How Government Helps Perpetuate Poverty

Poverty may be the worst thing that conservatives and progressives agree on.

It's not on policy, mind you. But their policy proposals are both motivated by same basic assumption about what causes poverty--namely, the ignorance and incompetence of poor people themselves.

Some may surely bristle at this description, so it's useful to see how this concept is evident in the ideas that are explicitly advanced by both conservatives and progressives.

Conservatives tend to assume that poor people are poor because they make bad life choices. Maybe drugs, maybe having sex and getting pregnant too early, or maybe just spending more than they can afford to. And from this, conservatives often conclude we need not use government policy to help poor people. After all, they brought it on themselves, so how can we hope to save them from their own bad choices?

As appalling that position may sound, the progressive take is not really much better. Painting with a broad brush, progressives generally believe poor people are poor because an array of systemic forces stand in their way of a better life. They aren't wrong about this, but they are wrong about what those forces are.

Usually, progressives view the poor as a victim of the capitalist system, and every business they interact with is hellbent on exploiting them. Employers want to pay them too little, landlords want to charge them too much, and grocery stores probably want to sell them junk food--culminating in the relatively new issue of food deserts.

But notice what the progressive story also entails. In a capitalist system, people can't be (legally) exploited without their consent. What progressives are often ultimately saying about poor people is that they don't know what's really in their best interest.

Splitting a flat with another family might be necessary to save on the cost of rent. But it would be too degrading to their dignity so it shouldn't be allowed; city planning codes can make it illegal to solve this problem. This may make housing too expensive, no matter. No matter, we'll have the government depress interest rates and build affordable housing to fill the void.

Working overtime might help poor people make ends meet. But as we know from Mr. Sanders, progressives believe that if you work 40 hours a week, you should earn enough to not be in poverty. Thus, employers should be punished for making anyone work more than that and they are--in particular, employers have to pay time and a half for every hour above 40 per week. This seems like a benefit to the worker, but in practice, it serves to eliminate choice and flexibility. If the 41st hour of the week costs 50% more than other labor, employers will be reluctant to pay for it. So poor people who need to work more than 40 hours to get by may need to find a second job instead, since working overtime has become artificially expensive for employers and that much harder to find.

Not to worry, this has a solution too. If working 40 hours isn't enough to get by right now, then we just need to raise the minimum wage. And so on, and so forth.

Each progressive intervention creates problems that warrant new interventions to solve them. But the root cause in all of it is the same. Poor people are not smart enough to make good decisions for themselves--what wage is appropriate, how much they should work, how they should live, etc. Instead it's up to the high-minded and selfless progressive to craft policy to make certain unsavory choices illegal--thereby preventing the poor from being exploited.

Thus we see that, while the motivations and policy prescriptions may differ markedly, the fundamental assumption about poor people is the same for many conservatives and progressives alike: poor people are poor because they don't act in their own best interest. For conservatives, this is a justification for doing nothing at all, a defense of the status quo. For progressives, it's a justification for an endless series of interventions in the economy designed to help the poor, without regard for likely consequences.

Libertarians take a different approach.

Broadly speaking, we agree with progressives that there are a myriad of systemic forces that exist today that help keep people in poverty. The problem is that we believe most of those forces are the creation of government, not of capitalism.

We believe that poor people are in the best position to decide what is right for themselves. And each intervention that restricts their choices, no matter how well-intentioned, is likely to make them worse off.

To see exactly how this phenomenon manifests in practice, we recommend this excellent article from Charles Johnson at the Foundation for Economic Education. In it, Johnson shows how well-meaning policies on everything from housing to food safety have created a world where it is extremely difficult for poor people to get ahead or even get by. It's an essential read for anyone who cares about these issues.

Here's the link:

Scratching by: How Government Creates Poverty As We Know It

Libertarian Presidential Ticket Has Another Disappointing Primetime Town Hall

Libertarian political views can be called many things, some deserved and others not so much--bold, heartless, inspiring, naive, peaceful, unconventional, etc. "Boring" usually doesn't make the list.

And yet, somehow at the latest Libertarian Town Hall, with Gary Johnson and Bill Weld at the helm, that was precisely the outcome.

True to form, Weld was coherent, but frequently wrong. Meanwhile, Johnson stumbled through slightly better positions, but was often wrong as well.

