Arnold Kling  

Follow-up Question for Modern Liberals

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My earlier post elicited some responses denying that free-market liberalism is an oxymoron. My view is that modern liberalism is an ideology of government expansion. Let me re-iterate that the ideology of government expansionism invokes the following:


1. X is a crisis.
2. Collective action through government is necessary to solve X.
3. Collective action through government is sufficient to solve X.
4. Government needs more power in order to solve X.

If you are a modern liberal, can you name a sector of the economy where this does not apply? Are any of the four statements above false for any major industry?

If I was attacking a straw man, I would be happy to be corrected.

Addendum: The first 10 comments failed to address the question. So let me make it simpler. Fill in the blank, "I believe that the ____ industry does pretty well on its own. We need no more regulation or government subsidy that we have today, and perhaps even less."


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CATEGORIES: Political Economy



COMMENTS (32 to date)
Someone from the otherside writes:

Not a liberal myself but 4) would appear to be somewhat fishy. In general, adjusting pre existing regulation would go a long way to solving crises and that generally should not require expanding government?

Chuck writes:

Well, what does free-market mean? For starters, government sets up the parameters that free markets exist in - police and courts to prevent coersion in transactions and enforcement of agreements after the fact. The modern corporation was a government creation. Intellectual 'property' is a government created thing.

When we talk about free market transactions being free of coersion, why don't we consider the biological need to eat to simply exist a form of coersion? If you owned all the food in the world and I was hungry, and I enter into a transaction with you, is that not coerced by biological need?

I think an answer to your question first requires a definition of what free market means.

Do filing statements for corportations violate free market principles? Do laws about false advertising interfere with a free market? Could a science/efficacy based pharmaceuticals market exists in a country without an FDA?

Josh writes:

1. The War on Drugs is in crisis.
2. Collective action though government is needed to decriminilize drugs.
3. Collective decrimilization is sufficient to solve many problems associated with drugs.
4. Government needs less power in order to solve the drug problem. (Here: add more rehab, social services, etc. But this addition is far outweighed by reduction in Police/FBI enforcemnt)

You did not require the industry be legal.

Jim writes:

I think there are relatively few areas / sectors in which 'Collective action through government is sufficient to solve the key problems', and I don't think I'm alone in that among lefties. Three examples close to my heart are housing, transport and energy production - significant problems arise in each if left completely to the market, but I certainly don't think government should take sole responsibility for any of them.

So yes, maybe your understanding of liberalism leaves something to be desired.

John V writes:

Jim,

significant problems arise in each if left completely to the market,

how so?

John V writes:

Chuck,

I think you know what a broad, charitable and well-understood definition of free markets is. Why not just answer the question?

brian writes:

It's hard to name a lack of something (X). For example, imagine there were a large negative externality associated with sightseeing. Thus, X would be the problem of over consumption of sightseeing. Then utilitarian liberals might support a tax on sightseeing in order to price this externality. But there is no externality, and so liberals do not support government intervention in that sector.

There's an example, but it's hard to name because you're trying to come up with a problem that doesn't exist. I'm sure I could come up with hundreds of examples if I sat here for awhile, but it's difficult to observe the lack of a reason for intervention.

I'll try and take a quick stab at it though. First, let's presume that there is already certain government intervention such as well-defined property rights and infrastructure. Beyond this, as a liberal I oppose further government intervention in complete, competitive markets where there are no significant externalities or costly information failures. So markets for things like the following would not require any intervention:

Art, furniture, electronics, most types of food, clothing.

These are off the top of my head. But there are certain issues of definition that Chuck brought up. What is "collective action through government"? Is it any government action? If so, then libertarians support government action ins every sector when they call for enforcing property rights. Same with intellectual property rights.

brian writes:

John V: the problem is that free markets require some intervention like well-defined property rights, which requires collective action. It's not always clear what government intervention violates free market principles. Privatizing a public park may be free market, but how about privatizing other public resources, such as clean air, through cap and trade? In both cases you're giving private interests property rights to resources in order to marketize them, but in general only the former is considered free market by libertarians. There's no clear indication of why, and how to distinguish them.

liberty writes:

I have to agree that the drug war, and also other crime, military and social areas (such as abortion, sex, prostitution, pornography, etc) fall into the category of things that the left doesn't want to expand government for.

