Yesterday, I flew back home from Europe. On the flight, I read Brad DeLong’s Slouching Toward Utopia, a narrative of the political economy of the period from 1870 to 2010. DeLong views this period as a sort of extended 20th century, during which accelerated economic growth had all sorts of unforeseen effects.
Flying to the west, I had an extended October 12th, with 9 extra hours. I am a slow reader and I was dead tired on the final leg of the trip. Yet I somehow managed to finish the entire 540-page book just as I landed in Orange County, which wouldn’t have been possible if DeLong hadn’t written an unusually absorbing account of this period. Everyone else seemed to be watching inflight movies.
From reviews, I had assumed the book would be an account of how three major factors supercharged growth after 1870: globalization, the industrial research lab, and the rise of the modern corporation. Those ideas are certainly discussed, but DeLong’s real interest is in the way that ideology helped to shape the events of the past 150 years. I’ll focus on areas where I disagree with DeLong, but I agree with most of his analysis. Don’t let my quibbles dissuade you from reading this engrossing narrative.
DeLong sees many of the problems of the 20th century as being caused by people having blind faith in ideologies. While individuals have committed crimes in all times and places, only ideology can motivate the sort of mass crimes committed by communist and fascist regimes during the 20th century. DeLong actually sees three ideologies that people adhere to despite the evidence being overwhelming against them; communism, fascism, and extreme laissez-faire. I think he’s right about the first two, but mostly (not entirely) wrong about the third. Most of my reservations boil down to one issue. I am a libertarian economic historian and DeLong is a center-left economic historian with a deep skepticism of libertarian ideology.
Throughout the book, DeLong frequently refers to “really-existing socialism” in order to distinguish regimes such as the Soviet Union and Mao’s China from idealized versions of socialism dreamed up by intellectuals. Of course it’s easy to find examples of really-existing socialism and really-existing fascism. It’s also easy to show how these ideologies led to fanatical political movements that caused great destruction. Indeed, the examples are so obvious I don’t even need to recount them here. But what about the third ideology—libertarianism? Presumably, DeLong also believes there are lots of examples of libertarianism run amok, but I’m not so sure that’s right. Who are the Stalins and Hitlers of libertarianism? Which countries are the spectacular failures of libertarianism?
To be clear, I accept that the real world is messy and that “true libertarianism” has never been tried. I am perfectly willing to consider partly libertarian cases. For example, let’s think about the most libertarian economic models in the world today, keeping in mind that all countries have large and intrusive governments, at least to some extent. How do those relatively extreme cases compare to their neighbors? Do they go too far?
In Europe, most economic freedom rankings view Switzerland as the most free market economy. In the Western Hemisphere, the US, Chile, and Canada generally top the rankings. In the Asia-Pacific region it’s usually Hong Kong, Singapore, New Zealand, Australia, and Taiwan.
I’m certainly not suggesting that these countries don’t have problems, or even that they don’t have problems that are in some sense due to right wing economic ideologies. At the same time, these are clearly some of the most successful countries in their region, by almost any measure.
If you wanted to draw a picture of the evils of communism, it would be easy. Show the concentration camps. Show the victims of famine. The same is true of fascism, but replace famine with bombed out cities. Libertarianism run amok? What does that even look like? A Swiss village?
This doesn’t mean that DeLong is wrong about libertarianism, just that a critique requires a more nuanced argument than in the case of communism and fascism. There are no obvious cases of failed libertarian countries to point to.
Many center left people would disagree, arguing that there are two obvious examples of libertarian failure. One is historical. Prior to WWII, free market ideologies led many nations to reject government programs like unemployment compensation, disability insurance, universal health care and old age pensions. In addition, regulatory agencies such as the EPA, FDA and OSHA did not exist. The second seemingly obvious example of libertarian failure is financial crises that are widely attributed to deregulation and/or, and unwillingness of governments to adopt appropriate fiscal stimulus after the damage is done. These are the examples that DeLong focuses on.
Once again, this anti-libertarian argument is not as strong as it looks. Yes, governments were much smaller in the 19th century. And yes, living conditions were much worse. But to draw any causal connection between those two facts you’d need to do some cross sectional comparisons. DeLong does a good job of showing that the entire world was much poorer in the 19th century. If excess libertarianism was the problem, then you might have expected a mass migration of people from free market dystopias to the less laissez-faire parts of world. Just the opposite occurred. The migration was primarily to the relatively capitalist countries such as the US, despite our lack of welfare programs.
[As an analogy, it’s awkward for intellectuals on the center left to watch large numbers of working class Americans moving each year from blue states to places like Texas and Florida. Indeed, this fact explains their sudden interest in zoning reform, which is (ironically) a longstanding cause for libertarians like me.]
That’s not to say that the US might not have been better off with more welfare spending in the 19th century, just that it’s not an obvious example of the failure of extreme libertarianism. Indeed, I’d go even further. At the (cross sectional) level, I don’t believe world history offers any obvious examples of the failure of libertarian ideology. Not one. If I am wrong, which country is the failed libertarian model?
On the other hand, from a time series perspective there are some seemingly obvious examples of libertarian excess, including the Great Depression of the 1930s and the more recent Great Recession that followed the 2008 banking crisis. While those events certainly look like failures of libertarian ideology, on closer inspection they are both examples of the failure of government monetary policy. Nonetheless, here I believe DeLong is partly correct, as while I see these events as representing government policy failure, I accept DeLong’s view that they largely reflect government policy failures caused by ideas popular among many libertarians, such as opposition to stimulus when NGDP has fallen. So I certainly don’t wish to suggest that our hands are clean. Libertarians are like anyone else; they often hold incorrect and even morally objectionable views.
