Scott Sumner on Liberaltarian Progress

I have generally been pessimistic about the prospects of the “liberaltarian” project of forging an alliance between libertarians and liberals (e.g. here and here). Economist Scott Sumner, however, makes a good case that this effort has achieved a lot if you look at it from a longterm perspective. Ultimately, the difference between Sumner’s view and mine is less stark than it seems. As I explained in this post, there is a difference between “liberaltarianism” conceived as a wide-ranging political coalition, and liberaltarianism as an intellectual dialogue between the two groups, in which libertarians seek to understand liberalism and try to persuade liberals to become more libertarian. I am pessimistic about the former, but I think the latter has achieved considerable good in the past and may achieve more in the future. Sumner defines liberaltarianism as “basically libertarians attempting to knock some sense into liberals on economic issues.” This dialogic approach is very different from Brink Lindsey’s famous 2006 proposal for a political alliance which first coined the term.

Here are some of Sumner’s specific points, with my comments:

Let’s review what liberals used to believe, before libertarians knocked some sense into them:

1. In the US, they believed the prices of goods and services should be set by the government. Ditto for wages. This took the form of the NIRA in the 1930s. It took the form of multiple industry regulatory agencies like the ICC and CAB. By the late 1960s and early 1970s they favored “incomes policies” which were essentially across the board wage and price controls. Today they generally favor letting the market set wages and prices. Very liberal Massachusetts recently abolished all rent controls.

This is real progress and some of it was indeed due to efforts at persuasion by libertarian scholars such as Milton Friedman (who persuaded most of the economics profession and many policymakers that price controls were not the right way to fight inflation). At the same time, it’s worth noting that many liberals still favor price controls in a variety of industries, most notably health care. Despite Massachusetts’ action, most liberals also still favor rent control.

2. In the US, they believed the government should control entry to new industries. They have abandoned that belief in many industries, and based on recent posts by people like Matt Yglesias, are becoming increasingly disillusioned with remaining occupational restrictions.

I don’t see as much change here as Sumner suggests. Most liberals still favor most of the occupational licensing regimes that we have. And a great many want to make some of them even more restrictive. Yglesias’ views are commendable, but unusual. In my own field of law, many liberals want to increase barriers to entry in order to combat the supposed oversupply of lawyers (despite the fact that reducing that supply would lead to even higher prices for legal services to the poor). It’s possible that, overall, liberals are modestly less supportive of occupational entry restrictions today than they were 30-40 years ago. But I want to see more evidence before I endorse that conclusion.

3. They favored 90% tax rates on the rich. Today they favor rates closer to 50% on the rich.

Like point 1 above, this is genuine progress. I do wonder how much of this change was caused by libertarian efforts at persuasion and how much by growing political resistance to extremely high tax rates. The “tax revolt” of the late 1970s, coupled with Reagan’s political success on a tax-cutting platform, surely persuaded many liberals that 90% tax rates were politically unsustainable.

4. In most countries liberals thought government should own large corporations. Today most liberals around the world think large enterprises should be privatized. Over the next few decades there will be trillions of dollars in new privatizations, and very few nationalizations.

Here, I think Sumner conflates liberals with socialists. The latter did indeed favor nationalization of all or most large corporations. Liberals generally did not. Still, the decline of this socialist worldview was a major step forward, and the work of libertarian economists surely had a lot to do with it. At the same time, the fall of the Soviet Union and (to a lesser degree) the failures of government-owned enterprises in Western Europe also had a major impact, probably an even greater one.

Finally, it’s worth noting that, even conceived as a dialogue rather than an alliance, liberaltarianism involves more than just economic issues. It also covers the “social” issues where liberals and libertarians supposedly agree more. Here, I think the two groups have drifted apart over the last several decades more than they have come together. On average, today’s liberals are more likely to support a wide range of restrictions on “noneconomic” freedom than those of forty years ago. Consider such issues as government-imposed regulation of smoking and diet, expansion of antidiscrimination laws to cover various new groups, campaign finance restrictions, and anti-“hate speech” laws. Liberals today are more supportive of all of these than they were back in the 1970s. The decline of the 1960s “counterculture” has also reduced left-wing enthusiasm for ending the War on Drugs (though an important minority of liberals still want to do that, or at least cut back on it). Perhaps libertarians made less effort to persuade the left on these issues than on economic ones; or maybe their efforts were badly conceived and ineffective. Regardless, this part of the liberaltarian dialogue has not gone well for the libertarian side.

In sum, I think Sumner somewhat overstates the amount of progress here, and attributes too much of it to libertarian persuasion and not enough to other factors. That said, his central point has a lot of validity. The gap between liberals and libertarians on economic issues has indeed declined over the last forty years (notwithstanding some backsliding during the current recession), and it may be possible to reduce it further in the future.