Technocrats and Populists: Who Trusts the People? By Ben Domenech.

Technocrats and Populists: Who Trusts the People? By Ben Domenech. Real Clear Politics, August 13, 2013.

Liberals and “libertarian populists” are wrong: politics isn’t a zero-sum fight between corporations and the poor. By Ezra Klein. Washington Post, August 12, 2013. Also here.

In Search of a More Populist GOP. By Stephanie Slade. U.S. News and World Report, August 14, 2013.

What Is Libertarian Populism? By Conn Carroll. NJBR August 8, 2013. With related articles.

Democrats Have Become the Party of Concentrated Elite Power. By Yuval Levin. NJBR, July 31, 2013. With related articles.

The “Country Party” and the “Court Party.” By Ross Douthat. NJBR, July 28, 2013. With related articles and links to NJBR posts on libertarian populism.

GOP must woo working people chasing the American dream. By Timothy P. Carney. Washington Examiner, November 7, 2012.


Domenech:

I appreciate Ezra Klein’s engagement with libertarian populism, and what he views as a fraudulent perspective from the populists on the left and right. But I have a few issues with his analysis. First, I’ve seen nothing from the small cadre of libertarian populist writers out there that suggests life in America’s economy today is a zero sum game, or that bigness alone is the cause of all ills. The problem is not the bigness of the corporate Bigs – it’s that they have partnered with Big Government to insulate themselves from competition, socialize risk, and warp the marketplace in their favor by building “bigger moats,” to use Jamie Dimon’s phrase, around themselves. This exacerbates many existing problems and, in fact, inhibits the kind of economic growth that takes us out of zero-sum politics.

 

To pick one example totally at random, consider Jeff Bezos’s Amazon and their shift in support for an internet sales tax. Is the problem with Amazon that it’s big? Of course not. I love Amazon as a consumer, and their bigness in the past week allowed them to bring me some tasty macadamia nuts, a new watch, a new book by Jay Richards, and a streaming David Fincher film. What’s the problem with Amazon? Well, Amazon opposed the internet sales tax supported by stores like WalMart for years. Why did they change their mind? In part, it’s because they realized they could make more money providing rent-seeking services to small businesses, processing the tax for them, knowing that the regulatory burden involved would prove particularly troublesome for mom and pop shops. They saw an opportunity to suck thousands of sellers away from places like eBay and into the Amazon Marketplace, not thanks to competitive value, but thanks to a sweeping new government policy. Amazon got to where it is by being a reliable and innovative company, and they are now supporting an effort to prevent competition from local sellers of books and other goods and make it more costly for potential competitors to enter the space where they have a dominant market share.

 

This is why libertarian populists oppose cronyism: because we recognize that a system which uses the power of government to hold down the next Amazon – the young, innovative, hungry businesses that work to compete – has all sorts of terrible unseen outcomes, including a more stagnant economy, one with less upheaval but also less innovation, and one which allows for higher prices. Imagine the world we would live in today if Washington had put its thumb on the scale for Wang or Commodore in 1983 and smothered Microsoft, Apple, and Intel – favoring the powerful over the companies run out of garages. The tech sector would still be hugely important, but it wouldn't be what it is today – and in its absence, we would see less wealth, fewer jobs, lower productivity and more. Except we wouldn't know that’s what we missed out on.

 

As for Klein’s comments about the poor: the poor are doing better in this economy by many measures than they have in past recessions – while income inequality has grown, mobility measures show more consistency – but I’d argue that’s almost entirely due to private companies and the benefits of competitive arenas of the marketplace (dramatically lowering costs, expanding access, forcing innovation, etc). At the same time, the costs of energy, food, and insurance premium costs are eating up larger portions of family budgets (to say nothing of how the cost of higher education inhibits mobility). In each arena, the regulatory/subsidy state is preventing competition and profiting from the poverty of others, creating disincentives for success. This in turn creates a societal bias toward the false security of government-run mediocrity instead of the promise of liberty and prosperity.

 

It’s far too simplistic to say this is corporations versus the poor, and Klein is correct that this is not what's going on here. What’s going on is that the Bigs have worked in tandem to create a system where corporate rent-seekers can profit from the paternalistic technocratic state. Where do subsidies come from? And where do they go? Someone has to run the life of Julia after all.

 

What’s most notable about Klein’s examples is that they all represent redistributional inputs, with the actual outcomes a dubious proposition: take money from one person, funnel it through the Bigs, give it to another, who in turn gives it back to the Bigs. And is this making any of their lives better? Or, like the Oregon Medicaid study revealed, is it just providing a paternalistic sense of security? Giving poor people more money, on the condition they stay poor, to purchase government approved corporate products and services via pretend markets closed to competition from small business doesn't help the poor. Quite the opposite, in fact: the current entitlement state is designed to help the poor stay poor more comfortably, and help the Bigs profit from their poverty – a system where Big Agribusiness and Big Energy lobby for subsidies, tariffs, mandates and quotas, and then profit from the entitlement programs which direct taxpayer funds toward them through the pockets of low earners. We live in a world where the Big Wall Street banks make billions off getting a cut from the swipe fees of every food stamp debit card for 47 million people across the country.

