It’s increasingly fashionable for left wing progressives to view free speech advocates as being defenders of a neoliberal system that favors the fortunate. We are told that “there need to be rules to restrict hate speech”. The use of passive voice makes it all seem quite simple.
Less often do progressives say, “The government needs to create and enforce laws against hate speech.” Even less often do you hear “Government leaders such as Attorney General Jeff Sessions need to seek out and punish people engaged in hate speech.” The Devil is in the details.
Ever since the Great Recession, we’ve been repeatedly told that neoliberalism went too far, and that there needs to be a swing back toward more government interference into markets. So let’s see how that backlash against neoliberalism is working out.
1. We were told that the big internet companies have too much power, and that regulation is needed to rein in companies such as Google and Facebook. Here’s the WSJ:
GDPR, the European Union’s new privacy law, is drawing advertising money toward Google’s online-ad services and away from competitors that are straining to show they’re complying with the sweeping regulation.
2. We were told that free trade was hurting American factory workers. So now we’ve put heterodox trade skeptics like Robert Lighthizer and Peter Navarro in positions of power, and they’ve started an international trade war. And they have also delivered a negative supply shock to US factory workers, making the cost of key raw materials like steel and aluminum much more expensive here than in our trading partners:
US businesses have warned there is a risk of severe damage from the tariffs on steel and aluminium announced by the Trump administration and the retaliatory measures launched by other countries.
Business groups said the decision to impose tariffs on imports from US allies including Canada and the EU could disrupt the global trading system, curtail investment and lead to job cuts.
In a statement that typified the alarmed reaction, the Coalition of American Metal Manufacturers and Users said: “Restricting the raw material supply in the US and imposing tariffs on imports from our closest trading partners places American manufacturers directly in harm’s way.”
Yes, these tariffs will help the roughly 100,000 workers in the steel industry, but what about the roughly 10 million in industries that use steel? And what about the workers in American exporting industries that are hurt by these tariffs? And what about the low-income American workers who will pay more for the products they buy? And what about the breakdown in the rule of (trade) law, and the promotion of nationalistic attitudes throughout the world? How’d that work out in the 1930s? It’s sounds nice when intellectuals express concern that free trade ideology has led to a “China shock” that cost jobs in the rust belt, not so good when you actually start to contemplate the alternatives.
3. We were told that free market ideology is not appropriate for the energy sector, as there are all sorts of externalities. So how will the opponents of neoliberalism react to this recent announcement that the US government is planning to re-regulate energy:
Trump administration officials are making plans to order grid operators to buy electricity from struggling coal and nuclear plants in an effort to extend their life, a move that could represent an unprecedented intervention into U.S. energy markets.
The Energy Department would exercise emergency authority under a pair of federal laws to direct the operators to purchase electricity or electric generation capacity from at-risk facilities, according to a memo obtained by Bloomberg News. The agency also is making plans to establish a “Strategic Electric Generation Reserve” with the aim of promoting the national defense and maximizing domestic energy supplies.
National security—where have we heard that term before? That’s right, it’s also the justification for the recent protectionist moves by the Trump administration. We cannot trust Canada to export steel to the US during a war. Interestingly, the administration has signaled that national security initiatives such as tariffs and sanctions (including ZTE) will be removed if other countries satisfy our wishes in unrelated areas. I guess the administration is willing to put “national security” at risk if we can export a few more movies to China.
Maybe I’m being too cynical here, but there is a serious point. If you read left wing progressives or right wing nationalists, you are led to believe that neoliberalism is a sort of religion, and that neoliberals have been entranced by the supply and demand diagrams in textbooks into blindly supporting free markets. This is a complete misreading of where neoliberalism came from.
In 1974, statism was still the ruling ideology almost everywhere in the world. People like Milton Friedman were often viewed as crackpots. (I was at a progressive university at the time (in Madison), and have first hand knowledge of this period.) Neoliberalism arose for very specific reasons, mostly having to do with the failures of real world statist polices, such as protectionism, price controls, nationalization of industries, and regulatory barriers to entry. There were very sophisticated studies of the political economy of government intervention in the economy, including the way that policies get captured by special interest groups. Neoliberalism was aided by the superior performance of relatively open, market-oriented economies—Hong Kong vs. Argentina. It was never about blind faith in markets.
Younger intellectuals and policymakers have forgotten all of this history, and now we will be forced to relive all the mistakes of the statist period—until eventually the internal contradictions of statism become so obvious that there is another neoliberal awakening.