Last night, they were campaigning not primarily on the merits of libertarian ideas. Rather, they were campaigning on the alleged virtues of compromise and bipartisanship, and how their personal governing experience could bring those about.

While there were no major gaffes, they expressed many decidedly non-libertarian views.

How to solve the problem of domestic terrorism? They want to expand the FBI. Oh, and things like the Orlando Shooting wouldn't have happened if we didn't have so much due process left in this country (not a direct quote, but the necessary implication of their remarks).

What about terrorists overseas? Weld's okay with drone assassinations, and they were both okay with violating Pakistan's sovereignty to assassinate Osama bin Laden and with invading Afghanistan. Not mentioned--the fact that the Taliban were willing to extradite Osama bin Laden for prosecution, which could have obviated both decisions.

I confess it was around that time that I unplugged with the predicted level of disappointment.

Back in 2007, Ron Paul managed to capture everyone's attention and inspire a movement with a few brief minutes on a Republican debate stage. Johnson and Weld just had a second hour on cable news in Primetime to lay out the libertarian case, and I doubt very much whether anyone will remember it, fondly or otherwise, a few days hence.

Read Brian Doherty at Reason for the rest of the highlights from the town hall, if you can call them that.

On Utopia and Unicorns

Libertarians often face the accusation that we believe in utopia. "If people were all kind and generous," someone might say, "then we'd all get along and libertarianism would be great. But people are not uniformly good, which is why we need a large government to protect us."

In a way, it's an interesting argument because it begins by nearly giving away the store--of course libertarianism would be the ideal system!

But, at the same time, it's also effectively rhetorically, because it paints its opposition as the idealists. And few people over the age of 30 want to be idealists.

The trouble is that libertarianism doesn't assert any particular view of human nature, either bad or good. Instead, we simply assume that people tend to follow incentives and pursue their own self-interest. If they are incentivized to do bad or corrupt things, they'll often do those things. If they are incentivized to do good things, they will probably do those instead. Individual exceptions to the rule will always exist, but these are the general trends.

Most people would actually agree with the statement that people are motivated by their own self-interest. Some people may prefer to use an adjective like "greedy" and wish it were not the case. But this doesn't change the basic common understanding--that people pursue their own interests.

The core difference, then, between libertarians and everyone else is that libertarians apply this same assumption to everyone, whether they are in the government or in the private sector. Other political philosophies implicitly assume that people in government operate under a different priority--serving the public interest. But the people in government are just the same as people in the private sector. So why should we assume that winning an election will transform them into more moral and altruistic people than everyone else? Clearly, we should not.

And given that people in government and in the private sector all still follow incentives, the question becomes where are the incentives the best.

In the private sector, people pursue their own interest by providing goods and services to other people and businesses that voluntarily pay for them. If you want more money, your task is to provide better goods and services or provide them to more people. It is possible to achieve short-term gains through fraud or similar means, but the risk of getting caught is high and the consequences are severe. If you constantly rip off your customers, eventually you will have no customers.

In the public sector, the incentives are considerably different. If you're a politician, your self-interest is served by getting votes, and getting campaign contributions that help you get votes. You can get votes by genuinely making positive reforms that help people. But you can also get votes through pandering to special interests and dishonest fear-mongering. Judging by our current politics, this second approach seems to clearly be the dominant one. If you're a bureaucrat, the incentives may vary somewhat based on your particular job. One thing we do know, however, is that public employees in the US are much harder to fire than their private sector peers. And it likely goes without saying that this fact probably doesn't encourage excellence 100% of the time.

Thus, we might able to summarize the libertarian approach as follows: We think people in government have bad incentives and limited accountability, so we want the government to do as little as possible.

Other political camps, right or left, implicitly believe the following: We agree that people in government often behave poorly and are unaccountable. But, with the right people in charge and the right reforms implemented, it can be fixed.

Which position sounds unrealistic now?


Following on with this general theme, we're recommending a new article at the Foundation for Economic Education. It's called "Unicorn Governance," and the author persuasively suggests that most people who advocate expanding the government do so because they believe in a different kind of government. They don't want to expand a government with all the dysfunctions we know today, not really. Rather, they want to expand a different, conceptual government that works like they want it to in theory, even if it cannot be found in practice.

