David R. Henderson  

From the Vault: Reply to the Village Voice

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In writing a tribute to the late Murray Weidenbaum last weekend, I came across a piece I wrote in 1979, a piece that had caused me to get in touch with Murray. I titled it "Reply to the Voice." It was a reply to a scurrilous attack on the growing number of U.S. economists in the late 1970s who were becoming increasingly critical of the regulatory state. The attack I was replying to, which appeared in the Village Voice, was "The Counterintelligentsia: The 'Free Enterprise' Think Tanks and the Holy War on Government," by Peter Stone.

What I noticed on rereading it is how little things have changed. Many on the left cannot consider economic arguments of libertarians and conservatives without attacking their motives and their funding. Notice that it starts even with the title. What's the point of putting "Free Enterprise" in quotation marks if not to hint that somehow they don't really believe in free, or at least freer, enterprise?

But I'm also pleased with how well my reasoning has held up. Here's one excerpt:

The author, Peter Stone, tries to discredit the free market by casting aspersions on the economists who argue for it and on the foundations that finance much of their work. He quotes approvingly a Nader associate's claim that these economists are "corporatist academics" who are "trying to give legitimacy to the corporate worldview."

What is the "corporate worldview"? The term connotes a world run by giant soulless corporations that swallow up the individual. But that is simply Mr. Stone's view of where the free market would lead. Those of us who write the analyses Mr. Stone criticizes have a different view of the free market. We believe that the individual has a better chance to fulfill his potential when he is free to engage in voluntary exchange than when the government tells him what exchanges he may make and on what terms he may make them.


I then go on to give some examples. Then I write:
Mr. Stone obviously doesn't believe that the individual will fare well in a free market. But rather than countering the arguments and evidence of the market's proponents, he dismisses them as paid hacks. I doubt that many of them are paid hacks. Most are people with particular viewpoints who are hired by the foundations to articulate those views. The validity of their arguments does not depend on the source of their funding. We cannot dismiss their arguments because they were paid to make them anymore [sic] than we can dismiss Mr. Stone's arguments because he was paid to make them. But in Mr. Stone's case, there is nothing to dismiss. He gives no arguments.

I also pointed out that Stone could make his attack only by ignoring many of the economists on his side of the spectrum who were critical of regulation:
Belief in the free market cuts across traditional ideological lines. Many modern liberal economists are among the most vociferous critics of government regulation. For instance, Paul MacAvoy, a McGovern supporter in 1972, spent most of his time on former President Ford's Council of Economic Advisers fighting regulation. Charles Schultze, the current chairman of the Council, is a strong critic of price supports in agriculture. Walter Heller and Arthur Okun, chairmen of the Council under Presidents Kennedy and Johnson respectively, signed a statement at President Ford's 1974 economic summit calling for the elimination of (1) controls on the production and pricing of oil, (2) price controls on natural gas, (3) ICC [Interstate Commerce Commission] restrictions on entry and rates in surface freight transportation, (4) CAB [Civil Aeronautics Board] restrictions on entry and rates in air transportation, (5) Federal Maritime Commission regulation of shipping rates, (6) restrictions of interest payments on checking accounts, (7) federal cartelization of agriculture markets through marketing orders and price supports, (8) import quotas, (9) FCC regulation of cable TV, and a number of other regulations. Twenty-one of the 23 economists who attended the summit signed the statement. Among the other signers were Paul Samuelson, formerly an adviser to President Kennedy and Robert Kennedy, and currently an adviser to Senator Kennedy; and Andrew Brimmer, former head of the Federal Reserve Bank of New York. Only John Kenneth Galbraith and the AFL-CIO's Nathaniel Goldfinger were nonsigners.

Notice, by the way, for all the times believers in freedom play "ain't it awful," that on items (1), (2), (3), (4), (6), and (9), we had a huge amount of success.


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COMMENTS (6 to date)
Nick writes:

For a "Holy War on Government", we have certainly failed considering the government has doubled since the Clinton Administration, we are sitting on top of a 17 trillion dollar debt (along with hundreds of trillions of unfunded liabilities), and the Code of Federal Regulations has exponentially exploded in size and scope (to the point the congressional research service can no longer figure out the number of federal crimes under statute and reg).

Even by his own benchmarks, his side has essentially gotten its way for several decades (with perhaps a slight bump during the Reagan administration). So what is he complaining about? We are marginal at least in our ability to actually limit government power.

Frank McCormick writes:

Excellent letter! Except for:

". . .Andrew Brimmer, former head of the Federal Reserve Bank of New York."

Brimmer was a Federal Reserve Board Governor. He was not head of the Federal Reserve Bank of New York. Here is an excerpt from Wikipeidia:

"During Brimmer's time at Harvard, he also worked at the Federal Reserve Bank of New York as an economist, and established the central bank of the Sudan. After graduation, Brimmer became assistant secretary of economic affairs in the U.S. Department of Commerce. In 1966, under appointment from U.S. President Lyndon B. Johnson, Brimmer began an eight-year term on the board of governors of the Federal Reserve, becoming the first African American in that position. In 1974, Brimmer left the Federal Reserve and taught at Harvard University for two years. Thereafter, he formed his own consulting company, Brimmer & Company. He was a trustee of the Economists for Peace and Security."

David R. Henderson writes:

@Frank McCormick,
Thanks. Too bad Google didn’t exist when I wrote that. :-)

Tom West writes:

I think you misunderstand the mind-set. It's not necessarily an assumption that the free market must be bad for people. It's the assumption that *no one* believes in the free market.

It's the belief that those who have economic power don't want to eliminate the government, they want to *become* the government. But before they can do that, they must first eliminate any other power that rivals their own, especially one that owes its allegiance to the people.

It's the belief that nature abhors a power vacuum. That without a powerful government with at least nominal responsibility to the people, you will have a powerful government with responsibility only to the powerful. The alternative to America as it stands now is not a free-market America, it's Russia by another name.

And not only that, this fact is *so* obvious, that the only reason anyone could possibly claim otherwise is that that they both know what will happen, and intend to be paid off for their efforts when America becomes that fascist state, controlled by a few oligarchs.

Now this might seem absurd, but I've seen a few posting around here about people who absolutely understood that anyone statist understood that it led to totalitarianism, and must be supporting statism for the personal power they hope to rewarded with.

However, much to my deep chagrin, the former opinion seems a lot more common than the latter.

Roger McKinney writes:

Tom, I agree. The left no more favors power to the people than the right wants free markets. Both want power through a large government, just for different reasons. Republicans have grown the state faster than any Democrat since Johnson.

Tom West writes:

Actually I have to say that knowing a fair number of people across the spectrum, pretty much all of those politically involved are doing so to make life better for all of us.

They may have different ideas of how to do this, what constitutes "better", and who are the winners and losers in the inevitable trade-offs that policy decisions require, but I overwhelmingly find good faith amongst almost all.

What I do find disturbing is the assumption of bad motives on the part of their opponents. It's rarely true, and it is certainly not a requirement to vigorously oppose other people's platforms. Good people can have radically different utility functions.

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