[BTW, throughout the book DeLong sprinkles in a few embarrassing quotes from libertarians like George Stigler and Friedrich Hayek. In contrast, one finds almost no examples of embarrassing quotes from intellectuals on the center-left, even though if you go back in history you can find plenty of such examples on issues ranging from race to gay rights. Whole books have been written documenting the left’s embarrassing excuse making regarding communist regimes.]
DeLong views Herbert Hoover as an example of how laissez-faire ideology can lead to disaster. The truth is more complicated. At the time, Hoover was regarded as being much more interventionist than Coolidge. DeLong correctly lists some of Hoover’s mistakes, but only those that would be viewed as mistakes by a center-left economist. Thus Hoover favored high tariffs and opposed devaluing the dollar. But DeLong doesn’t discuss the many (ineffective) actions that Hoover took to ameliorate the Depression. Nor does he discuss Hoover’s decision to dramatically raise income taxes on the rich (from 25% to 63%), or his success in jawboning corporations to avoid the sort of deep nominal wage cuts that allowed for a fast recovery from the 1921 deflation. That’s not laissez-faire. I’m not one of those libertarians that believe these policy errors caused the Great Depression—tight money was the main problem—but these mistakes made it somewhat worse. (As did FDR’s NIRA wage shock.) I suspect that most center-left economists support higher taxes on the rich and oppose nominal wage cuts in a depression, so perhaps this explains DeLong’s oversight.
Like most Keynesian economists, DeLong sees the collapse of aggregate demand as an example of the inherent instability of unregulated capitalism, although in my view the decline in AD was caused by a tight money policy adopted by the Fed in 1929 (and also the Bank of France.) Again, at the time many right wing intellectuals supported this policy, so I’m not trying to let them off the hook. But given what we know now, the cause of the Great Depression was clearly government failure.
Many libertarians oppose central banking. I find many of their arguments to be quite weak, as I’ve explained in previous posts. But even if it were true that abolishing the Fed would be a policy disaster, I don’t see how any center-left economist can claim that mistakes made by actual real world government central banks constitute a failure of laissez-faire. Maybe we need a central bank. Maybe laissez-faire in money won’t work. But if we have a central bank and it screws up, that’s not a failure of laissez-faire. Show me the Great Depression of the pre-Fed era.
The counterargument from mainstream Keynesians is that the Fed didn’t cause the Depression; it merely failed to prevent it. That issue gets bogged down in two areas–semantics and counterfactuals. It’s not even clear what the term “cause” means in macroeconomics. If a central bank could have prevented disaster X with policy Y, does not doing policy Y mean it caused disaster X? I’d say yes, but others might say no.
In practice, not much is at stake on the semantics question. I imagine that DeLong and I mostly agree on how Fed policy during the 1930s and 2010s could have been much better, even if we disagree as to how much good that would have done.
Similarly, we both agree that the housing bust did not cause the Great Recession. DeLong makes the same sort of argument that I made in my book on the Great Recession. Here’s DeLong:
By November 2008, there was no sense in which construction employment “needed” to fall. It had managed to make its adjustment from its boom-bubble 2005 high back to normal and even subnormal levels in 2006 and 2007 without a recession. By November 2008, employment in construction nationwide—and in Nevada— was well below its normal and average share of the US workforce.
Take out the term “bubble” and that’s exactly my view.
But whereas I then pivot to the view that it was tight money (not housing) that caused NGDP growth to collapse, DeLong thinks it was a Minsky issue; too much demand for safe assets. And swapping bank reserves for T-bills would not solve that problem. I address the myth of central banks running out of ammunition in the book I have coming out later this year, but let’s step back and consider what’s at stake in this debate. Basically, I believe the Great Recession was much worse than otherwise because the Fed did the wrong monetary policy, whereas DeLong thinks it reflected the fact that an unregulated economy is unstable and the government did the wrong fiscal policy.
By the intellectual rules of the game, monetary policy rules such as the gold standard, money supply targeting, price level targeting, NGDP targeting, etc., are viewed as being consistent with libertarianism, whereas activist fiscal policy is not. And yet from 64,000 feet up, if that’s the only distinction between libertarianism and pragmatic center-left ideology, it’s a fairly minor one. Especially given that one can have an activist fiscal policy without making government any bigger at all; you merely need to make the budget more countercyclical (without altering the average ratio of G/GDP.)
The world is very complex, so people can interpret facts in different ways. DeLong focuses on how industrial policies helped East Asian countries grow fast, whereas I see East Asia as a free market success story, with institutions such as Japan’s MITI being a net drag on growth. This is partly because the more free trading examples of East Asia (Singapore, Hong Kong) actually did a bit better than the East Asia countries with more subsidies and tariffs. And it’s partly because export subsidies and import tariffs tend to partly neutralize each other, leaving overall East Asian trade regimes more open than they might appear when looking at one sector at a time. And it’s partly because East Asia did better than Latin American countries that relied more heavily on import substitution. But I can see how others might view the picture differently—the world is messy.
I am not interested in defending libertarianism in all its forms. For instance, I am disgusted with the new leadership of the Libertarian Party. I strongly disagree with many libertarians on monetary policy issues. I favor carbon taxes and progressive consumption taxes. But I cannot accept DeLong lumping libertarianism in with communism and fascism as being one of three fanatic ideologies that ignore the evidence provided by the real world. He’s right about communism and fascism, but wrong about libertarianism. Yes, we make mistakes, but no more than the typical center-left or center-right economist.
The best parts of the book are the sections looking at ideologies such as nationalism, communism and fascism. On those issues, I am in complete agreement with DeLong.