This is what the author describes as the "unicorn problem". Advocating for government policies based on an imaginary form of government makes as much as sense as advocating the use of imaginary unicorns as a serious mass transit solution. In short, we must confront the world as it actually exists, not the world we wish existed. Here's the link:

Unicorn Governance

Libertarian Party Nominates Johnson and Weld for President, Failure Imminent

The Libertarian Party convention occurred this weekend and the delegates selected Gary Johnson and William Weld to be the party's nominees for President and Vice President. Johnson and Weld are both former Republican governors in New Mexico and Massachusetts, respectively, and the case for their nomination was made almost exclusively in terms of electability--which is something of an odd criterion for a party that has never garnered above 1% of the vote in any previous presidential race.

Of course, this year is going to be different. Never in recent memory has the American electorate been this dissatisfied with their two primary choices. Indeed, in acknowledgement of this fact, the party actually awarded Hillary Clinton and Donald Trump a Liberty Outreach award for helping the American people search for political alternatives. Further confirmation comes from recent polls that featured Gary Johnson gaining at least 10% support in a hypothetical election contest among him, Trump, and Clinton. If this support rises to 15%, Gov. Johnson would likely be featured in the Presidential debates, which would be a major coup for the Libertarian Party. Moreover, there have even been unconfirmed whispers that Johnson's campaign could be the beneficiaries of millions of dollars of campaign contributions from disenfranchised wealthy Republican donors.

Anyway, this is the context in which the nomination decision was made. And in this context, one can almost understand the desire to choose the compromise candidacy that Gary Johnson and especially William Weld represent, over a more consistently libertarian choice like Austin Petersen or Darryl Perry. Johnson and Weld were viewed as the pragmatic choice, and both managed to win on the second ballot of their respective races (the LP holds separate votes for the VP and President).

I don't think it's all that debatable that the Johnson and Weld ticket will get more media coverage than the libertarian alternatives. Even before their nomination, they gained significant coverage and it's likely to continue. But having a platform to deliver the message is only part of the battle. It also matters what that message is. In the case of Johnson and Weld, the message is going to be many things; confusing is probably going to be near the top of the list.

Before we go further, it should go without saying that Johnson is preferable to Trump or Clinton (or Sanders) on basically every issue. That said, he and his running mate have been sufficiently bad on foreign policy at this point that my vote is likely to go elsewhere.

The Candidates
The former New Mexico governor comes off as eminently likable and real. He was also the first sitting governor to call for legalization of marijuana, way back in 1999, before it was trendy. And to his credit, he takes the libertarian stand on most issues.

The trouble with Gary, however, is that his positions seem to be driven more by instinct than by a set of consistent principles or study on any subject. While this may not seem like a huge deal, it becomes apparent in debates and interviews on a regular basis. The end result is missteps that are likely to turn off disenfranchised Republicans, Democrats, and independents alike. Some choice examples:

• On the minimum wage in an interview with the Huffington Post:
  
• Here, he's making the economic argument in a general way, which is fine. But then he literally says, "nobody works for minimum wage." This is obviously incorrect, and certain to be insulting to a left-leaning audience. On the contrary, the correct argument on this, to such an audience, is to emphasize that this policy is likely to make many poor worse off by reducing their employment opportunities and eliminating their ability to gain experience in the workforce. Meanwhile, if the same argument needs to be framed for a more conservative audience, the key is to emphasize freedom of contract and protecting the free market.
  
• On the issue of climate change and whether government should do more about it, in the debate Saturday night (start at 41:00):
  
• Here, Johnson ends up taking the correct libertarian position (that government shouldn't do anything else), but unfortunately his justification is factually and obviously incorrect. He claims that the free market shifted away from coal naturally as people voluntarily opt for less carbon-intensive fuels. While it's true that there has been a shift, it's wrong to claim the free market was a driver. In reality, increased regulations on the coal industry (and the threat of more in the future), in addition to incredibly low natural gas prices produced by the fracking boom, drove the shift away from coal. One of these is a market force, but the other is decidedly not. Here, by taking what might be seen as a middle ground (care about the issue but don't want government to fix it), he actually alienates both sides of the political spectrum. (His former competitor Austin Petersen, corrected the record immediately when it was his turn to answer the question in the debate.)
  