So, the sectors of the economy seem to be:
(1) Police, courts and military
(2) Many areas of social / morality

The first sector is arguably what government is there for, so it doesn't make sense to many on the right, including some libertarians that this be radically reduced before reducing other areas of government - such as economic regulations and public ownership of industry. The second sector is where libertarians and liberals agree.

8 writes:

Charles Murray might be a free-market liberal. Didn't he suggest eliminating all social programs and social spending and replacing it with a flat income transfer?

A free market liberal might be a "compassionate conservative" (in the theoretical sense), i.e. they want a totally free market but are willing to use government to correct the most egregious social disparities.

aaron writes:

Healthcare, government has all the power it needs to reduce costs. All it needs to do is allocate money to educating more Drs. and med caregivers.

Eric Hanneken writes:

If I understand what Arnold is asking for, the respondents so far (except Josh and aaron) have neglected point 1: "X is a crisis." I take him to be saying, "For any crisis X, American liberals believe 2, 3, and 4." So it's not an answer to observe that liberals believe in allowing some room for markets to operate.

Here are some crises:

  • The recent mortgage meltdown

  • The recent spike in energy prices

  • Enron

  • Toxic goods from China

  • Global warming (or is that a chronic condition?)

Are there any liberals who do not believe 2, 3, and 4 when X is set to one of the above? Are there other values for X we could choose? X has to be a crisis that liberals believe is real, so no fair bringing up Medicare or Social Security.

spencer writes:

If I ignore the issues of scale and feed back most industries work fine without government. If we were in the 17th century largely rural societies where most individuals lived on farms and were largely self sufficient there would be little need for government regulation. But as life and the economy becomes more complex and the externalities from the interactions of everyone in a more crowed environment the need for more government controls and/or regulation emerges. In the 17th century pollution was not an issue. In the 21st century it is a problem that the market can not deal with without active government establishing new rules.
Industry x that may not need regulation in isolation does need regulation when it operates in a new more crowed and more interactive environment. Your vision of liberalism assumes that we are in a 17th century environment and that is what makes it impossible to see it as a realistic alternative. In your simple 17th century world of limited trade and limited mobability your assumptions about reputation did generally work.
But in todays world where you have no idea of the source of the good you are purchasing and even if a firm loses its reputation in one place there are still a wealth of other markets in the world your simple concept of reputation effect does not work. I could go on and on, but the basis point is that your philosophy may have worked in 1776 but not in 1976.

the world is too complex for your simple philosophy.

Arnold Kling writes:

Spencer,
You have clearly articulated the progressive view, which is that complex societies require more central direction. The opposite, Hayekian view is that central planning is at a comparative disadvantage in a complex world.

hutch writes:

spencer,
Do you believe government is equipped to handle this complexity? The incentives for government are totally screwed up to handle this complexity. Politicians want to get elected so they do what they need to do to accomplish that goal. As much as we'd like to believe out elected officials are there in our best interests they aren't; they are there in their own best interests - re-election.

kebko writes:

I wanted the government to fix all the problems. If the government gained power & didn't fix the problems, it's not my fault. I specifically told them I wanted them to fix the problems. The reason the problems got worse is because corporations used insider access to screw everything up. So, corporations are the problem. So, now we need government to get more powerful so they can be more powerful than the corporations & finally, actually, solve the problems, just the way I want them to....etc.

John V writes:

Brian,

You're kinda making this more complicated than it needs to be.

People understand the need for courts and and the principle of private property as cornerstones to a properly functioning free-market. So, you're really bringing up anything that isn't already understood, or agreed upon by free market advocates. Anarcho-capitalists are less numerous than probably out and out communists in this country. A lawless economy is not what anyone means by free markets.

