The Daily Debate - 6/10/2013

By Robert Tracinski

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June 10, 2013

1. The "Libertarian" Utopia

2. If Men Were Angels

3. Dispatches


1. The "Libertarian" Utopia

Last week, I linked to a challenge from Michael Lind, who argued that libertarianism—by which he means a radical pro-free-market, small-government agenda—is not "credible" because no one has ever implemented it.

This argument doesn't exactly make sense even on its own terms. You can see the non sequitur when Lind compares the libertarian utopia to Communism.

"If socialism is discredited by the failure of communist regimes in the real world, why isn't libertarianism discredited by the absence of any libertarian regimes in the real world? Communism was tried and failed. Libertarianism has never even been tried on the scale of a modern nation-state, even a small one, anywhere in the world."

But having been tried and demonstrably failing is very different from not having been tried at all. An idea that has not been tried is one that just might work.

But there is no reason to analyze the argument on its own terms, because Lind's question displays an astonishing ignorance of economic and political history, as I described in passing last week.

Now I find that Lind's argument has been taken up by E.J. Dionne, who hopes that Lind's challenge "will shake up the political world."

"In his bracing 1970s libertarian manifesto 'For a New Liberty,' the economist Murray Rothbard promised a nation that would be characterized by 'individual liberty, a peaceful foreign policy, minimal government and a free-market economy.'

"Rothbard's book concludes with boldness: 'Liberty has never been fully tried in the modern world; libertarians now propose to fulfill the American dream and the world dream of liberty and prosperity for all mankind.'

"This is where Lind's question comes in. Note that Rothbard freely acknowledges that 'liberty has never been fully tried,' at least by the libertarians' exacting definition."

Dionne is committing several forms of sleight of hand here. First, notice that "libertarian," in this context, is a modern term for an old idea. Modern libertarianism, which dates back to the 1960s, has three elements: free-market economics; civil liberties (including opposition to drug prohibition and other attempts to legislate personal morality); and an anti-interventionist foreign policy. Dionne is primarily interested in discrediting the economic aspect of libertarianism, but that is a policy that has a much older name. It used to be called laissez-faire, and if you name it in those terms, it's clear that it has been tried.

That brings us to the other form of sleight of hand, where he quotes Milton Friedman about how we've never "fully" tried libertarianism. Well, no, not "fully," nor have we ever had "full" laissez-faire. But for a lot of America's history we've gotten close enough that it would count as a libertarian utopia compared to today.

What would you take as the central planks of a laissez-faire platform?

Well, there would be no central bank empowered to print money. We can check off that box: the Second National Bank was shot down by President Andrew Jackson in the 1830s, and we didn't have a true, modern central bank until the creation of the Federal Reserve in 1913.

A laissez-faire society would definitely be on the gold standard—a libertarian obsession—and America did remain on the gold standard even after the creation of the Fed. The gold standard was temporarily suspended by President Roosevelt in 1933, which put an immediate end to the Great Depression. No, wait, I'm sorry, the depression lasted another decade. A modified gold standard was re-established after World War II and lasted until Nixon killed it for good in 1971. Which also led immediately to runaway prosperity. No, wait, it led to runaway inflation.

Our ideal laissez-faire society would have no federal income tax—which America didn't have until we amended the Constitution to allow it in 1913.

There would be virtually no regulations on business. There would be no antitrust laws (as there were not before 1890) and no EPA (created by executive fiat in 1970). It would be like the Lochner Era—from the late 19th century into the 1930s—when even state-level regulations, such as minimum wage laws or regulation of work hours, were struck down by the Supreme Court as an infringement of economic liberty.

There would be no public schools, which were rare in the U.S. up to the 1850s, didn't really take off until the 1890s, and were not compulsory everywhere until 1918. Even then, management of the schools would be left to state and local governments and there would be no cabinet-level Department of Education, as there wasn't until 1980.

The federal government would not be involved in subsidizing higher education or guaranteeing student loans, which it didn't do until about 1965, and which was dramatically expanded in the 1990s. Which may explain why tuition has skyrocketed since then.

Above all, the perfect laissez-faire society would have no welfare state. There would be no unemployment benefits (as there weren't before 1932), no Social Security (as there wasn't before 1935), no Social Security disability (1956), no food stamps (1964), and no Medicare (1965).

As for the non-economic agenda of libertarianism, I suppose you could cite the absence of prohibitions on drugs up through 1914, though the War on Drugs that we know today was another wonderful innovation of the Nixon administration, dating to 1970.

And in foreign policy, there was a time when our default policy was not to "entangle our peace and prosperity in the toils of [foreign] ambition, rivalship, interest, humor, or caprice." Those words were written by an American statesman with a distinguished military record and a widely popular career in politics. You may have heard his name: General George Washington.

Now here's where we get to Dionne's last big sleight of hand. Part way through, he realizes he can't ignore this history, so he shifts his argument. Instead of arguing that laissez-faire isn't credible because it hasn't been tried, which was Lind's argument, he switches to arguing that laissez-faire has been tried but didn't work.

"We had something close to a small-government libertarian utopia in the late 19th century and we decided it didn't work. We realized that many Americans would never be able to save enough for retirement and, later, that most of them would be unable to afford health insurance when they were old. Smaller government meant that too many people were poor and that monopolies were formed too easily."

Fair enough. You might argue that this previous American system had problems that needed to be solved, or that the small-government attitudes that dominated from America's Founding up through the 19th century—Alexis de Tocqueville observed that "you hear it as much from the poor as from the rich"—were right for the time but are not right for our current circumstances. I would argue that this is true for Washington's non-interventionism, which made more sense when oceans were harder to cross and most of the world was still ruled by monarchs. The fact that I'm so much more of a hawk and an interventionist is a big part of the reason why I don't call myself a "libertarian," even though I agree with the free-market and civil-liberties aspects of their platform.