His chapter on “inclusion” discusses issues such as race and gender, mostly from an American (moderate woke) perspective. My views are somewhere between DeLong’s and those of American conservatives. On the one hand, I think many conservatives underestimate how much things like tighter voting rules are aimed at suppressing African-American turnout. On the other hand, while the left is correct about the pernicious effects of racism (residential zoning is another example), they underestimate the extent to which differences in pay between ethnic groups and genders (both in the US and in other countries) is caused by factors other than current discrimination–particularly cultural differences. So I found the chapter on race and gender to be less persuasive than other parts of the political analysis–too much of the overly simplistic progressive “victims and villains” perspective. DeLong also takes a few jabs at critics of the welfare state, but I think he underestimates the disincentive effects of social welfare programs. The programs may be worth doing, but it’s disingenuous to dismiss libertarian concerns about work incentives. Marty Feldstein was at least partly correct. (Indeed, DeLong himself used to be a bit of a supply-sider.)
The book has a rather sad ending. DeLong sees the neoliberal era as ending around 2010 and mentions the recent rise of illiberal ideologies such as populist nationalism. My sense is that his views have shifted somewhat to left since 2007, for two reasons:
1. The Great Recession looks like it was caused by laissez-faire, and many laissez-faire proponents advocated bad policy responses.
2. In recent years, we’ve seen an increasing number of dangerous right wing demagogues in various countries.
My views are:
1. The Great Recession was caused by bad monetary policy, and many laissez-faire proponents advocated bad policy responses.
2. In recent years, we’ve seen an increasing number of dangerous right wing demagogues in various countries.
Unlike DeLong, my economic policy views have not shifted to the left. But regarding the political changes now happening all over the world, I increasingly align with the left.
In my view, DeLong recent pessimism about neoliberalism puts too much weight on time series evidence. Yes, growth often failed to improve during the neoliberal era, and even slowed in some cases. (I’d argue that’s for reasons explained by Robert Gordon–fewer promising new technologies.) But from a cross sectional perspective, neoliberalism looks much better. The countries that did more neoliberal reforms tended to do better than the more statist models. Few people in the UK, Sweden, Estonia, Chile, Australia or New Zealand wish to go back to their 1970s economic model.
Slouching Toward Utopia is a hard book to describe. The subtitle is An Economic History of the 20th Century. But it’s much more than that. Some of the best parts cover areas such as political ideology, diplomacy and military history. By conventional standards, DeLong probably tries to do too many things. But he has an extraordinarily wide range of knowledge, a sharp analytical mind, and an engaging style. So whatever the book is, I’m very glad I went along for the ride.
READER COMMENTS
BC
Oct 13 2022 at 11:50pm
“There are no obvious cases of failed libertarian countries to point to.”
To be fair, critics of libertarianism have a long list of catastrophic failures in the US. (Even though the US does not rank highest in economic freedom, these critics seem particularly disgruntled about life in the US.) These failures include:
Many people in the US that don’t want to buy health insurance end up without health insurance.
Until a few weeks ago, Americans that borrowed money for college were expected to pay those loans back. This is what is known as the “college debt crisis”.
America produces many billionaires with no mechanism for preventing that at least until such time that poverty has been completely eliminated. Thus, billionaires and poor people (by First World standards) exist simultaneously, in the same society, at the same time.
Top marginal income tax rates seem difficult to raise above about 30-45 percent (at least if one ignores add-on investment income and estate taxes). Thus, even for very high earners, the federal government ends up with less of each marginal dollar than the earner himself gets.
Speaking of estate taxes, even the very wealthy in America are able to give much of their accumulated wealth when they die to their loved ones instead of to perfect strangers that mostly are unaware that the deceased has died let alone mourn such death.
This is what can happen when unbridled capitalism is left unchecked.
BC
Oct 13 2022 at 11:54pm
For some reason, line breaks and bulletized lists appear when I type but get deleted when the comment posts.
Monte
Oct 14 2022 at 10:12am
This is the new Econlog-imposed format tax on unbridled opinion.
Scott Sumner
Oct 14 2022 at 2:27pm
Yes, I have problems with this too.
Alexander Turok
Oct 14 2022 at 1:03pm
“Until a few weeks ago, Americans that borrowed money for college were expected to pay those loans back. This is what is known as the “college debt crisis”.”
You can call it a crisis if you want. I call it, “you take out the debt you pay back the debt.” Same as car debt, mortgage debt, credit card debt, etc.
Scott Sumner
Oct 14 2022 at 2:07pm
The US government spends as much on health care as European governments (as a share of GDP.) The difference is that we waste lots more money, and hence cover far fewer people. I wouldn’t call it a particularly libertarian system, indeed libertarians oppose our system and played no role in designing it. Obama’s not a libertarian. I’d call it an incompetent mixed economic system.
Brandon Berg
Oct 14 2022 at 2:26am
If you haven’t already read it, check out this 1932 campaign speech in which Franklin Roosevelt railed against Hoover’s spendthrift ways while proposing to cut the federal budget by 25%.
Scott Sumner
Oct 14 2022 at 2:39pm
Yes, I did read it long ago.
Jeff
Oct 14 2022 at 3:44am
Saying there are no libertarian Hitlers or Stalins is like saying there are no centenarian serial killers. Of course there aren’t, because centenarians’ capacity for action is diminished overall. At that stage, even continued existence becomes a chore. Similarly, a libertarian state is simply one in which there is no longer sufficient energy to proscribe actions that are disapproved of nor move toward any common goal. The original organizing principle of the society is no longer persuasive; “libertarianism” is just the name given to the void left in its absence.
Mark Z
Oct 14 2022 at 1:38pm
That sounds like a good thing for libertarianism then, doesn’t it?