• Worst of all, on the question of the Iran Deal, again in Saturday's debate (start at 1:07:00):
  
• Here, Johnson starts out by saying he was initially for the deal, but then came to oppose it because he didn't want the US to give money to Iran, because the country finances terrorism. Of course, the money belongs to Iran already and relates to assets that were frozen (that is, confiscated) as a part of sanctions. Johnson's reply implied that he understood this fact, but he opposed it anyway. This is tantamount to believing the US should be able to steal from other countries if we dislike their foreign policy choices.
  
  Additionally, while it's true that Iran sponsors organizations that the US has labeled terrorist groups, it's also true that the main such group, Hezbollah, has also been one of the principal enemies of extremist groups like Al Qaeda and ISIS in Syria. If standard Washington "enemy of my enemy is my friend" logic were to prevail on this subject, Iran, would actually be a natural ally in the current scenario. Obviously, I don't endorse any such alliance, but it just goes to show how shallow and misleading Johnson's characterization is. Furthermore, if financing terrorism were sufficient to justify abolishing trade with other countries, most of the US allies in the Middle East would be off-limits. Just as important, Iran's president ran on a platform of normalizing relations with the West precisely so he could improve Iran's domestic situation--so it's not at all clear how much of Iran's money will ultimately be spent on military efforts / terrorism anyway.
  
  Another problem here is how this contradicts Johnson's professed support for diplomacy and his skepticism of military intervention. Above everything else, the Iran Deal mattered because it moved the US further away from war with that country and was a step toward freer trade. The details make it even easier to support from an American perspective, but even just that broad outline should make it readily supportable from a libertarian, noninterventionist perspective. Thus, getting this issue wrong is likely to be a bridge too far for antiwar voters on the left and among libertarians (quite likely including yours truly). Yet because he wasn't hawkish enough, it's also unlikely to do him any favors among more conventional conservatives.

In short, the pattern is clear and depressing. Gary Johnson's left-leaning social tendencies make him most suited to appeal to Democrats that can't stand Hillary. But his free market leanings and gaffes could easily turn them off. On foreign policy, he's likely to more peaceful than Trump and Hillary because the bar is so low, but his principles can be abandoned on core issues, making him a no-go for antiwar voters. And then on economic issues, he will occasionally take the right position for the wrong reason.

Regrettably, Gary's running mate, Governor Bill Weld, is likely to make matters far worse. To prove this point, all one needs to do is survey the list of endorsements Weld has made over the past few cycles: George W. Bush in 2004 (for foreign policy, of all things), Barack Obama in 2008, Mitt Romney in 2012 (that is, neither Ron Paul nor Gary Johnson), and initially John Kasich in 2016 until switching to become a libertarian. And to top it all off, Weld is known for being bad on gun control. Thus, as a practical matter, what this means is that any conservative that wasn't already alienated by Gary Johnson himself, will be successfully enraged by his vice president.

The end result is a ticket that finds a way to disappoint just about everyone in one way or another, without inspiring many in the process. This is seen as a pragmatic choice, but in reality, it's anything but. Johnson and Weld will likely manage to get in the debates, but as a libertarian myself, I'm deeply concerned how they will represent the ideas once they're there. The most probable outcome seems to be that the American people will be more familiar that libertarians exist, and more confused than ever about what they stand for.

Ultimately, the Libertarian Party has elected two compromise candidates, both of which are former politicians, in a year when much of the electorate despises compromise and politicians with equal fervor. And just as Rand Paul failed to garner sufficient support when he attempted to dilute the message of libertarianism, it is likely that Johnson and Weld will meet the same fate.

Penn Jillette's Peaceful Shortcut to Libertarianism

Famous entertainer Penn Jillette from Penn & Teller recently gave a speech to the Cato Institute about how he became a libertarian. His libertarian epiphany story is one of my favorites because it reminds me of my own. Penn didn't come to libertarianism because he was a capitalist or a right-winger or even an economist. Rather, he came to libertarianism from a "purely hippie point of view". Penn considered himself to be a liberal (in the modern sense), but he also believed in peace. And essentially, he became a libertarian when he realized it was most consistent with his emphasis on peace.

