Thanks to the hundreds who participated in the polls. I’m going to shut them off at noon, Iowa time.
The results of the basic Hood Conjecture poll will be easy to display, but the Magic Buttons need some slicing and dicing for useful visualization. Sadly, I am a spreadsheet tard. Anyone out there a Google Spreadsheet ninja who wants to make me cool charts?
It would be fun to do a longer survey designed to reveal some actually meaningful information. But fill out my stupid survey anyway, because it’s really interesting to see how people answer.
[NOTICE: POLL CLOSED. DATA ANALYSIS UNDERWAY]
I’ll say more about John Hood’s post later. For now, let’s look at just this:
Most libertarians would rather live in a society with a smaller welfare state and illegal drugs than they would live in a bigger welfare state with legal drugs.
Is this true? Let’s find out!
I’ve never done this before, but I just used Google Docs to devise a simple poll. I hope it works! If you would not consider yourself a libertarian, please refrain from participating. I’ll post the results tomorrow.
Over at The Corner, Jonah Golberg and John Hood have been taking poorly aimed shots at “liberaltarianism.” I’ll try to reply to some of what they say, and maybe Brink will jump in. Jonah writes:
As I read Brink Lindsey and Will Wilkinson these days quite a bit, I think I’m on safe ground when I say they are suitably vexed by the stimulus bill and its chief defenders.
Which gets me wondering: Whatever happened to liberaltarianism?
[...]
[I]t seems to me that the stimulus debate clearly puts the lie to the idea that liberals and libertarians can see eye to eye on the large questions of political economy, at least for the foreseeable future. The first principles simply aren’t aligned. The theoretical arguments in favor of the stimulus amount to rubbing the libertarian cat’s fur backwards. And the so-called “libertarian center” hardly seems to be decisive or even relevant to the public debate. In the most important and fundamental debate about the role of government in a generation, the libertarians are lining-up with, and even marching out in front of, the conservatives.
Jonah here is guilty of a common mistake about the “liberaltarian” or what I like to think of as the “liberal” project. I’ll let Brink speak for himself, but I’m not that interested in short-term partisan politics. I’m interested in a much longer-term project. I want to help create the possibility of a popular political identity that takes the value of human liberty, in all its aspects, really seriously. As I see it, this project involves an attempt to reunify the separate strands of the American liberal tradition. I’m not sure what it is about that project that would that lead Jonah to think Brink or I should be vexed by the behavior of the Democratic Party and its operatives. The stimulus bill vexes me not at all. It’s what you’d predict knowing the current extent of Democratic power, the opportunity that the perception of crisis creates, and the composition of the Democratic coalition. As a student of James M. Buchanan, I’m no romantic about democracy.
Moreover, what is it about the era of George W. Bush that makes Jonah think that conservatives and libertarians see eye to eye on the large questions of political economy? I understand it is now politically expedient for Republicans to oppose whatever Obama is trying to do. But, frankly, the recent performance of the Republicans in Congress has been pathetic, managing to do little more than fight to get a bit more for their constituencies and a bit less for the majority’s. I do not remember hearing a plausible, principled alternative powerfully articulated by the Congressional Republicans. Maybe that’s because the great success of the GOP over the last eight years has been to destroy the reputation of free markets and limited government by deploying its rhetoric and then doing the opposite. Partisan Republicans choke on the truth that the emerging shape of the Obama era is the aftemath of the GOP’s successful, if unwitting, campaign to destroy the political economy they proclaimed.
There’s a lot of diversity within libertarianism. And the most common forms of libertarianism are, I think, still pretty well shot through with conservative reflexes bred by the long Cold War alliance between libertarians and the right. For many libertarians, hating the left just feels like home. So many libertarians will indeed come running home when called to service by the organs of partisan conservativism. Well, good luck to y’all, but I was never on the team, and I’ve never wanted less to be on it. I’d rather work the long angle.
I think Obama and the Democrats are already in the process of screwing it up. The romance of transformative hope is going to wear off pretty quick as all-but-uncontested Democratic policy deepens and lengthens the recession. There’s a lot of culturally and psychologically liberal people out there who are, and are going to be, interested in a liberalism that actually works. I want to use this time of ferment to work on developing the missing option in American politics: an authentically liberal governing philosophy that understands that limited government, free markets, a culture of tolerance, and a sound social safety net are the best means to better lives.
So “whatever happened to liberaltarianism” is that it’s an ongoing project to change who talks to whom, to freshen the stale dialectic of American politics, and to create new possibilities for American political identity.
Whenever I say nice things about Canada, some people get annoyed. After all, they have socialized medicine and are more inclined to regulate certain kinds of speech. But these are anecdotes. If looks for anecdotes on the lack of freedom in the U.S., one becomes buried in them. If I look at actual indices that attempt, however imperfectly, to measure various freedoms, the U.S. and Canada come out pretty much identical on a classical liberal conception of freedom. And Canada comes out ahead on contemporary capabilities conceptions of positve liberty. To my mind, the evidence pretty strongly supports the conclusion that Canada is at least as free as the United States. Why is this a problem for some Americans?