Jeff
Oct 15 2022 at 10:35pm
I guess that would depend on how you regard the existing regime in comparison to any competing political entities that might vanquish it.
Mactoul
Oct 14 2022 at 9:17pm
Libertarianism is reflected in social dissolution. Policy of open borders leads to countries being flooded by foreigners which will cause great problems in a generation or two. Some countries may never recover.
Scott Sumner
Oct 14 2022 at 9:32pm
Which countries have open borders?
Jim Glass
Oct 15 2022 at 10:37pm
“Which countries have open borders?”
Sweden’s experiencing a good deal of trouble as the result of being close enough…
https://www.econlib.org/the-unjoined-debate-2/#comment-298419
Thomas Lee Hutcheson
Oct 17 2022 at 6:51am
That is why we should be selective with immigration selecting those with MR>MC up to the point where MR=MC. Done that way would give up a huge increase in immigration.
MarkW
Oct 14 2022 at 6:32am
But regarding the political changes now happening all over the world, I increasingly align with the left
And I find myself increasingly alienated from both left and right. From a U.S. perspective, I find both the Democrats and Republicans of the 2020s to be much worse than the Democrats and Republicans of the 1990s — the only real exceptions being general acceptance of gay marriage and drug legalization. So many bad ideas of the past have been pulled off the ash heap of history by both parties (with some new ‘innovative’ bad ideas thrown in for ‘good’ measure).
JFA
Oct 14 2022 at 12:18pm
I agree… I consider myself much less aligned with either right or left these days. It used to be the case where I could find common ground on a handful of topics with someone of either partisan persuasion… now the choice is between “men can get pregnant” and “trying to treat people equally is a form of racism” on one side or an inordinate of contradictory conspiracy theories with a large dose of nationalism (rather than patriotism) tossed in on the other side, with the commonality being “do whatever it takes to win”.
Scott Sumner
Oct 14 2022 at 2:26pm
I mostly agree, but not with this:
“with the commonality being “do whatever it takes to win”.”
One party is much more willing to steal elections.
JFA
Oct 14 2022 at 2:37pm
Maybe… but the Dems reaction to 2016 was pretty extreme. Many prominent politicians thought the election was illegitimate (with Hillary Clinton (in 2020) intimating there was something illegitimate with the 2016 election), and Dems tried to remove Trump from office for collusion with Russia when they couldn’t show Russia had anything to do with the election aside from buying some Facebook ads. The Republicans worry me more, for sure, but given the opportunity, it seems Dems are willing to do whatever it takes. They just haven’t been in the position to do so.
Scott Sumner
Oct 14 2022 at 4:34pm
“Dems tried to remove Trump from office for collusion with Russia when they couldn’t show Russia had anything to do with the election aside from buying some Facebook ads.”
Really, I don’t recall anything like that happening. When did that occur?
JFA
Oct 15 2022 at 12:46pm
https://en.wikipedia.org/wiki/Impeachment_inquiry_against_Donald_Trump
Sorry I should have said “alleged abuse of power” instead of “collusion with Russia”… alleged collusion with Russia was why many Dems didn’t believe the 2016 election was legitimate.
JFA
Oct 15 2022 at 12:56pm
From the start of Pelosi’s speakership after the 2018 election, she faced calls to bring articles of impeachment against Trump, and some Dems tried to bring articles of impeachment in 2017, and the whole charade of trying to link Trump to Russia with the Mueller report (which was called for by 130 Democrats) was initiated in March of 2017 (Dems seemed to salivate over the possibility of the report recommending charges be brought against Trump). I think those actions (plus the actual impeachment) constitute an attempt to set in motion the removal of President Trump. I don’t have any respect for Trump, but Dems started working to try to remove him before he took the oath of office.
robc
Oct 14 2022 at 7:03pm
I agree, but I have a feeling we disagree on which party that is.
Scott Sumner
Oct 14 2022 at 2:09pm
I agree, although I’d say that the right is getting worse at a much faster rate than the left.
Tom P
Oct 14 2022 at 10:15am
While I don’t agree with the arguments, criticisms of colonialism are often framed as libertarianism/capitalism run amok.
Early colonialism was typically run with a profit-motive and often by corporations. The triangle trade, rubber terror in the Congo, Spanish exploitation of the new world, and Indian and Irish famines are all used by the left as examples of unchecked capitalism.
So a steelman argument of libertarianism run amok is a Haitian slave market to replace the natives that have all been worked to death, not a Swiss village. Again, I don’t agree that represents “true libertarianism”, but I think that’s what an honest left-leaning argument would look like.
James N. Markels
Oct 14 2022 at 1:36pm
Wasn’t colonialism all government-enforced? The goal of a colonizing government was essentially to increase its power and status, and reap from the colonized as much as possible. They did not intend to create libertarian enclaves, nor did they. The native people were oppressed at every turn. The only purpose of business (as permitted by the colonizing government) was to pursue the government’s goal of taking as much wealth out of the colonized nation for its own benefit. The whole central notion of libertarianism — individual rights, limited government — was not present in the least.
Mark Z
Oct 14 2022 at 1:44pm
The closest analogs to modern libertarianism that existed in the 18th (not sure about before that) century were generally anti-colonialism, so one would have a tough time attributing imperialism to libertarian ideology. If the argument boils down to, ‘any wrongs of private corporations can be laid at the doorstep of libertarianism/capitalism,’ couldn’t one do the same thing with governments? E.g., the holocaust discredits socialism because it was carried out by a government (actually, almost every war or act of genocide was probably committed by a government), and socialists are pro-government.
Scott Sumner
Oct 14 2022 at 2:11pm
If someone wants to view slavery as libertarianism, then I cannot even have a discussion with that person. All I can do is shake my head in disbelief.