PS. I define neoliberalism as free markets plus some safety net/social insurance plus market-oriented policies to deal with externalities, such as carbon taxes. Of course this term has multiple possible definitions.
READER COMMENTS
Chris
Jun 3 2018 at 5:05pm
You should be praised for your restraint if “progressive” is the term you use for Madison, 1974.
Russ Abbott
Jun 3 2018 at 5:28pm
I basically agree that neo-liberalism is the right general way to go. But …
Would you dismantle the FDA and leave it to the market to determine when medications have been sufficiently tested?
Would you eliminate laws against fraud?
…
There are lots of ways in which the market fails without government help/regulation. I don’t see your qualifications to free markets as sufficient to ensure a successful economy.
Kevin Erdmann
Jun 3 2018 at 5:52pm
Russ Abbott:
As someone who was defrauded and has attempted to utilize the American state court system to seek justice, it would be hard for me to fathom a system more geared toward protecting criminals while lining the pockets of attorneys. For small businesspeople in many contexts, we effectively have anarchy now. The justice system exists for corporations with millions of dollars to spend, for criminals who know that system will lead most victims to accept injustice, a few people dumb enough to try to use it, and of course most of all the lawyers.
If we agree that a non-state solution to this is untenable, then surely we should still all agree that the justice system is a litmus test for a state that is functional enough to do anything competently, and our state fails.
My experience has been that the state system fails because there is no realistic force of moderation that prevents the system from clogging up with process and with arms-race billing rates for the best attorneys so that the cost of any basic white collar case starts in the 6-digits.
Dismantling the state justice system would be horrific, but it might be an improvement. On the other hand, state justice systems can be efficient. It is highly efficient at frightening minorities caught with drugs into making plea bargains that trap them in the underclass.
Sorry. Rant over.
Kevin Dick
Jun 3 2018 at 5:54pm
@Russ Abbott.
Substantially reducing the FDA’s authority is a pretty standard neoliberal position.
Enforcement of contracts is a pretty standard neoliberal role for government. Fraud is generally considered to be part of that.
And your last sentence is confusing. We’re not starting from scratch here. It’s a relative argument. The neoliberal claim is that _reducing_ government interventions from current levels will lead to a _more_ successful economy.
Very few neloliberals, Scott almost certainly included, advocate reconstituting institutions from scratch along purely free market lines. Those people are called anarcho-capitalists.
Scott Sumner
Jun 3 2018 at 8:55pm
Russ, Yes, I’d suggest abolishing the FDA, although Medicare might want a review board before approving government coverage of a particular drug. But I don’t believe that I should have to have a prescription in order to buy a drug.
Laws against fraud are consistent with a free market.
Thaomas
Jun 4 2018 at 8:21am
I think your definition of “neoliberal” is too narrow. I’d include an objective of redistributing income with progressive income (or even better, consumption) taxation and application of cost benefit analysis to regulation, law enforcement, immigration, and public spending.
Tom
Jun 4 2018 at 8:58am
“The Devil is in the details.”
This needs to be said more often. Maybe there should be a name for this fallacy:
1. If I were appointed to a government position that oversees X, I would be morally good and good at my job.
2. Therefore, the government should oversee X.
(Call it the Statist’s Fallacy?)
I’m not a psychologist, but I suspect that lots of smart academics on the Left reason in this way. Yes, they’re good people: smart, honest, generous, responsible, capable. But that doesn’t justify our concluding that the actual government that actually gets elected (by our actual electorate!) will comprise people who actually have those qualities.
robc
Jun 4 2018 at 9:00am
Chris,
I was there 20 years later and it was still the Peoples Republic of.
I cant even imagine what it was like in 1974 (Although I heard stories from professors).
robc
Jun 4 2018 at 9:04am
Russ Abbott,
Have you not seen the studies that pretty clearly show that the FDA has killed far more people than it has saved?
Its a classic case of the seen and the unseen. You can see the tens of people poisoned by a bad drug, but you can’t see the hundreds of thousands of deaths caused by delaying approval of a heart medication.
Seppo
Jun 4 2018 at 9:07am
@SSumner, How do suggest handling the tragedy of commons regarding overuse of antibiotics & resistance buildup? Just ignore it and expect that markets will come up with substitutes?
I’m not implying that FED and regulated prescriptions are a good solution, but many would claim that it is better than laissez faire antibiotics.
Selling Amoxicillin prescription rights to one party who regulates the prescribed amounts and sets prices with a bidding system would for sure cause controversy even though for fishing quotas people might see it as a reasonable solution.