However, basic free market principles are not hard to understand nor honor when making policy...but govt. violates them all the time when compromised by special interests.

John V writes:

Brian,

You're kinda making this more complicated than it needs to be.

People understand the need for courts and and the principle of private property as cornerstones to a properly functioning free-market. So, you're not really bringing up anything that isn't already understood, or agreed upon by free market advocates. Anarcho-capitalists are less numerous than probably out and out communists in this country. A lawless economy is not what anyone means by free markets.

However, basic free market principles are not hard to understand nor honor when making policy...but govt. violates them all the time when compromised by special interests.

Corey writes:

Higher education.

I can't think of any government intervention that would help improve outcomes. And as a liberal, if there are changes to be made, I see them being made most successfully by private institutions offering better choices.

But in case that doesn't count, I'll say the auto industry. Sure, CAFE standards could be improved but a carbon tax or cap-and-trade will take care of much of that (to say nothing of current gas prices and competition among car makers).

Chuck writes:

@John V

Chuck,

I think you know what a broad, charitable and well-understood definition of free markets is. Why not just answer the question?

If it is so simple to define in a real-world context John, feel free to lay it on me. My free-market understanding has been tainted by behavioralist and epistomological heresies.

My larger point is that a truly free market is an abstraction, while the markets we actually use every day only exist because of government intervention.

Eric writes:

Spencer --

But was the model that failed in the 1970s the classical model or the government-directed model? Before you answer I'd like to remind you of price controls (yes, Nixon, I know, but not a classical liberal just because he was (R) ), the oil crisis, stagflation, etc., etc.

Chuck writes:

@Eric Hanneken

You make a good point that the 'crisis' aspect of the hypothetical is being ignored.

I agree with the drug crisis anology.

I guess I have to agree with 'someone from the outside' when he says 4 is the kicker.

1. american dependency on fossil fuels is in crisis
2. collective action is necessary to encourage mass transit to reduce dependency on fossil fuels
3. reallocating funds from building roads to building mass transit is sufficient to reduce dependency on fossil fuels
4. Govt. needs no new powers to reduce dependency of fossil fuels (just to prioritize it)

There is more than can be done to reduce fossil fuels, of course, but that's a start.

Arnold Kling writes:

Corey,
Thanks for your answers!

Some liberals think higher education needs more subsidies (we need everyone to go to college), but I gather you're willing to pass on that.

I don't know that I'll give you the auto industry, considering you want cap-and-trade.

brian writes:

Eric Hanneken writes:
If I understand what Arnold is asking for, the respondents so far (except Josh and aaron) have neglected point 1: "X is a crisis." I take him to be saying, "For any crisis X, American liberals believe 2, 3, and 4."

Eric, I define a crisis as something that requires 2, 3, and 4. Feeding people not a crisis because it's solved so well by the free market. So it is not an X.

If we changed the definition of a crisis to include, for example, feeding people, then I'll accept 1 without accepting 2, 3, or 4.

There are some serious definitional problems going on here that hinder mutual understanding.

Chuck writes:

Here is a post from Ezra Kleins blog, that would be happy for some simply adjustment to existing govt. powers.

Neil Sinhababu makes a good point:
If we're going to subsidize the meat industry as heavily as we do (at present, most of the subsidies are for feed grains) the least we could do is concentrate the subsidies on farmers who treat their animals in an ethical way. As it stands, a lot of farmers keep chickens in such cramped conditions that their beaks need to be chopped off to keep them from pecking each other to death, and put pigs in cages so small they can't turn around. These practices should be banned, but there are a number of public policy tools even short of that that will prevent a lot of animal suffering.
He also links to polling data showing that 62 percent of Americans support "strict laws concerning the treatment of farm animals." Our brutality to animals caught up in industrial food production is the sort of thing that can only survive because it's far, far, far from the public eye. Putting aside all arguments about vegetarianism, very few people who would defend the practices of factory farming. The argument is one through ignorance, instead. It's won because we ignore the Meatrix:

As Neil writes, there are very simple public policy changes that could better the conditions of these animals, and make our food supply chain safer and more healthful. The fact that we not only tolerate, but actually subsidize, practices so few of us would willingly defend is a pretty tremendous indictment of the existing policy.