Colonialism is an extremely anti-libertarian position, premised on restricting freedom.
Brian
Oct 14 2022 at 3:33pm
Scott,
I think Tom P. is right here. The argument is very common among the tin-foil-hat variety of leftists that capitalism has killed and enslaved far more people than socialist governments. Slavery and colonialism are seen to be a direct result of unregulated economic activity. DeLong’s reference to “extreme laissez-faire” ideologies seems to be aimed at the same ideas, and this is a very serious flaw indeed. DeLong is not offering a minor disagreement with you; he is embracing a full-on delusional view of the world (at least in my view).
I don’t know if you are aware that these types of arguments are widespread on the internet among left-leaning folks, but their resonance with DeLong’s argument makes me think that his book should be evaluated with that perspective in mind.
Scott Sumner
Oct 14 2022 at 5:59pm
I suspect you have not read DeLong’s book, as he doesn’t make that mistake. He’s a very smart guy. Only an idiot would equate slavery with libertarianism. There is literally nothing less libertarian than slavery.
JoeMac
Oct 14 2022 at 12:56pm
Hi Scott.
In your eyes, what is the difference between the ideologies of Nationalism and Fascism?
You advocate a carbon tax. By how much do you think it would be socially optimal for a carbon tax to raise national energy prices in order to curb the harmful effects of climate change?
Why do you assume Republican efforts to curb voting is aimed specifically at African-Americans rather than any anyone who votes for Democrats at all? This seems in conflict with the finding that that the last two Trump elections saw millions of Whites flee to the Democrats and millions of non-Whites flee to the Republicans.
If the entire point of acquiring income is to ultimately consume it, then why would a progressive income tax dissuade economic effort less than an income tax would? If you tell people they can consume less, then won’t they respond by putting less effort into acquiring less income?
Scott Sumner
Oct 14 2022 at 2:20pm
Fascism is an especially authoritarian and militaristic version of nationalism. Modi and Trump are nationalists, while Putin is a fascist.
I’m not certain what carbon tax is optimal.
One would have to have their head in the sand not to realize that in many of the voter suppression states (i.e., the deep south) the Democratic voters are mostly black and the GOP voters are mostly white.
A few southern states like Georgia have substantial numbers of white Democratic voters, but those tend to be well-educated professionals in the Atlanta area. So the Georgia GOP would have no gain from suppressing white Democratic turnout, indeed it might hurt them, as their white voters are less educated.
Both taxes discourage work effort, but income taxes also discourage saving and investment.
Mactoul
Oct 14 2022 at 11:21pm
What precisely is this voter suppression?
Requiring an ID?
My country needs an ID to vote and nobody objects.
Thomas Lee Hutcheson
Oct 17 2022 at 7:03am
That IS one way if not everybody has the “right” kind of ID (especially if the “not everybody” is distributed in potentially politically significant ways). I’m guessing that your country has a universal ID system.But making voter registration easier for people with certain characteristic than others when that characteristic is not cost effective in preventing voter fraud is another. Placement of poling stations is potentially another. When you put your mind to it, it’s not really hard.
Mark Z
Oct 15 2022 at 4:49am
Most of the policies characterized as ‘voter suppression’ in Georgia – e.g., length of early voting, restrictions on distributing food or drink, mobile ballott drop off – exist uncontroversially in other states, like northern, deep blue New York.
foosion
Oct 14 2022 at 1:03pm
A major thread is that there is a tension between a laissez faire market economy and outcomes that many or most regard as just – people have rights beyond the property rights valorized by the market. It’s not clear (at least not to me) what rights libertarianism supports. In that context, there’s Dean Baker’s point that property rights are not neutral, things such as the degree of patent protection have major effects on markets and distribution. What’s the libertarian position on the extent of patent and other IP rights?
Scott Sumner
Oct 14 2022 at 2:23pm
My view is that we have too many intellectual property rights. Some are valid methods of encouraging new invention. But they have gone way too far in areas like culture and business practices.
robc
Oct 14 2022 at 7:19pm
I start with self ownership and whatever follows from it.
Hannes Malmberg
Oct 14 2022 at 1:24pm
I agree that laissez-faire late 19th century US is paradise for its white citizens is paradise compared to Hitler and Stalin, and that the treatment of slaves and the native population were not libertarian.
My best candidate for libertariansim-run-amok would be the large famines in Ireland and India.
This is not to say that the British empire was fully libertarian in its colonies, or that no government regulations could be partly to blame.
Rather, I would apply the standard of “really-existing libertarianism” where the ideology is implemented by relying on slogans such as “intervention is bad” and “welfare is bad for incentives”, that these slogans are used even when markets are distorted by some policy, that arguments from second best have high status, and where libertarian slogans risk are partly captured by people who simply want low taxes.
By those standards, I think really-existing-libertarianism might have contributed to potentially millions of preventable deaths through starvation. You can read the wiki on the Indian 1876-1878 famine to see arguments about the importance of mean-testing, the danger of “dependency” if you do hand-outs etc. Very similar logic to modern libertarian rhetoric.
