corporations to respond to consumer demand and punishes them when they fail to meet it. He takes issue with Long’s lead essay by arguing that “playing defense,” that is, defending today’s corporations when they act consonantly with a fully freed market, is a valuable part of libertarian advocacy. One must nonetheless take issue with these same corporations when they violate the principles of laissez faire and distinguish carefully between these cases.

  • In his response essay, Dean Baker declines to tally up a “score” of how well libertarians, or other groups, have defended a truly impartial, laissez faire economy. Instead, he suggests intellectual property as an obvious area where libertarians must challenge corporate power to distort the market. Patents that make health care more expensive and copyrights that artificially restrict whole areas of our culture are obviously concessions to corporatism, and the “extraordinary abuses” undertaken to enforce these privileges should be vigorously challenged. Although libertarianism has been skeptical of both patents and copyrights, Baker suggests that this is an area deserving still further attention, and one in which liberals could perhaps become solid allies.

  • The discussion this month has focused to a greater than usual degree on the activities of certain Cato Institute policy scholars. The editors thought it appropriate to solicit responses, and we present them here in their entirety.