Talking about “life saving” and “necessary” drugs just tickles some kind of primitive “fairness” reactions in many (most?) people.
Andrew_FL
Jun 4 2018 at 9:25am
There was nothing wrong with liberalism that required neo-ing. In that sense, your argument, that neoliberalism is “best” is incorrect.
Matthias Görgens
Jun 4 2018 at 9:55am
Neoliberalism is different from classic liberalism. Whether the neo was necessary isna different question.
As for definition, in practice the most common one is: ‘whatever I disagree with’.
One alternative definition that is pretty close in effect to what Scott mentioned: “what would Singapore do?” (or Hong Kong).
For example Singapore has robust laws against fraud, but doesn’t require much occupational licensing. Uber was welcomed with open arms, but has been outcompeted by a local company. There’s some redistribution, but taxes are generally low and the state is small.
Matthias Görgens
Jun 4 2018 at 9:55am
Neoliberalism is different from classic liberalism. Whether the neo was necessary isna different question.
As for definition, in practice the most common one is: ‘whatever I disagree with’.
One alternative definition that is pretty close in effect to what Scott mentioned: “what would Singapore do?” (or Hong Kong).
For example Singapore has robust laws against fraud, but doesn’t require much occupational licensing. Uber was welcomed with open arms, but has been outcompeted by a local company. There’s some redistribution, but taxes are generally low and the state is small.
Mike Sandifer
Jun 4 2018 at 10:18am
Scott,
It’s nice to see someone else advocating the abolishment of prescription requirements. If all drugs were OTC, I think we’d see big initial price drops, followed by more gradual price drops, until patents expire and generics cause prices to drop further. This has certainly been the pattern with Rx drugs that went OTC in the past.
Also, it would cut out doctors as expensive middlemen. My mother used to have to see a doctor every few months just to have NSAID eyedrops refilled, even though they presented no danger and everyone knew she’d need them for the rest of her life. They were to treat rejection of her corneal transplants.
And, my mother may be alive today, had she had access to Suboxone. She lost access, both because the DEA changed rules such that her doctor could no longer prescribe it under his existing license, and also because Medicare stopped paying for it. It costs over $400/month. Our last conversation was about seeing if we could get her back on Suboxone, instead of the oxycodone she was given and was overtaking. Two weeks later, she was dead of an overdose.
I should so also point out that, like millions of Americans, her drug pushers were most of her doctors. They introduced opiods to her and kept prescribing them, despite her obvious addiction. The current system, whatever the positive intentions of it’s creators, has created the biggest drug addiction problem in our lifetimes.
Scott Sumner
Jun 4 2018 at 11:30am
Tom, When making this argument to progressives you can also say, “The Donald is in the details.” 🙂
Seppo, I agree that government regulation is needed when there are externalities, such as antibiotics.
Mike, Sorry to hear about your mother; it’s sad to see the damage done by our drug laws.
Mark Z
Jun 4 2018 at 6:27pm
Thaomas,
Adding additional policy positions to the definition of neoliberalism would make the term even narrower, not broader.
regulation_agnostic
Jun 5 2018 at 4:04pm
I certainly agree that regulations in practice seldom work out as well as envisioned, no matter which party is in charge. And that is a problem you have when you elect people who want to regulate things.
OTOH, when you elect people who have spent years saying that regulations can only make people’s lives worse, they do not repeal the very worst regulations, nor do they enforce the remaining regulations as well as they can. That way they can prove that they were right.
Some things are overregulated, some under. Some regulations both cause new harms and fail to solve the original problem. We should do better! But pointing out one side of a trade off without mentioning the other…does not seem like it settles the issue.
Scott Sumner
Jun 5 2018 at 10:30pm
Regulation, You said:
“when you elect people who have spent years saying that regulations can only make people’s lives worse”
Perhaps, but we’ll never know until we elect that sort of person. Both the Dems and the GOP are big fans of regulation, although they differ as to which types of regulations they prefer.
Lorenzo from Oz
Jun 5 2018 at 11:47pm
“Both the Dems and the GOP are big fans of regulation, although they differ as to which types of regulations they prefer.”
Enter public choice theory. (My favourite version of which is Baptists & Bootleggers.)
Art Carden
Jun 22 2018 at 9:52pm
Something that sticks out to me: I wonder how many people appreciate the difference between “100,000” and “10,000,000.” I suspect a lot of people just hear “large number” and “larger number” without really considering that there are a hundred times as many people working in steel-and-aluminum-using industries as in steel-and-aluminum-producing industries.
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