Excess mortality was above of 5 million, so in the same order of magnitude as many later calamities. I consider this a warning example of where naive reliance on libertarian slogans can lean you (but no problem for bleeding heart libertarianism who support a basic welfare state).
https://en.wikipedia.org/wiki/Great_Famine_of_1876%E2%80%931878
“The insistence on more rigorous tests for qualification, however, led to strikes by “relief workers” in the Bombay presidency.[2] In January 1877, Temple reduced the wage for a day’s hard work in the relief camps in Madras and Bombay[11]—this ‘Temple wage’ consisted of 450 grams (1 lb) of grain plus one anna for a man, and a slightly reduced amount for a woman or working child,[12] for a “long day of hard labour without shade or rest.”[13] The rationale behind the reduced wage, which was in keeping with a prevailing belief of the time, was that any excessive payment might create ‘dependency‘ (or “demoralisation” in contemporaneous usage) among the famine-afflicted population.[11]”
Scott Sumner
Oct 14 2022 at 6:07pm
That’s a possible example. I’m afraid I cannot comment as I am not very knowledgable about that case. I’d need to know more about the details. In most cases, colonialism is deeply anti-libertarian, restricting trade with other countries. I don’t think anyone would describe India as a particularly libertarian country. But if “incentive effects” were cited as a reason not to give needed aid during a famine, that would be a good example of an idea being pushed too far. So you may be right.
Mactoul
Oct 14 2022 at 11:32pm
There is no 19c libertarianism. None applicable to Irish or indian famine.
Libertarianism is essentially the doctrine that there are no political relations among men. That all men are equally strangers to each other. There is no true sense in which an American is politically related to another American rather than to an East Indian.
This opposes the classical idea of division of man into neighbors and strangers. Though nowadays it is preferred to put it as division between friend and enemy.
Henri Hein
Oct 14 2022 at 2:04pm
I think Hong Kong prior to the Chinese take-over comes pretty close to libertarian minarchy, at least on economic matters. It has no industrial policy or much regulation, and trade is generally free. Its economy has done well. Not only in terms of growth, it was also resilient (not immune) to crisis – it recovered reasonably quickly after 1998 and 2008. Its unemployment is often around 2%.
Social spending is much lower than most countries in the west. To take one example, spending on primary education in 2017 was a fraction of a percent of GDP. In contrast, the US spends about 3.5% of its GDP on primary education. With low spending on social services like this, according to the progressive theory, Hong Kong should be rife with problems. Yet, it has a healthy economy, low crime rates and no social unrest to speak of. (Again, prior to the Chinese take-over).
DeLong could point to lots of reasons why Hong Kong is special. It has a unique history and geographical and geo-political advantages. Maybe its model does not scale up to a country the size of the USA. Even with all that, if laissez-faire was the cause of economic instability and social problems, you would have expected Hong Kong in 1996 to be a hot mess. Instead, it had remarkably few problems compared to contemporaries.
Scott Sumner
Oct 14 2022 at 2:24pm
Good points. In addition, the one part of Hong Kong that is highly regulated (real estate) is also the most dysfunctional part of their economy—by far.
John Brennan
Oct 14 2022 at 2:34pm
Even the best historians still conflate Hoover with Coolidge. The two could not have been more different. One can make the argument that Coolidge represented the “laissez faire” conservatism of the Roaring Twenties but could not do so for Hoover. Jane Addams voted for him twice–and campaigned for him. As Commerce Secretary and President, he laid the groundwork for the modern federal bureaucracy that FDR was able to run with in the 1930s (See the work RECENT SOCIAL TRENDS–two volumes underwritten the Hoover Administration–to understand the head start given to the FDR Administration). He was also responsible for the planning and zoning regulatory regimes that have increased the prices of housing for going on 100 years now. See:
https://planning-org-uploaded-media.s3.amazonaws.com/document/real-story-behind-enabling-acts.pdf
Scott Sumner
Oct 14 2022 at 2:42pm
Yes, and the New Deal built on some of the initiatives planned by Hoover.
Thomas Lee Hutcheson
Oct 17 2022 at 7:08am
If Hoover had gone off gold in 1929, things would have been much different. Of course if the 1928 Fed had been less focused on asset bubbles, things would have been different.
Ilverin
Oct 14 2022 at 2:35pm
David Friedman wrote “Neither anarchy nor minarchy is necessarily libertarian. But anarchy comes closer.”.
So for David Friedman specifically, to me, Somalia seems like a failed state of his libertarianism.
Yes he did write the book “Machinery of Freedom” but just because anarchy mostly worked in ancient Iceland, that doesn’t mean that A) it would work that well everywhere B) is ancient Iceland’s anarchy actually more desirable than the average European government today?
A few more libertarians are like Ayn Rand and are not so anarchical as Friedman but still oppose taxation in general, which in practical terms will lead to a weak military. States like the Iroquois Confederacy no longer exist because they were militarily weak and are therefore failed states.
It might be useful to separate libertarianism from people as or more anarchist than Ayn Rand, then I would agree with Scott that we can’t identify failed libertarian states.
Scott Sumner
Oct 14 2022 at 2:45pm
“Somalia seems like a failed state of his libertarianism.”
I don’t think many libertarians would support that model. Somalia is in a state of civil war. And that’s not the model DeLong was discussing.
Andrew_FL
Oct 14 2022 at 6:12pm
Somalia is not a libertarian utopia but by many metrics the pre-existing state was so predatory that the people were, in fact, better off under anarchy.
Mark Z
Oct 15 2022 at 9:07pm
More specifically, Somalia was a predatory socialist state, so it’s particularly ironic that people on the left use a nation recovering the the ruination of a Marxist dictatorship as an example of libertarian dysfunction. In reality Somalia is yet another example of socialist dysfunction.
artifex
Oct 14 2022 at 9:55pm
Somalia has a federal government.
Jeff
Oct 15 2022 at 11:21pm
Not just taxation, why would someone make any kind of sacrifice or take any kind of risk–life, liberty, or property–for “libertarianism”? It makes no sense, unless you are just a glutton for punishment. In the U.S. we have certainly bandied about jingoistic sayings like “I disagree with what you are saying, but I will die for your right to say it.” But those only resonated insofar as part of the founding myth of the United States involved creating a haven for a particular type of religious dissent. Strip that away and those sayings lose all traction. Most 21st century Americans are not even willing to tolerate speech they disagree with, let alone die for it. “But I support free speech!” says the card-carrying libertarian. Ok…are you willing to die for it? If so, why on earth would you?
