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“Liberaltarianism” Is a Sideshow

No self-respecting left can make opposition to “rent-seeking” its focus.

Kentucky senator Rand Paul speaks about medical marijuana during a news conference as New Jersey senator Cory Booker looks on, March 10, 2015 in Washington, DC. Mark Wilson / Getty Images

Most people love attention, me no less than anyone. So I’m happy to respond to my learned friend Henry Farrell’s challenge to the argument I made in my critical review of The Captured Economy, the new book by our mutual friend Steven Teles and Brink Lindsey.

The object of that book is to map a new territory of cooperation between Left and Right, for the sake of traditional progressive goals. In pursuit of this political project, a new philosophy is offered, summed up by the term “liberaltarianism,” and further described as “anti-state egalitarianism.”

Let me say that in principle I have no objection to couplings of strange bedfellows in progressive causes, and my record proves it. Back in the early days of blogs, I launched a left-right blog known as “Stand Down” to campaign against the US invasion of Iraq. I assembled luminaries from the world of blogging, including Markos Moulitsas (Daily Kos), Duncan “Atrios” Black (Eschaton), Tom Tomorrow, Julian Sanchez (Notes from the Lounge), Radley Balko (The Agitator), and Jim Henley (Unqualified Offerings), among many others.

More recently I’ve been pleased to see left-right initiatives towards “auditing the Fed” and mildly encouraged by some of Senator Rand Paul’s bloviations against US imperialism.

My difference with the Lindsey-Teles (LT) book lies in the fact that these were tactical gambits, not the stuff of some new political philosophy meant to command broad acclaim or a position of prominence in the Left’s agenda.

The crown jewel of LT’s appeal is the rising proliferation of economic rents accruing to the very wealthy over recent decades — certainly a tempting target for the Left. Both LT and Henry suggest that rents are at the root of the historic growth in inequality. Unfortunately for Henry’s argument, if you’re traveling with Dean Baker — whose imprimatur LT and Henry both try to claim — the increase in inequality in the US is not a story of rents received by asset owners. Rather, as Dean explains in his book on the subject, it resulted from increasing inequality in labor compensation. (Piketty is name-checked in LT’s book, though rents play no part in Piketty’s account.)

But LT’s leading cases of rent-seeking — financial deregulation, occupational licensing, intellectual property, and the restriction of urban housing supply due to rent control and zoning — only partly overlap with rents received in the form of high wage and salary income. In contrast, an overriding factor in the growing inequality of labor income — for some the most important one — is something unappetizing for the liberaltarian palate: the withering of trade unionism and industrial action. Few factors run more against the grain of nostrums of competitive markets.

Farrell, making a point for trade unionism, breaks a lance for John Kenneth Galbraith’s idea that unions represent a form of “countervailing power” (also invoked by LT). Now I love me some JKG, always have, but from where I sit this defense, welcome though it has always been, comes from a stance of liberal noblesse oblige, an appeal to fellow elites. No self-respecting left would defend unions as a mere device to allow labor to strike some kind of unsatisfactory balance with capital. It’s the posture of a benevolent elite. For the time being we’ll take what we can get, but for the future what we on the Left want is no gods, no masters.

Farrell says, with the benefit of private assurances from LT, that unionism is in keeping with the thrust of their argument: rent-seeking that promotes equality is better than other types that do not. But unionism is vulnerable to the same arguments they deploy against occupational licensure or rent control or zoning, all cases where the distributional implications are either ambiguous, contestable, limited, or mitigated by other considerations.

Limited space precluded me, in my review, from expressing my sympathy for another theme in LT: the importance of democratic deliberation. The idea here is that rents die in the sunlight of open discussion and debate.

Unfortunately, the past couple of weeks in Washington DC may have rendered this focus a political nonstarter, and perhaps even a handicap. We’ve already witnessed the shenanigans that led to the enthronement of Trump’s first Supreme Court nominee. Now for the sake of a monumentally perverse, rent-choked tax reform, the Republican Party has abandoned all norms of democratic deliberation, not to say elementary human decency, to an unprecedented extent.

It takes two to deliberate democratically. To pretend otherwise amounts to unilateral political disarmament. You can’t fight malicious distributional policy with appeals to process. Farrell and LT neglect the possibility that it will be necessary to fight fire with fire. Bernie Sanders understands that.

If liberaltarians want to tail the burgeoning progressive movements in the US, they can be welcomed. But the tail is not going to wag the dog.