But here's what you can't plausibly argue. You can't argue that laissez-faire is not a credible political philosophy, that it has not been tried to any substantial degree, or that it has not been a success. The nation's first 150 years, the years that we were closest to laissez-faire, saw America's development from a small colonial backwater to a global superpower with the most prosperous economy in all of human history. Yes, people in 1913 were much poorer than they are today, but that's not the relevant standard. The relevant standard is that the common man was much better off than he had ever been before. The situation of the average person had improved at least as much from 1813 to 1913 as it has from 1913 to today.

If someone come up with a proposal to go back to a de facto gold standard, radically cut income taxes, eliminate Social Security and Medicare and the rest of the welfare state, get the federal government out of education, and shutter the EPA, I'm pretty sure E.J. Dionne would denounce him as a libertarian fanatic. But that person would just be advocating a return to the way America was from its founding up through the 1920s (which explains the current surge of interest on the right in Calvin Coolidge).

All of this is to say that America was a "libertarian utopia," or darned near to it by today's standards, for the first 150 years of its existence, which is at least a half century longer than it has been a modern welfare and regulatory state. Entitlements are currently the biggest item in the federal budget, but up through the 1950s, 80% of federal spending was on defense. Today, defense is down to 20%, so it is just in the past fifty years that the basic priority of the federal government has shifted from national defense to entitlements. It is this modern welfare state that is of relatively recent vintage—it is not quite as old as the Baby Boomers—and it has produced the result we can see both here and in Europe: out-of-control government spending that leads to spiraling debt.

Given this crisis, I would argue that it is the modern welfare and regulatory state that need to prove its credibility.


2. If Men Were Angels

The exposure of a free-floating NSA dragnet of phone records had the New York Times editorial board fuming that "the administration has now lost all credibility," before later amending it to add "on this issue." It's an addition that seems to soften the statement but doesn't really do so. Then the Times adds a very sensible observation: "Mr. Obama is proving the truism that the executive branch will use any power it is given and very likely abuse it."

It would be interesting to see what other conclusions the Times would come to if they actually took that notion seriously.

Peggy Noonan expands on this point.

"There is no way a government in the age of metadata, with the growing capacity to listen, trace, tap, track and read, will not eventually, and even in time systematically, use that power wrongly, maliciously, illegally and in areas for which the intelligence gathering was never intended. People are right to fear that the government's surveillance power will be abused. It will be. There are many reasons for this, but the primary one is that humans are and will be in charge of it, and humans have shown throughout history a bit of a tendency to play every trick and bend and break laws. 'If men were angels,' as James Madison wrote, limits, checks, balances and specifically protected rights would not be necessary. But they aren't angels. Add to all this simple human mistakes, innocent and not, and misjudgments. And add to that sheer human craziness, partisan lust, political mischief of all sorts. In the Clinton White House there was a guy named Craig Livingstone who amused himself reading aloud the confidential FBI files of prominent Republicans. The files—hundreds of them—were improperly secured and disseminated. Imagine Craig Livingstone at the National Security Agency. Imagine Lois Lerner."

Mark Steyn adds that the supposed "trade-off" of greater security may also be an illusion. This is the same government that let in the Boston marathon bombers and kept Fort Hood shooter Nidal Hasan employed even after he "put 'Soldier of Allah' on his business card." No really, he did. Steyn concludes that "this is less good cop/bad cop than no cop/bad cop."

"Because the formal, visible state has been neutered by political correctness, the dark, furtive shadow state has to expand massively to make, in secret, the judgment calls that can no longer be made in public. That's not an arrangement that is likely to end well."

But back to the James Madison quote that Noonan referred to. With a hat tip to Ben Domenech, here is the full version of the "if men were angels" passage, and boy does it seem relevant today. I couldn't possible improve on Madison, so I will give him the last word.

"But the great security against a gradual concentration of the several powers in the same department, consists in giving to those who administer each department the necessary constitutional means and personal motives to resist encroachments of the others. The provision for defense must in this, as in all other cases, be made commensurate to the danger of attack. Ambition must be made to counteract ambition. The interest of the man must be connected with the constitutional rights of the place. It may be a reflection on human nature, that such devices should be necessary to control the abuses of government. But what is government itself, but the greatest of all reflections on human nature? If men were angels, no government would be necessary. If angels were to govern men, neither external nor internal controls on government would be necessary. In framing a government which is to be administered by men over men, the great difficulty lies in this: you must first enable the government to control the governed; and in the next place oblige it to control itself."


3. Dispatches

I mentioned last week a Lee Atwater quote used by the left as their smoking gun to show that economic issues are just the right's "code words" for racism. I mentioned that in the original context, Atwater actually meant that he thought racism was fading as an issue. See a better explanation, complete with the sentence the left usually leaves out of the quote, which dramatically changes its meaning. See also a longer explanation here.

Niall Ferguson describes how runaway regulations have made it harder to start a business in the U.S., even as it has gotten easier elsewhere.

One of the reasons I favor a more interventionist foreign policy than the libertarians is the need to protect the freedom of the "global commons."

Egypt's cultural elites have declared war on the Muslim Brotherhood. Or rather, they have recognize that the Brotherhood is already at war with them.

"Robot Journalists Are Closer Than You Think." Closer than you think. Closer than you think. Malfunction... malfunction... malfunction....


—Robert Tracinski

The Daily Debate

edited by Robert Tracinski

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Robert Tracinski is also editor of The Tracinski Letter.

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