Contra Yglesias

in part

My usual explanation for why I call myself a libertarian instead of a liberal is that after the enemies of liberalism stole its name we needed a new one.¹ In a recent Substack post, however, Matthew Yglesias writes that:

while some classical liberals have called the Republican Party home, liberalism has largely been a Democratic Party project.

His view is that “liberals” in the modern American sense, classical liberals and libertarians are all liberals in the same sense. Is he right?

I take the central feature of classical liberalism, as of libertarianism, to be the commitment to individual liberty, the right to do things, to buy, sell, speak, travel, “Laissez faire et laissez passer.” What is now called liberalism — the moderate left of the current U.S. political spectrum — abandoned that negative liberty in favor of what is sometime called positive liberty, the right to an adequate level of food, education, medicine paid for and provided, if necessary, by someone else. The two, both labeled liberty, are not consistent with each other; if you have a right to be fed by me I do not have a right to do something else instead.

Both positions are defensible, both have been held by large numbers of people, but they are not the same

Yglesias on Libertarians

He has two complaints. One is that:

Libertarian intellectual culture, by the same token, at times seems to take for granted that essentially all questions have already been answered because the ideology itself simply contains the answers.

That was probably true of most of the libertarians he argued with at DC poker games. I expect it was also true of most of the people on his side at those poker games. Most people committed to a political ideology take their beliefs for granted.

As evidence that it is even true of him, I offer his other complaint about libertarians:

libertarians are so averse to the distributional conversation that they veer toward denial about the extent to which strong effective states that facilitate transportation networks and electrical grids and stable banking systems are the foundation of economic growth.

The interesting thing is not that he believes in the benefits of government intervention in the economy; many people do. It is that he treats the positive effects of such intervention as a known fact.

The two worst failures of the banking system in US history were the collapse of the (government created) Second Bank of the United States in the 1830’s and the Great Depression a century later. The latter occurred when the Federal Reserve, created to defend the banking system against runs, failed to do so and the system, having relied on it, collapsed — Lucy, Charlie Brown and the football on a larger scale.

Attempts by the railroads of the late 19^th century to cartelize for the most part failed, price fixing agreements collapsing into competition in months. The problem was solved by the creation of the Interstate Commerce Commission with the power to enforce their cartels.² When new transportation technologies developed they too were regulated to prevent, not promote, competition. An airline could not reduce its fare without permission from the CAB or a trucking company run a new route without permission from the ICC, permission that their competitors could and would oppose. That continued until Alfred Kahn, a pro-market economist, persuaded Carter to deregulate transportation.

In Yglesias’ view, that “strong effective states … facilitate transportation networks … and stable banking systems” is a fact which libertarians “veer toward denial” of.

The Economic Case for Negative Liberty

We have two different mechanisms to solve the coordination problem, coordinate the interdependent actions of individuals. The obvious one is central control, someone at the top telling everyone else what to do. It works tolerably well for small groups, scales very badly. The less obvious solution is decentralized coordination, each individual controlling himself and his property, with trade, prices, voluntary exchange transmitting costs and values between individuals. To use inputs I must buy them from willing sellers, which transfers the cost of my using them to me. I sell my output to willing buyers, transferring its value back to me. If value is greater than cost it is in both my interest and our interest for me to produce those outputs from those inputs.

For the decentralized system to work perfectly every actor would have to bear all costs and receive all benefits of his actions, making it in his interest to take those actions and only those that produce net benefits. That does not happen because of what economists call market failures, situations where an individual fails to bear some of the cost or receive some of the benefit of his actions; the result is an imperfect solution to the coordination problem. But the alternative is not a perfect solution produced by wise and benevolent philosopher kings. The alternative is the political market, where individual actors — voters, politicians, lobbyists, government bureaucrats — bear almost none of the cost of their actions and receive almost none of the benefit, making it unlikely for the actions in their interest to be the ones in our interest.

Market failure is the exception on the private market, the rule on the public market.³

Yglesias quotes Churchill’s description of democracy as “the worst form of government except for all those other forms that have been tried.” It may not have occurred to him that if the best form of government is very bad that is a reason not to give government the power to do things even if the alternatives are imperfect, hence that libertarian opposition to government power over the economy may be based on more than being “averse to the distributional conversation.”

There is much more to his post, some of which I agree with; it could be a long argument, to which I may return.

The conclusion of the post, attributed to Ilya Somin, a libertarian, but endorsed by Yglesias, is that libertarians should seek an alliance with the center-left:

The traditional Cold War-era “fusionist” alliance between libertarians and cultural conservatives is, he thinks, dead and should be replaced by an effort to build bridges with the abundance camp on the center-left

That I agree with, have been making at least since 2007, when I wrote:

Since Republicans at the moment support more government—more even than Democrats as of the last time they were in power—it is worth looking for other allies.

It is even more true now. Left liberals, even the abundance faction, may not be classical liberals but they are closer to us and we are closer to them than either of us is to the Maga Republicans on the right or the progressive Democrats on the left.

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1. One that we stole from the left anarchists, but since they don’t believe in property rights …

2. Gabriel Kolko, Railroads and Regulation.

3. For a more detailed account of this argument see Chapter 53 of my Machinery of Freedom and, for a book length account, my Hidden Order.