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Wednesday, July 24, 2013

A libertarian-populist policy agenda has to be both libertarian and populist

Jesse Walker|Jul. 23, 2013 2:15 pm REASON
By now the world knows about the revolt within the Republican Party over civil liberties and foreign policy, as Kentucky Sen. Rand Paul and others condemn PATRIOT Act–style encroachments on citizens' rights, Iraq-style projections of power abroad, and a drone war that threatens to blur the difference. Lately there's been talk of another rebellion, this one directed at the economic policies that have come to define much of the Republican Party, and for that matter much of the Democratic Party as well. The members of this movement, to the extent that a nascent tendency can be described as a movement, have been labeled libertarian populists—"libertarian" because they aim their fire at big government, "populists" because they aim their fire at other large, centralized institutions too. The LibPop idea is to take an axe to the thicket of corporate subsidies, favors, and bailouts, clearing our way to an economy where businesses that can't make money serving customers don't have the option of wringing profits from the taxpayers instead.
Ross Douthat of The New York Times has called this current "a strain of thought that moves from the standard grassroots conservative view of Washington as an inherently corrupt realm of special interests and self-dealing elites to a broader skepticism of 'bigness' in all its forms (corporate as well as governmental)." That skepticism generally takes the form of wanting to roll back corporate power by rolling back state power. But some LibPops are willing to flirt with more active anti-corporate interventions by the state, as long as they're aimed at undoing the effects of prior interventions. The man most closely identified with the "libertarian populist" tag, for example—Timothy Carney of The Washington Examiner—has endorsed the idea of breaking up the big banks.
In some quarters, libertarian populism has become not just a rallying cry for opponents of the corporate state but an idea for a new kind of Republican Party, one that, in Carney's words, "fights against all forms of political privilege." Here are three thoughts that anyone envisioning a new libertarian-populist GOP should keep in mind:
1. A libertarian-populist policy agenda has to be both libertarian and populist. Seems obvious, right? But if libertarian populism is going to be more than a slogan, it has to stay committed both to cutting back government and to battling privileged corporate interests. And there are two ways this can go awry.
In theory, any movement committed to limiting state power is going to challenge corporate power too, since so much of the state is dedicated to subsidizing or protecting different industries, from banks to broadcasters and from agribusiness to insurance. In practice, a politician familiar with free-market rhetoric will be tempted to fire it only at the easiest targets. It is easier to cut a tax than a subsidy, and it is easier to cut a subsidy for relatively powerless people than a subsidy for an influential lobby. Even figures who can boast a more pro-market record than the average Republican pol have been known to toss those tendencies aside when the right interest group is having trouble in the marketplace. Think about Steve Forbes endorsing a "temporary big role" for government—that is, a bailout role—in the economic crisis of 2008. Or, over on the Democratic side of the aisle, recall the ways the legendarily anti-spending senator William Proxmire of Wisconsin pushed to aid his home state's dairy industry. Give up the populist side of the LibPop agenda, and the libertarian side soon follows.
The other danger is that you'll keep the populism but lose the libertarianism anyway. After all, populism comes in many flavors. When a corporate powerhouse owes its position to the government yet the task of undoing the web of privilege that put it there looks too daunting, it's tempting to back a more conventional liberal measure aimed at bringing the business down to size. A potential case in point is Carney's proposal to bring the banks to heel via legislation to break them up. Big banks, he wrote, "inherently have too much political power, and...will inevitably use that power to guarantee bailouts."
That isn't a ridiculous argument, and I wouldn't want anyone to toss Carney out of the libertarian tent for making it. A federally mandated corporate breakup can be a net gain for economic liberty; when the Justice Department hammered AT&T in 1982, to give the obvious example, it ended a monopoly that had been created and maintained by the state. But the Ma Bell breakup also introduced a lot of new rules and, in the process, new ways for telecom companies to game the regulatory system. Carney suggests that "a blunt 'dumb' measure like size is not as prone to financial and political gaming as the 'smarter' plans that rely on regulators and politicians deciding what's best for us." That's probably true. But he goes on to suggest a still blunter measure—an anti-bailout constitutional amendment—that would be even harder to game, and would ultimately do more to keep the banks' size and power under control. Seems like a more promising crusade to me.
