Responding to Trevor Burrus

Trevor Burrus at CATO has some thoughts about Demos' new effort to critique libertarian thinking. Burrus begins his article by distancing libertarians from certain misconceptions about their beliefs. Demos concedes and is aware of the benefits of capitalism enumerated by Burrus. Many libertarians and conservatives assume that their opponents are naïve about the historical contribution of capitalism to the elimination of widespread, desperate poverty before the Enlightenment. Indeed, if the conventional understanding of libertarianism is “market presumptionists,” as asserted by Burrus, then he may have more disagreement with fellow libertarians than with GGI. For example, the Cato Institute defines libertarianism by stating that government should not use their powers to prohibit voluntary exchanges, redistribute property, or interfere in the lives of individuals who are otherwise minding their own business.This is more individualistic than “market presumptionists.”

If by market presumptionists, Burrus means that that it is debatable whether private enterprise or government can best perform a task, but the burden of proof is on government to prove the necessity of government involvement, then he is at odds with Tea Party libertarians.  For them collaboration is considered treason, science is considered a matter of opinion. Their libertarian agenda is not debatable. Either my way or we will shut down the government.  In effect, philosophical libertarians like Cato have provided an ideological rationale and political cover for far more extremist libertarians such as the Tea Party.

The goal of Gordon Gamm Initiative (GGI) is to make the public aware of the damage to our country that has been caused by libertarianism and to move the pendulum of public opinion in the direction of recognizing the value of a government to serve the general welfare. The principal architect of the recent origin of the libertarian mindset was President Reagan’s assertion that our Government is the problem which is not capable of providing solutions to our nation’s problems.  All of the Republican candidates for president stated a libertarian thesis that they would not favor increasing taxes by $1 to pay for government services (except for John Huntsman).   It is the mindset of libertarians that are threatening to shut down the government rather than raise the debt ceiling so that our nation’s budget obligations will be paid.  Ron Paul stated that health insurance should be the responsibility of consumers and that if they weren’t able to secure health care because they did not obtain insurance, they should suffer the consequences of unavailable health care. Grover Norquist is known for his statement that government should be shrunk to the size of a bathtub and drowned. All of the above are reflections of libertarianism by political leaders. They are not “fringe” libertarians. Norquist has a contract with tea party Republicans that punishes them for violating their pledge to libertarianism. Their positions are not merely “market presumptionists.”

Contrary to the assertion of Burrus, the ideas of libertarianism have been a powerful influence on public policy. Historically, it was the early influence of libertarianism that argued for the freedom of contract to trump legislation limiting work hours and child labor. The principal thrust of the Tea Party has been to demonize government, dispense with Social Security and Medicare, and oppose revisions in affordable health care that would reduce the power of insurance providers from restricting health care access. The Cato Institute takes credit for the libertarian economic foundation of the Tea Party on their web site.

Both government and private enterprise play an important role in our mixed economy in serving the general welfare. However, unmonitored free markets provided the rationale for child labor, price gouging, monopolistic practices, deceptive advertising, and taking advantage of the disparities of information and power between buyers and sellers.  Advocates for freedom of contract (voluntary exchange) pitted the right to insert credit terms in small print that were usurious or misleading  against advocates of truth-in-lending laws and protectors of consumers with limited bargaining power. Consumers are not capable of evaluating drugs for their safety, effectiveness, and the truthfulness of the sales claims made of their benefits. What libertarians fail to acknowledge is that market failures are endemic and systematic. Government is necessary to enable markets to do what they do best, and to prevent the economy from coming off the rails. Imagine if government had cost the economy the more than ten trillion dollars cost by the financial market’s systematic mis-pricing of toxic financial assets!

Both GGI and libertarians can go back and forth in providing examples of government incompetence and private enterprise market abuse. These examples, however, will notserve to demonstrate the general ineptitude of either. The point here is that government is neither always the solution nor the problem.  GGI does not dispute the value of capitalism, whereas libertarians are uncompromising in their disparagement of the value of government.For example, Burrus refers to the Japanese internment during the Roosevelt administration as an example of government overreach justified on the grounds of national security. Another Burrus example was government drug laws that incarcerate people for what they freely ingest in their bodies. 

GGI would not defend the illegality of marijuana use “for their own good” (as stated by Burrus). This caricature of anti-libertariansis simplistic and not the only reason for regulating drug use.  The public considers it justifiableto have laws prohibiting the sale or encouraged use of drugs by minors.  They condonelaws against the use of drugs that impair driving.  There is a justification for regulating the representation of the ingredients of drugs so that customers will know what they are purchasing and that it is safe.  In other words, there are other community interests in restricting drug use and dispensation besides protecting people from themselves. 

Similarly, GGI agrees with Burrus that the internment of Japanese after Pearl Harbor in mass was an abhorrent decision. It was abhorrent because it treated all Japanese-American citizens as presumptive enemies of the U.S. because of their national origin.  However, it was the libertarians (who sanctify the freedom of contract) that opposed civil rights laws prohibiting discrimination against people on the basis of race, sex, or national origin. Otherwise, free market ideology would permit employers and home sellers to discriminate against ethnic minorities because it was their business or home to do with as they wish.

There are other western capitalist countries with mixed economies that have robust governments with adequate funding to provide oversight of financial markets, emergency assistance for environmental tragedies (equivalent of FEMA), and safety administration that sets standards for drilling, bridges, mining.

Other western capitalist countries honor their government employees and encourage their children to become public servants and pay them competitively with private enterprise.   They staff their agencies adequately to perform their duties. It then becomes the job of the legislature to prevent excessive regulation from unnecessarily interfering with the innovation and creativity of robust capitalism.

The criteria for government oversight are to insure a fair marketplace for the exercise of capitalism and to balance community interest with the entrepreneurial spirit.  The imbalance of financial power, information, and the sophisticated tools of marketing undermine a true voluntary exchange for consumers in contracts of adhesion. It is the role of government to balance the scales. When our government insures a fair marketplace for consumers and investors it enhances our creditworthiness as a place to do business, contributes to our well-being, and justifies our reputation for fairness.