Mike Alexander
Oct 14 2022 at 3:06pm
There are two serious negatives to libertarian economics. One is rising economic inequality will necessarily happen. According to demographic structural theory (https://en.wikipedia.org/wiki/Structural-demographic_theory) the tendency towards political is assess using an indicator called the PSI. For aging countries with a fiat currency like the US, PSI is largely dependent on elite numbers and inequality. According to Peter Turchin, one of the top figures in this field, rising inequality leads to rising elite numbers, and so rising PSI. High PSI results in a crisis period in which elites come to see the problem, followed by a resolution period in which PSI is reduced.
This can be done by reduction in elites as happened in 1860. Northern elites called for the confiscation of 60% of elite wealth, eliminating most of them from the elite category, by emancipating their slaves w/o compensation. The result was civil war, which the Southern elites loss and suffered the loss of stature. An alternative could have been emancipation with compensation, paid for by Northern elites, which would have make both sets of elites poorer (i.e. inequality reduction). Unsurprisingly Northern elites wouldn’t go for this, and so it was settled on the battled field. Here is an example of a classic form of resolution–civil war.
Or it can be done with inequality reduction as happened after 1929, when American elites opted for inequality reduction via a special kind of response to a routine financial crisis. How this happened is discussed in my book https://mikebert.neocities.org/America-in-crisis.pdf . PSI is again high today as we are again in another crisis period. As far as I can tell the special kind of response used last cycle is off the menu this time. Instead we hear talk about civil war, political coup, financial crisis.☹ To give today’s elites a break I would point our that last cycles elites went through FOUR financial crises (1873, 1893, 1907, 1931-32), AND what Marxists call a “revolutionary situation” (around 1920) before they got the memo. But it seems the Federal Reserve is determined to prevent any more crises so I don’t see how any memo can ever be delivered.☹
The second problem with libertarian economics is when allowed to run without Fed intervention, it generates regular asset bubble which sometimes are followed by financial crises. Due to the unpleasantness of the aftermath of the 1929 stock bubble, Congress decided to prevent crises by preventing bubbles. For 54 years after 1933 there were no bubbles. But sufficient libertarian elements were restored in the 1980’s to bring back bubbles, first in 1987 and again in 2000, 2007, and today, one of which gave us a crisis, with the jury out on this one.
Scott Sumner
Oct 15 2022 at 11:06am
“The second problem with libertarian economics is when allowed to run without Fed intervention, it generates regular asset bubble which sometimes are followed by financial crises. Due to the unpleasantness of the aftermath of the 1929 stock bubble”
Actually, unstable Fed policy played a major role in the 1929 crash. But it certainly wasn’t a “libertarian” monetary policy, by any definition. Stocks were not overvalued in 1929.
Spencer
Oct 14 2022 at 3:20pm
Yeah, right. Even the janitor has something worthy to say. But DeLong was part of the stagflationists:
“Rethink 2%”
Capt. J Parker
Oct 14 2022 at 3:55pm
I would argue that bad monetary policy was the proximate cause of the Great Recession. The root cause was that the securities market created a huge volume of MBS and derivatives all of which lost value when housing prices declined. The bad monetary policy response to the change in demand for cash would not have happened without the change in demand for cash.
I think there’s a case to be made that the MBS meltdown is one small example of failure of laissez-faire.
My larger point is that economically literate progressives such as DeLong, are progressives precisely because they see market economies as riddled with market failures and externalities. The Great Recession is the most recent shining example. For them, the only way to achieve the benefits that markets offer is to have government stabilize them. Saying that the Great Recession was “caused” by bad monetary policy is pretty close to an acknowledgement that government sanctioned central planners really are required to stabilize markets. (and I think that acknowledgement still exists had the central planners used a GDP futures market to do NGDLPT and avoided the GR.)
The question of whether markets are robust and stable or fragile and in need of external stabilization really is an important one that, if resolved in favor of inherently stable might move the needle in favor of laissez-faire ideology and support the idea that libertarianism is a fact based practical philosophy.
jmkd
Oct 14 2022 at 5:53pm
According to the article below, in 2008, 57% of mortgages were “non-traditional”, meaning subprime and supported by the two government backed mortgage companies. The MBS failures of the GFC had plenty of government sponsorship.
https://cei.org/blog/the-financial-crisis-10-years-later-fannie-and-freddie-fueled-the-subprime-mortgage-bubble/
Scott Sumner
Oct 14 2022 at 6:10pm
You said:
“The bad monetary policy response to the change in demand for cash would not have happened without the change in demand for cash.”
This is a common misconception. The early part of the recession was triggered by a fall in the growth rate of cash, not an increase in cash demand. The Fed took concrete actions to deprive the economy of money.
jmkd
Oct 14 2022 at 5:59pm
I’m curious, how would you describe a theoretical “ideal libertarian” government? It seems to me that Communism is easy – when asked “who does…?” the answer is simply “the state”. I wonder if “no true Libertarianism” has been tried, because not only is it not practical, but it can’t even be described without very many subjective judgements on where to draw the line between state and private powers.
Scott Sumner
Oct 15 2022 at 11:11am
I don’t believe a 10% pure libertarian system would be ideal. But I do believe that the ideal system would involve a level of government intervention that would be so low that it would be viewed as libertarian by most pundits. DeLong doesn’t support even that sort of moderate libertarianism. But if it were adopted and effective, it would be widely viewed as libertarian, despite a few areas of government intervention. The role of government would decline by more than 90% from current levels.