2. The important political question isn't whether libertarian populism is a winning message for the GOP. It's whether the GOP is a winning vehicle for libertarian populism. Taking on the corporate state is a good idea whether or not it's politically popular. It is true, of course, that the typical politician won't embrace an agenda unless he thinks it's going to win him votes. But for those of us who aren't politicians—or operatives in a politician's employ—there's no reason to care about winning votes unless those votes then generate something we want.
That might seem obvious too, but apparently it isn't. The most high-profile discussion of libertarian populism to appear thus far is a Paul Krugman column in The New York Times that never once bothers to engage, or even mention, the libertarian populists' central idea of challenging both state and business power. Instead Krugman treats the whole concept as a branding exercise aimed at winning "a pool of disaffected working-class white voters," then attacks it on the grounds that the strategy won't work. The LibPops' political agenda, he claims, is just "the same old policies" the GOP has always advocated, by which Krugman means less federal spending.
Well, libertarian populism does entail less federal spending. It also entails the wholesale rejection of the crony-capitalist conservatism that guided the Republican Congress in the K Street Project days and the heavy-spending, bailout-happy economics advanced by President George W. Bush. A libertarian-populist GOP would have slashed back the military-industrial complex and would have let the big banks fail. You need a serious case of myopia to see this as the same old Republican agenda.
There are rank-and-file Republicans who find these ideas attractive—if not in their most radical form, then at least in a shape that's a serious challenge to business as usual. And the so-called "liberty Republicans," represented by such figures as the Michigan congressman Justin Amash, have built a niche where such notions are welcome. But there's a difference between making a home in the GOP and taking the party over. By attacking the idea that government should be the servant of powerful corporate interests, the LibPops are challenging one of the basic operating principles of the modern Republican establishment. I wish them the best of luck in that fight, but I'm not at all optimistic that they'll win it.
Fortunately, they can still claim other victories...
3. Whether or not libertarian populism can win elections, it can win a lot of day-to-day fights. This is important to understand, because there are libertarians who have an aversion to populist arguments, apparently fearing that they inevitably end up growing rather than shrinking the state. Think back to early 2009, when the bailed-out insurer AIG prepared to dip into its tax-funded coffers to hand out $165 million in bonuses. As a loud populist outrage ensued, I criticized some prominent Republicans for rushing to AIG's defense. I was surprised to get negative feedback from a number of Reason readers, who didn't like the AIG bailout and weren't particularly happy about the bonuses but thought the uproar would likely serve as a wedge to increase the government's interference in the economy.
The scandal turned out to have a rather different effect. According to Ron Suskind's Confidence Men, an expensive proposal for a government-led bank restructuring failed to gain traction in part because of the anti-bonus backlash. "With all the money that already went to TARP, no one is getting that kind of money through Congress, especially with this AIG bonus disaster," White House Rahm Emanuel reportedly said at the time. Rahm Emanuel is in no way a libertarian and in no way a populist, and he had his own shady motives for blocking the plan. But he had a point about which way public opinion was tilting, and his argument carried the day.
If an inchoate outpouring of political disgust can scuttle that much, imagine what a more self-conscious LibPop movement could achieve—one that organizes at the grassroots, doesn't back down from entrenched enemies, and reaches out for left/right alliances as often as possible. The Wall Street bailout itself had a stumble when the House refused to vote for it, and that was before the Tea Party and Occupy movements were in place to be drawn on for reinforcements. I don't expect libertarian populism to take over one of the major parties. But it just might strike down some of the worst ideas the non-libertarian, non-populist elements of those parties try to sell us.

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