 

The point of welfare should be to help poor people stop being poor. Ronald Reagan’s belief that “Welfare’s purpose should be to eliminate, as far as possible, the need for its own existence” is completely absent from the world Klein frames. Many well-intentioned paternalists on both sides of the aisle believe the starving masses really are helpless, incapable of seeking out a better life for themselves in the absence of Leviathan’s handouts. Except this is a system which best serves the Julia Profiteers, not Julia herself. Throwing money at the problem misses the point that social capital can't be redistributed, and inputs of money don't yield outputs of mobility. Frederic Bastiat’s line about the bad economist being one who confines himself only to visible effect is apt: all the current system has to offer is the input of money sent in the direction of people, with no measure of the negative outcomes of disincentivizing success or crowding out private, voluntary alternatives to the State.

 

This is the difference between the technocrat and the populist, writ large: true populists trust the people – even the poor people.


Slade:

Amid the search for a way forward for Republicans heading into the 2014 midterm elections, the drumbeat for “libertarian populism” has been getting steadily louder. That idea, defended by writers like the Washington Examiner’s Tim Carney and The Transom’s Ben Domenech, asks the GOP to meld two strains within its ranks that have, until now, generally been seen as discrete.

 

Libertarianism is characterized by its support for only minimal government intrusion into the free market. Populism, meanwhile, is known for its support of anything that benefits “regular Americans” instead of powerful elites. At first blush, the two can seem uneasy bedfellows – after all, some may wonder, doesn't capitalism just serve to make richer the already rich?

 

The philosophy’s advocates don’t see it that way. Instead, they call for eliminating governmental programs primarily because those programs give a leg up to large, entrenched interests like super PACs, labor unions, banks and corporations. Libertarian populism is defined less by what it’s for and more by what it seeks to do away with – the reality that our current system unfairly privileges big institutions at everyone else’s expense. Setting aside that any policy prescription liberal economist Paul Krugman doesn’t like is probably worth pursuing, there are good reasons to think Carney and Domenech might be on to something.

 

There can be no doubt crony capitalism is a problem in America. When the biggest, richest, most powerful institutions can collude with government to rig the game in their favor, the competition that makes free markets the greatest force for freedom in the world begins to break down. Aspiring entrepreneurs are dissuaded from trying to start new businesses, because they doubt they'll be able to compete with existing ones – not on the merits, but in the big firms’ ability to buy influence with policymakers. And when producers are able to gain an unfair advantage through subsidies, bailouts, federal loan guarantees or beneficial regulations, consumers are forced to pay more for lesser products.

 

A great example of this is our needlessly convoluted “swiss cheese” federal tax code. Large entities have the resources to hire an army of lawyers and accountants to ensure they’re taking advantage of every possible loophole. Most individual taxpayers, well, don’t have that option. As a result, middle-income households end up paying nearly as much, and sometimes more, in taxes than the wealthiest Americans. And because big institutions can put their dollars to work lobbying the government for better treatment, the nature of the tax credits, write-offs and deductions carved into the code will skew more and more in their favor over time.

 

The libertarian populist answer to this problem is to flatten and simplify the tax code – not because doing so reduces the burden on the rich, but because it makes it harder for them to avoid what they owe. Fewer loopholes means less reason to spend huge amounts of money seeking out those loopholes. This does in a day what decades of carve-outs meant to benefit the middle class have failed to accomplish: It levels the playing field. And that is the crux of the libertarian populist formula: get government out so entrenched institutions can't keep using it to game the system.

 

At both ends of the political spectrum, Americans are hungry for an antidote to cronyism. Frustration with that aspect of the status quo is what powered both the tea party and the Occupy movements. In between, people may not quite be sure what’s wrong with the current system, but they know something isn’t right.

 

Therein lies the opportunity for Republicans. As the Examiner’s Carney put it, “It’s time for free-market populism and a Republican Party that fights against all forms of political privilege – a party that champions all who want to work and take risks in order to improve their lives and raise a family.”

 

There is ample evidence that this could be a winning strategy. As workers have struggled to bounce back from the recession, banks and corporations have been raking in the profits, and that hasn’t gone unnoticed. A report by the College Republican National Committee earlier this summer found the conservative narrative that young people most agreed with was, “We need leaders who aren’t afraid to fight existing interests like big companies and big unions in order to reform outdated and unsustainable programs.” Americans, especially young Americans, have become deeply suspicious of large institutions. More worrisome for Republicans, they have come to associate the GOP with the very institutions they mistrust.

 

The College Republicans asked a focus group of aspiring entrepreneurs why they voted for President Obama even though they see Republicans as the party that favors business. “The Republican Party would make it really easy to start a business and have a successful business if you already have that capital in your bank account . . . but we’re all sitting on our own various debts and our student loans, and the Republican Party isn’t helping us with any of that,” one respondent explained.

Both parties are looking to communicate that they’re on the side of regular Americans. Liberals can convey that idea by supporting wealth redistribution measures and ignoring the long-term negative consequences to the economy. But conservatives have to find a different way of proving to people they’re not just looking out for the rich and powerful. More and more it seems their only hope is by making the GOP’s raison d'être to get the crony out of capitalism.