It’s true that the U.S. has in many ways a more libertarian culture and political tradition than does Canada. But then isn’t it all the more interesting to note that, despite America’s unique “land of the free” self-conception, we’re no more free than Canadians? I feel strongly that American culture is more varied, alive, weirder, synthetic, and creative than probably any other. This is in part because of, and not despite, the odd conservative and religions strands in American culture. And it is a culture especially amenable to all sorts of entrepreneurial experiments, which gives American culture a level of innovation and vitality (including countless varieties of religious weirdness) that I think partly explains why it is the world’s dominant exporter of culture. And I think the U.S.’s wealth relative to other countries is actually underestimated. We are astoundingly rich (recession or no recession) and this is a place of crazy opportunity. So I think the U.S. does better in positive liberty terms than it sometimes gets credit for.
But that doesn’t begin to mean that we live up to our reputation for the kind of liberty classical liberals tend to care about. My sense is that some American libertarians have a vague sense that if Canada really was more free, then they should want to move there. But they emphatically don’t want to move to Canada. My diagnosis is that many libertarians prefer to live in a place where it easy to find others who share their individualistic and libertarian values over living in a place where they would actually be more free, but would feel more culturally alienated.
Brink Lindsey replies to Matt Yglesias’s criticism of his paper:
I think Matt misunderstands both my argument and what Krugman has been doing. I quite agree that Krugman doesn’t want a full-scale reinstatement of the corporatist, cartelistic policies of yesteryear. I say as much in the paper. What Krugman does want, however, is to portray the economic policies of the early postwar decades as an inspiration for progressives today — an example of how activist, interventionist government can simultaneously promote growth and reduce inequality. To quote Krugman’s Conscience of a Liberal: “During the thirties and forties, liberals managed to achieve a remarkable reduction in income inequality, with almost entirely positive effects on the economy as a whole. The men and women behind that achievement offer today’s liberals an object lesson in the difference leadership can make.”
To get to that ideologically convenient punch line, Krugman is forced to systematically misrepresent the policies and culture of the early postwar decades. He has to leave out all the things he doesn’t like, all the things that virtually all his fellow economists and fellow progressives don’t like, about the supposedly good old days — for example, the widespread cartelization efforts of the thirties, farm supports, price and entry controls on large sectors of the economy, restrictions on retail competition, high trade barriers, racist immigration laws, and the sexist confinement of working women to a pink collar ghetto. All of these contributed to the compression of incomes, yet they don’t serve Krugman’s ideological purposes. So he ignores them. That’s nostalgia-mongering, plain and simple: the selective recall of the past to make it seem better than it really was.
I think Brink is exactly right, and that earlier periods of American history simply aren’t usefully comparable to the present. The so-called Great Compression was singular and, as Brink notes, it was driven in no small part by policies and social norms that decent, well-informed people should now consider completely off the table. When it comes to policy to address inequality, the relevant comparison is to other contemporary liberal democracies. I think the evidence is strong that a high level of spending on welfare and social insurance is consistent with high levels of growth, as long as the economy is not hampered by excessive regulation, restrictions on trade, and large amounts of unproductive public spending. American progressives would make a lot more sense if they concentrated almost exclusively on reconfiguring the composition of curent levels of American spending–for example, moving money from defense to social insurance–rather than arguing for additional tax-financed spending. When progressives push for, say, more heavily regulated labor markets and trade barriers, it shows that they’re looking back to an era that wasn’t as good as they think, while failing to grasp what makes contemporary high-growth, eqalitarian social insurance states work relatively well.
I found Brad Delong’s new The Week column really stimulating. The lesson seems to be that the specifically Friedmanite version of classical liberalism isn’t a coherent position. Friedman wanted relatively free markets in everything but money. When it came to money, he made a huge exception and wholly endorsed central planning of the money supply. The problem is, the sources of money are in fact too many and too decentralized for Fed Central planners to control supply. That is, the Fed doesn’t really have sufficiently monopolistic control over money creation. So Friedman’s big monetary policy exception to laissez faire is undone by the fact that rational monetary central planning isn’t really possible. That’s a neat argument, and I suspect it’s true.
Here’s Brad:
The power of Friedman’s theory was, in part, rhetorical. “Keep the money supply growing smoothly” sounds like it means to keep the presses in the Bureau of Engraving and Printing rolling at a constant pace, printing out a steady flow of pictures of George Washington. But that is not how “money supply” actually works. In economic reality, “money supply” means not just cash money but also credit entries the Federal Reserve has made in commercial banks’ accounts at the Fed; plus all the credit entries commercial banks have made in households’ and businesses’ checking accounts; plus savings account balances; plus (usually) money market mutual-fund balances; plus (sometimes) trade credit and the ceilings between credit card limits and consumers’ current balances.