Thomas Lee Hutcheson
Oct 17 2022 at 7:16am
Maybe so, but I’ll bet the remaining 10% would still be called “Socialist” by the people who call the actual system “Socialist.” 🙂
Brian Considine
Oct 15 2022 at 12:16am
” Nor does he discuss Hoover’s decision to dramatically raise income taxes on the rich (from 25% to 63%), or his success in jawboning corporations to avoid the sort of deep nominal wage cuts that allowed for a fast recovery from the 1921 deflation. ”
Jawboning? Is this like the mockery of Biden for asking gas stations to lower gas prices (after which gas prices actually did fall)? To what degree, I wonder, can a President simply stop a rising or falling price by talking about it? Especially when that price is such a high portion of the costs of a corporation.I can see a politician jawboning charity or supporting the local town fair day and local businesses write a check, a small % of their costs maybe because they feel an emotional tug or maybe because they shrug and say why not call it an attempt to court good will. Can a politician hold up or down a major marco variable like some type of Economic Atlas? I’m not so sure.Say he could. Doesn’t that say something odd about the free market model? Under perfect competition margins should be so thin no such jawboning would be possible. Every business would be in a desperate race for survival and wouldn’t have any room to do anything that didn’t seem like a strict mandate from the market. If the economy of the late 1920’s could just be shifted by speeches, it had to have been something quite different than a free market model.
Scott Sumner
Oct 15 2022 at 11:14am
The policy was effective in preventing many big corporations from cutting wages during the first two years of the depression. (Smaller firms did cut wages.) The steel industry didn’t begin cutting wages until September 1931, although other firms began earlier.
The federal government is a big bully, and big firms are reluctant to cross it.
ThePajser
Oct 15 2022 at 5:05am
The greatest evils that people commit are genocides and wars, and they are not caused by ideology. Even regimes that invoke a non-violent ideology (eg Christianity) have committed wars and genocides. These evils are the result of our instincts… “Ordinary capitalist regimes” did not cause wars and genocides much less than regimes that accepted more extreme ideologies.
Democratic regimes have indeed committed far fewer politically inspired crimes than dictatorships. But again, this has nothing to do with the economic system, but with the nature of the dictatorship.
Libertarianism is not fundamentally different from typical capitalism. There is a difference in degree, not substance. Just as, for example, Maoism is not essentially different from Leninism, Protestants are not essentially different from Christians, etc.
The thesis that Leninist regimes are actually existing socialism is a logical fallacy; equivalent to the thesis that David Koresh or Charles Manson are actually existing second comings of Jesus Christ. But the Leninist regimes did apply an egalitarian planned economy. That’s another story.
Philo
Oct 16 2022 at 3:49pm
You write that some U.S. financial crises in the last hundred years “largely reflect government policy failures caused by ideas popular among many libertarians, such as opposition to stimulus when NGDP has fallen.” I view libertarians as wanting the government not to control the monetary system. If, contrary to what they advocate, the government does take control and is determined not relinquish it, various libertarians may have various ideas about how it had best proceed in the face of crises caused thereby; but should any of these ideas be included as parts of “libertarianism”? Libertarianism primarily describes an ideal, a first-best. It may also suggest second-best policies appropriate when some parts of this ideal are being irremediably violated—more liberty is usually better than less–but the place of these suggestions within “libertarianism” is uncertain. After all, libertarians—people who agree on the ideal—may differ in their recommendations for second-best policy: many different second-bests may be (roughly) equal in the extent to which they are deprivations of liberty. So, libertarians’ incorrect ideas about policy–which undoubtedly are failures of particular *libertarians*–may not be properly described as failures of *libertarianism*.
(As an aside: the best path to follow to *effect a transition* from some statist condition or other to an ideal libertarian state will, in general, not be prescribed merely by “libertarianism,” but will require some supplemental theorizing.)
Mark Brady
Oct 16 2022 at 5:49pm
As some commenters recognize, so much of the debate about libertarianism is predicated on what constitutes property rights that are consistent with individual liberty. And that, of course, was, and remains, a continuing source of debate among self-identified classical liberals and libertarians. Examples include the scope and term of intellectual property, the terms of labor contracts, and the site value of land.
Rufus Frazer
Oct 16 2022 at 6:20pm
Hi Scott, thanks for sharing your thoughts.
(as a former high school economics teacher), I’m curious as to your thoughts on this Delong quote, taken from an la times book review (https://www.latimes.com/business/story/2022-10-04/uc-j-bradford-delong-economist-reaganomics-neoliberalism) (I haven’t yet read the book).
— J. Bradford DeLong, UC Berkeley
Counter to this, I seem to recall from my readings that Reagan and Thatcher were seen as public responses to government overreach. The LA times review (and a new republic review that mostly discusses Piketty) goes further and suggests post world war 2 years were a “glorious” proof of the success of social democracy… it’s unclear from the review whether or not Delong agrees. is macroeconomic history really this murky or has politics intervened…
Jens
Oct 19 2022 at 10:17am
I don’t know the book, but I don’t think much of the juxtaposition of the three ideologies either. Above all, two of them are now very old. A good critique of the libertarian ideology would be concerned with describing its inability to deal with change in the world of political decision-making and communication. Not even Putin is as bad as Stalin anymore. Especially for older – or more precisely, one must not underestimate the author – old-at-heart representatives this can be very difficult or perhaps even something they simply fail at. For example, in the often used comparison of the axes left/right vs authority/freedom, it could be that the criterion of orthogonality, which most graphical representations show, is simply no longer given.
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