Thoughts, essays, and writings on Liberty. Written by the heirs of Patrick Henry.

“There is nothing more unequal, than the equal treatment of unequal people.”     Thomas Jefferson

October 20, 2008

RIP Libertarianism, 1971-2008

by Brad Warbiany

According to Jacob Weisberg in Slate:

A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument casts as villain the Community Reinvestment Act, which prevents banks from “redlining” minority neighborhoods as not creditworthy. Another theory blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue.

There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.

Well, I would suggest that he goes off the tracks as soon as he says that we “fall wildly short of providing any convincing explanation for what went wrong.” I hear a hell of a lot more cogent analysis of what went wrong and how than either Republicans or Democrats have offered.

In fact, the whole article is a strawman. Weisberg essentially says that the whole mess was caused by deregulation, and that deregulation equals libertarianism. Further, since the crisis was “caused” by deregulation, that invalidates the argument for deregulation and thus makes libertarianism intellectually bankrupt.

He does have one thing right, though. Libertarians will be painted with the same broad brush as the socialists, who– when faced with the collapse of socialist nations such as the USSR, Cuba, etc– claim that socialism would work if only it was really tried. The problem is that his conclusion is based on the premise that anyone believes libertarian has been attempted — a premise that he’s actually trying to generate rather than to reflect. Libertarians have never claimed that the society that we advocate has been remotely enacted in America, and the whole time we’ve been criticizing the hodgepodge of regulation and non-regulation by government as evidence that government is captured by special interests.

This, more than any other reason, was why I’ve removed my support from the FairTax. I love the FairTax proposal, but my cynicism of government has proven correct too many times to believe that Washington would allow a proposal to go through without modifying it into a monster. If I believed they’d enact the FairTax as proposed, I may support it. But since I do not, I don’t want my name behind the horrible tax scheme that would eventually be enacted under the moniker “Fair”Tax.

Sadly, though, some would claim that Weisberg– if not right about the issues– accurately captures public sentiment towards libertarianism. This mess will undoubtedly give deregulation or non-regulation a bad name, completely glossing over the fact that we libertarians have been complaining about the perverse incentives cause by this supposed deregulation all along. They’ll follow this up as electorates always do, by running away from liberty into the waiting arms of their nanny-state saviors.

TrackBack URI: http://www.thelibertypapers.org/2008/10/20/rip-libertarianism-1971-2008/trackback/
Read more posts from
• • •

5 Comments

  1. Sadly, though, some would claim that Weisberg– if not right about the issues– accurately captures public sentiment towards libertarianism.

    This is a public sentiment about libertarianism created by his own faction, the MSM, so of course he’s right. So long as the media continue to either be ignorant of or flat out lie about the true causes of the problems in the world, they’ll be the enablers of the left. And I suspect they wouldn’t have it any other way.

    Cogent analysis means nothing when the MSM has convinced the world that 2+2=5.

    Comment by Quincy — October 20, 2008 @ 3:41 pm
  2. One thing that simply annoys me in this whole mess is that those attributing the situation to deregulation so rarely have any idea what they’re talking about. The only thing they seem to point to is Gramm-Leach-Bliley; but, AFAIK, the deregulatory aspects of G-L-B were one of the saving graces of this whole mess, because they are what has allowed healthy banks/investment houses to buy up foundering banks. There are rarely – if ever – any specifics as to which aspects of deregulation actually caused the mess.

    Now, I will concede that it is possible that the “right” regulations would have prevented the whole situation. The problem is that, to my knowledge, no one ever seriously proposed regulations that actually would have done so. This is not surprising, because regulations are inherently reactionary (at least in those instances where they are not brought about by “regulatory capture”), always seeking to solve yesterday’s problems. Regulators – and much more so Congress – lack the knowledge or understanding to be very good at predicting problems before they happen; even when they do foresee problems, they are not likely to be very good at assessing risks.

    I realize this will fall on deaf ears, but I would like to know: (1) what aspects, specifically, of deregulation caused this mess; and (2) how, exactly, those aspects caused this mess. FWIW – I will concede that it is possible that some deregulation played a role, but I have yet to see a coherent argument to explain how deregulation played the primary role and was a bigger cause than, say, the FMs.

    Comment by Mark — October 21, 2008 @ 6:56 am
  3. Mark –

    The only area of lax regulation that contributed to this was around the GSEs (Fannie and Freddie), but this can hardly be used as an argument for government intervention since the GSEs are nothing but massive globs of government intervention.

    The other regulatory changes either helped the economy through the crisis, like Graham-Leach-Billey, which was a deregulation, or significantly enabled the bubble, like the adoption of the BASEL II rules, which was an increase in regulation.

    In short, you won’t be getting a coherent explanation about how deregulation caused this because there is none. The coherent explanation is that this is entirely a failure of government, from the CRA encouraging bad loans to the GSEs enabling them, the Federal Reserve feeding the bubble with artificially supressed interest rates, to the adoption of new banking rules that changed how packaged assets were valued. It’s a chain of one government failure after another.

    And for anyone who objects to me placing the Federal Reserve and Fannie/Freddie in the bucket of government, at the end of the day they answer to Capitol Hill and the clowns that infest it. If they answer to Captiol Hill, they’re government.

    Comment by Quincy — October 21, 2008 @ 10:20 am
  4. “And for anyone who objects to me placing the Federal Reserve and Fannie/Freddie in the bucket of government, at the end of the day they answer to Capitol Hill and the clowns that infest it. If they answer to Captiol Hill, they’re government.”

    I’d go so far as to say that the FM’s were worse than government – they were private enterprises backed by the government. I’ve long said that private-public hybrids are the worst of all worlds, because they combine all the worst elements of capitalism and socialism, with none of the public benefits of capitalism.

    Comment by Mark — October 21, 2008 @ 11:07 am
  5. Good point, Mark. Any way you slice it, though, a free market failure this ain’t.

    Comment by Quincy — October 21, 2008 @ 12:14 pm

Comments RSS

Subscribe without commenting

Sorry, the comment form is closed at this time.

Powered by: WordPress • Template by: Eric • Banner #1, #3, #4 by Stephen Macklin • Banner #2 by Mark RaynerXML