No central banker controls all these vast and varied sluices of the money supply – at least not in economic reality. When banks and businesses and households get scared and cautious and feel poor, they take steps to shrink the economic reality that is the “money supply.” Businesses extend less trade credit. Credit card companies cut off cards and reduce ceilings. Banks call in loans and then take no steps to replace the deposits extinguished by the loan pay-downs. Without a single bureaucrat making a single decision to slow down a single printing press, the money supply shrinks—disastrously in episodes like the Great Depression. Thus in emergencies, to say that all the central bank has to do is to keep the money supply growing smoothly is very like saying that all the captain of the Titanic has to do is to keep the deck of the ship level.
[...]
Friedman thought (a) that the central bank could exercise enough influence over the money supply to effectively control it, and (b) that banks and other financial intermediaries would be regulated tightly enough that what is now happening would be impossible. But he never resolved the tension between his view that banks need controls and the Chicago view that business must be unfettered.
There are a couple ways to go from here. One conclusion we might draw is that successful control over the money supply requires heavier regulation of the financial sector–to in effect centralize control over alternative sources of money supply. It’s not clear to me whether Brad is calling for that or not. He seems primarily to be pushing the idea that when Monetariasm has to give way to Keynesian fiscal demand priming when monetary responses to recession get tapped out. But I think one could just as easily infer from Brad’s argument that since ideal monetary central planning isn’t really possible, we ought to give up trying and fully legalize markets in privately-issued money.
From Ray Fair:
The stimulus has a big effect in 2010, but by 2012 the economy is roughly back to baseline (except for variables like the federal government debt). In the baseline case the federal debt rises from $5.78 trillion at the end of 2008 to $8.74 trillion at the end of 2012. In the stimulus case the debt at the end of 2012 is $9.34 trillion, about $600 billion more than in the baseline case. This does not take account of possible increases in the federal debt from the bailout activity.
So there is short run gain from the stimulus bill, mostly in 2010, but the potential long run costs do not seem trivial. If the stimulus bill is passed and the bailout continues, it may be that large tax increases will be needed starting in late 2011 or 2012.
I don’t have a lot of confidence in Fair-style macro models, but it’s also a lot better than just guessing. Suppose he’s right. Will Obama and Congressional Democrats be willing to impose a big tax increase before the 2012 elections?
One thing people are disagreeing about when they disagree about the stimulus is about the value of public sector activities.
So true. The “OH MY GOD WE ARE ALL GOING TO DIE FROM RECESSION MONSTER” rush to pass the deficit spending package is a travesty of democracy because we could really use a serious national debate on the value of various forms of public spending. But that was summarily preempted. This bill is a transparent vehicle for an immense amount of new public spending, much of which will have no effect other than to benefit certain political constituncies and make most of us poorer. I find the debate over what kinds of government spending are and are not conducive to broad prosperity really interesting. It’s too bad we couldn’t have passed a responsible Rivlinesque stimulus bill, leaving open the possibility of increasing the value of public sector activities by better identifying which of those activities actually have value. But when a political party has a chance to pay off their hungry clients after years of famine, it’s a bit much to ask for a pause for intelligent public deliberation. I guess that’s why it never seems to happen!
Clive Crook’s exchanges with Krugman and Barro are a must-read. In response to Crook’s quite reasonable charge that Krugman and Barro have both made themselves and their profession look bad, the Princeton Punisher charmingly replies, in a post titled “What Happened to Clive Crook”:
Clive used to be a reasonable guy; in his mind he probably still is a reasonable guy. But he has misunderstood what it means to be reasonable.
So there you have it. If Crook thinks Krugman has made himself look bad, that’s probably because he’s forgotten what it even means to be a reasonable person. Clive amply demonstrates his reasonableness through the restraint of his persuasive reply.
But the really fascinating part of Crook’s post is the email exchange with Robert Barro. Unlike Krugman, Barro wants to talk about the relevant economics, not politics. And Barro indeed thinks a lot of important people are guilty of “voodoo macroeconomics.” Is he being a dick? I don’t think so. Barro, unlike Krugman, is one of the world’s best, most cited, and most influential macroeconomists. And he keeps referring to a project he’s working on that provides evidence that the multiplier for non-defense spending is zilch. I’m looking forward to the published study, and to the professional response. If he’s right, we’re pretty clearly about to make an immense mistake. Barro also clarifies a useful distinction worth spreading:
One thing I think you need to be clear on is the distinction between Ricardian equivalence and Keynesian multipliers. The first bears, for example, on how a deficit-finance tax cut affects aggregate demand. The Ricardian view is no effect, and the “standard” view is that the effect is positive but less than one. The multiplier has to do with how a change in aggregate demand affects output. It is possible to have a large multiplier even with Ricardian equivalence, and it is possible to have a small multiplier even without Ricardian equivalence.
True.