Body Snatchers and Regulatory Capture
I occasionally find myself pondering how libertarians agree and disagree with non-libertarians. How much disagreement is due to a deep divide in values, and how much is due to different ideas on how to pursue similar values? Of course, there is no single answer to this question, but broad trends can be noticed.
I’ve noticed one area where libertarians and leftist (broadly) agree on the nature of a problem, but come to very different conclusions on the best way to respond to that problem. I’m thinking of how the state tends to favor powerful and entrenched interests over the interests of the less powerful. Leftists usually describe this with phrases like “we live in a corporatist state, and corporations control the government,” while libertarians are more likely to use phrases like “regulatory capture causes the state to serve the interests of the regulated industry over the public interest,” but both sides are describing the same phenomenon here.
As an aside, I think leftists underappreciate how much libertarians share their concerns on this front. Those on the left will suggest libertarians advocate free markets and oppose economic regulation out of some kind of loyalty to or fondness of big corporations, but this is very far from the truth. For one, big companies don’t want an unregulated free market – they want the market to be regulated in their favor. Second, the more regulatory power the state possesses, the more incentive companies have to ensure that power is used in their favor. And third, the nature of politics ensures this is almost certainly how regulation will be used in practice. Milton Friedman expressed this well in the first episode of his Free to Choose TV series:
I do not believe it’s proper to put the situation in terms of industrialist versus government. On the contrary, one of the reasons why I am in favor of less government is because when you have more government industrialists take it over, and the two together form a coalition against the ordinary worker and the ordinary consumer.
Where libertarians and leftists disagree is in how to deal with the problem of this coalition between the state and corporations. Libertarians see this coalition as a strong reason to decrease the regulatory powers of the state – leftists disagree. Obviously, I think the libertarian approach makes more sense – and to illustrate why, let’s indulge in a nerdy sci-fi thought experiment.
Imagine Earth was being slowly invaded by body-snatching aliens, who replaced humans with identical looking alien agents who worked behind the scenes to advance the aliens’ sinister agenda. Let’s say the government has tasked the NSA with countering this alien threat. Unsurprisingly, aliens begin to body-snatch their way into control of the NSA.
What’s the best way to respond to this? One approach we should definitely not take is to say “Body-snatchers have taken over the NSA, therefore we need to increase the powers of the NSA so they can better protect us from the body-snatchers.” That would be a terrible idea – if the body-snatchers have already taken over the NSA, then increasing the NSA’s powers will only play into the body-snatchers’ hand. QED.
Leftists who believe we live in a corporatist state, and advocate for greater state control of the economy as a counterweight to this concern, are making the same mistake. Their position amounts to saying “Corporations control the government, so we need to increase the powers of the government so they can protect us from the corporations who control the government.”
Kevin Corcoran is a Marine Corps veteran and a consultant in healthcare economics and analytics and holds a Bachelor of Science in Economics from George Mason University.