After Trump won the nomination, I thought I was going to have to write a big post about picking up the pieces on the right after Trump’s loss. Turns out, Hillary Clinton was a much worse candidate that even I suspected, and now it’s the left that needs to look at themselves. I’ve got some ideas that could help them (and at least one that advances my own agenda).
However, even I have to admit that the reality is not that dire for Democrats politically, nor progressives ideologically. At last count, Hillary was winning the popular vote by 2.5 million. It seems quite possible that if they had nominated someone who was more palatable to independents and moderate Republicans in Michigan, Pennsylvania, and Wisconsin, Democrats would have done fine. No platform overhaul necessary. In fact, had Obama been able to win a 3rd term, I’d bet a lot of money he’d have won it, were he facing Trump.
However, Democrats are doing poorly in most state-level races, including the House. In light of this, and since people are talking about refurbishing left-wing ideas anyway, it’s at least fun to discuss ways to improve the Democratic Party. Bernie Sanders stated that Democrats have to go beyond identity politics to focus on progressive ideas. I agree with this on its face, but I’m sure what Bernie really means is we should make the welfare state bigger and envelop not just retiree pensions and retiree healthcare, but universal healthcare, childcare, and free college-level education. He also seems to pair this with a strong regulatory state and reduction in some individual rights such as free speech connected to campaign financing. Rather than focusing on groups of people as representatives of ethnicities or genders, I think it’s fair to say Sanders thinks we should focus on wealth and socioeconomic status. In political coalition terms, Sanders wants to focus on revitalizing and expanding the New Deal Coalition, bringing back the white working class voters who supported Trump. This isn’t a crazy idea, but it does seem like trying to fight fire with fire, or rather, populism with populism.
Let’s take a look at a favorite libertarian tool, the Nolan chart:
Sometimes this chart will be drawn with “Populism” instead of “Authoritarianism” in the bottom quadrant. “Personal freedom” and “economic freedom” are often more intertwined than this chart would like to admit, and both the left and the right can be all over this chart. When Ron Wyden argues against NSA spying and against harsher sentences for drug offenses, he’s definitely high on the personal liberty access on the left. But when Democrat Chuck Schumer supports the Patriot Act, the prohibition of aerial drones, and the banning of Bitcoin, he’s a lot lower on the personal liberty axis. Likewise, Republicans can vary from very libertarian leaning, high up on the right side (Ron Paul) to low down on the right side, ok with regulated markets and curtailing personal freedoms (Donald Trump). The problem with the new Bernie Sanders approach for the Democratic Party is that it challenges Trump for the lower middle of the Nolan chart, meeting him head-on, while ignoring the top middle of the chart. Even if there were enough voters just in that lower quadrant, The Economist points out that recently left-wing parties have struggled with populist victories, losing to right-wing populists in a litany of countries.
Rather than fighting populism with populism, I suggest a flanking maneuver for the left, countering a view of government solving most problems with a view of more personal freedom, more efficient markets, but also a government focused on solving market failures. A tolerant market welfare state, or a neoclassical liberalism.
I’m not the only one who has advocated something like this; Scott Alexander has an excellent Something Sort of Like Left-Libertarianism-ist Manifesto. I would really recommend reading his article on this, as the following arguments are just poor restatements of Scott’s more eloquent points.
Markets convey valuable information and coordinate action across millions of actors with differing preferences. To quote from Hayek’s famous essay, “The Use of Knowledge in Society”:
The economic problem of society is thus not merely a problem of how to allocate “given” resources—if “given” is taken to mean given to a single mind which deliberately solves the problem set by these “data.” It is rather a problem of how to secure the best use of resources known to any of the members of society, for ends whose relative importance only these individuals know. Or, to put it briefly, it is a problem of the utilization of knowledge which is not given to anyone in its totality.
Markets are really good at solving this problem of distributed knowledge. They can then get the most efficient allocation of resources, and even direct future production towards the creation of goods most demanded by consumers.
But markets don’t solve every problem. They don’t solve the “initial” allocation of resources, when some market actors are endowed with few goods or capital. Thus, while it’s important to allow these people specifically to trade what resources they have (likely low-skilled labor hours) in the most lucrative way possible, they still won’t be able to end up with much since they didn’t start with much. In other words, some people aren’t highly skilled and may never be. Despite a nice efficient market, they might end up with few available resources. Markets also don’t solve (by definition) externalities where market transactions harm unseen third parties (pollution is the usual example).
A solution here is to create a welfare system that assists low productivity workers, while leaving as much of the market as untouched as possible. We can thus solve the problem and also continue to take advantage of the distributed knowledge and allocation abilities of markets. To be clear, most welfare programs are pretty good at giving assistance to the poor, but in the United States, they come with far too many market regulations and exceptions. Most of the most popular Bernie Sanders ideas emphatically do not leave the market untouched. His $15 minimum wage advocacy has little empirical support. Rather than punish companies for hiring low-productivity workers, we should be either subsidizing wages for low-income earners, or giving a small basic income. The cost would not then be forced upon companies that hire low-skilled workers (the opposite of what we want), but distributed among society generally (the whole point of the welfare state). The government negotiating for Medicare rates of specific procedures and the exclusive use of government bonds for the Social Security trust fund are two more examples of welfare that shun a market based approach.
Interestingly, this pro-market-and-pro-welfare approach is actually somewhat familiar in Bernie Sanders’ favored Nordic countries. While their budgets are larger than the US, in several measures, their regulatory burden is more favorable and laissez- aire, and some indices also give them stronger contract and property rights than America.
There are other benefits to this low regulation approach too. Specifically, rather than banning things we don’t like, such as the use of coal to produce electricity or drinking alcohol, we simply tax them to disincentivize their use. As Scott states, this leaves us more options. Obviously, there are some benefits to doing things the state wants to ban; otherwise people wouldn’t be doing them. Coal is burned because it’s so cheap. The problem is that its burning has externalities. If the state increases the cost born by those who burn it to better reflect the pollutants it releases, energy from coal could still be used, just not to the same extent. This is a good thing! We should encourage behavior when the benefits exceed the costs. If the state can help create better incentives, individuals will make better choices themselves without blunt bans from the government.
This neoclassical liberal approach also means an opposition to Trump’s (and Bernie’s) protectionism and anti-immigration stances. If workers are concerned about their situation in the information economy, we need to liberalize their education opportunities, or even subsidize low productivity wages. But we can’t respond with trade barriers and stifle technological progress. The defense of classical liberal values, like tolerance, the rule of law, privacy, and freedom of expression, is also fundamental to this political position, especially as all these values all under threat by Trump.
I don’t really expect Democrats or the left generally to take this approach, but perhaps I can convince a few here and there that it would make sense. Caring about what happens to the unfortunate in society is something libertarians don’t always do well, but markets still have a vital part to play in improving society. Ultimately though, over the next four years, libertarians and progressives will have to work together on some issues, such as defending civil liberties. Hopefully, progressives will realize that libertarians are allying with them for the very same reasons they opposed them during the Obama administration, and had they listened then, our problems would not be so dire now.