Or, to follow our format...

1. The way farm animals are treated in a commercial farming is in crisis.
2. Collective action is necessary to address the problem.
3. Collective action is sufficient to address the problem.
4. By targeting our farm subsidies better, we can, without increasing govt. power, improve the treatment of farm animals.

liberty writes:

"I believe that the ____ industry does pretty well on its own. We need no more regulation or government subsidy that we have today, and perhaps even less."

Like I said:

Abortion industry
Sex Industry
etc.

Eric Hanneken writes:

brian,

That's a nonstandard definition of the word crisis. You really wouldn't consider the mortgage meltdown to be a crisis if you didn't believe government action were required to solve it? Or is it just that you can't think of a crisis for which government isn't needed? That's pretty much what Arnold Kling was saying about liberals.

aaron writes:

Everytime someone suggests re-allocating money from roads to mass transit, I feel pain. Providing large common use goods is still the one area where govermnent can be effective. Shifting to more rigid and specific goods will not improve efficiency. I support mass transit etc, but the money should come from more useless programs not our most beneficial ones.

Chuck writes:

I don't think it is controversial to say that mass transit for dense urban areas is cheap. I would expect that the current subsidy-per-user for roads is vastly greater than the subsidy-per user-for mass transit.

There is surely a point of diminishing returns, but I think it is safe to say we are not there yet. Mass transit is symbiotic with higher population density - one reinforces the other. Roads are reinforce sparse population. It's fine to prefer sparse population living, but subsidizing it to the extent we do is silly (given the original premise that our priority was to reduce dependence of fossil fuel).

aaron writes:

I think you probably have an exaggerated view of how effective mass transit is and the extent to where it can be effectively used (there aren't many NYCs). I doubt the per use subsidy is larger for roads other than in the very dense areas you mention, consider how much more roads are used and how much more flexibility there is in their use.

The way congestion is growing suggests to me that there is a lot of bang for the buck to be realized in builing more roads.

Dr. T writes:

I believe that the 'truck farming' industry does pretty well on its own.

Truck farming is the growing of vegetables (sweet corn, peppers, beans, radishes, cucumbers, etc.) and fruits (berries and melons) with delivery to local roadside stands, stores, and farmers' markets. Truck farming has never received federal subsidies, price supports, protective tariffs, or other benefits. Truck farmers do not get disaster funds after hail storms or fungus blights or droughts. They are the silent, unknown, non-unionized farmers who provide a large percentage of our fresh produce each summer.

I am not a modern liberal (I'm a small government libertarian.), but I wanted to show that only a few, small, relatively unknown areas of the economy remain (relatively) free of government control or interference.

Grant writes:

Arnold wrote,

Spencer,
You have clearly articulated the progressive view, which is that complex societies require more central direction. The opposite, Hayekian view is that central planning is at a comparative disadvantage in a complex world.

I've always read this line of reasoning as: Is society getting more complex faster than government is getting more intelligent? Empirically I'd say yes, e.g. Bryan Caplan's book.

We all know your average voter (liberal or otherwise) wouldn't know an externality if it bit them in the ass. Still, I think too many educated liberals see externalities as things requiring government solutions. Sure, government can theoretically deal with externalities (if it can put a man on the moon, how hard is air pollution?). But there are large informational and incentive problems that keep it from being able to do so very well. Voluntary solutions have high transaction costs (albeit ones getting lower with modern communication technology), but government (in the form of taxes, police, political legitimization, etc) is also extremely costly.

I don't think its very clear that government is a good solution to externalities, or it sure isn't from where I'm sitting. It seems to me that government itself has more externalities involved in it than most market problems.

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