We'll get to the details in a minute, but first, it's worth noting that this is not the standard path to libertarianism. Speaking anecdotally, I think it's safe to say that most libertarians began as conservatives and then started to take the idea of limited government seriously. This inevitably leads them to question military wars abroad and the war on drugs--not necessarily because they are morally wrong, but because they require a massive government bureaucracy to implement and may curtail everyone's freedom in the process. Then, since conservatives typically agree with libertarians on taxes and economic regulations at the outset, it doesn't take much to push them over the edge to be full libertarians.

By contrast, the path from the left is much harder. The reason is that most people on the left do not share the conservatives' innate bias against high taxes or big government. Their focus is on outcomes--reducing inequality, protecting the environment, and helping the most vulnerable. If big government and high taxes are needed to achieve these ends, they would have no objection. Thus, the process of becoming a libertarian from the left means learning how expanding liberty (and shrinking government) is actually a more effective way to achieve all of these goals. There is an overarching theme if you're looking for it, but it's largely a case-by-case struggle. It usually requires of lot of good economics to understand that government actually inhibits progress towards everything that the left holds dear. 

My own libertarian epiphany story doesn't clearly fit with either of these extremes, but it's much closer to the latter path. I grew up identifying vaguely with the left because I lived in a conservative, religious state, and I wasn't religious. At the time the 2008 election campaign began, I was far more interested in sports than politics. Ron Paul's campaign changed that almost overnight--especially when I discovered the Giuliani moment. My key issue was a peaceful foreign policy, and Ron Paul was its most effective and consistent advocate. So I became libertarian-ish; I liked what Ron had to say on most issues, but I wasn't convinced on the entire libertarian platform.

In particular, the last holdout issue for me was the environment. I knew the economics of the Coase Theorem and the problems with regulations in general--freezing innovation, benefiting established corporations, and pushing up prices for everyone. But, having been personally involved in a few environmental activism campaigns in college, this was an area where my emotions still carried the day. I'd look at an issue like labeling GMOs or greenhouse gas emissions, and I'd suspend all skepticism about government effectiveness. I literally cringe to think of it now because my argument was the one that I now dread most, "This issue is just too important to leave to the markets (or freedom)".

So why I am telling you all of this? Because ultimately, I got over my last barrier to libertarianism in much the same way that Penn Jillette did. With the help of a close libertarian friend, Penn came to understand that government is defined by its monopoly on legitimate force. And then, because he believed so strongly in peace, he could only justify government force being used in a bare minimum of circumstances. It's well worth reading or listening to in full, but here's the key excerpt:

Then [my libertarian friend] started saying, “You know, you’re so against force. You’ve never hit anybody in your life. You’ve been beat up. You’ve been in carnival situations that have gone badly and people have hit you and you’ve not hit them back because you didn’t think it was life threatening. You are insanely peacenik in terms of the way you see war, what the country should do. Why do you think it’s so OK for the government to use force to get things done that you think are good ideas?” 

I started thinking that one really good definition of government is that government is supposed to have a monopoly on force. The government is the guys with the guns, and we are the people who tell the government what they can do. So in my morality, I shouldn’t be able to tell anyone to do something with a gun that I wouldn’t do myself.

Now I want to add here that I am incompetent and I am a coward, so this is all theoretical, what I’m about to say — but if you asked me: Would I use a gun to stop a murder? Yeah! Would I use a gun to stop a rape? Yeah! Would I use the threat of a gun to stop a robbery? Yeah, I think you kind of have to. Would I use a gun to protect our country and our way of life? Yeah! 

Would I use a gun to build a library? No!

 ...

And that is, in a nutshell, my entire view of politics: that I have to look over what people want the government to do and say “If I were given all the power, would I use a gun to accomplish what they want to accomplish?”

When the issue is cast in stark relief like that, it can seem hyperbolic. But we all know it's technically true. Some people might abide by some regulations because they genuinely agree with them. By for everyone else, they're doing it because they have to. And if you fail comply with the regulations, no matter how trifling, force can ultimately be used against you--maybe your property will be confiscated, maybe you'll be sent to jail by armed police officers, or if you're lucky, maybe it will go unenforced. We don't often think about it that way, but it doesn't change the reality.

This is the beauty of Penn's explanation. It's shocking and true at once. And essentially, it offers a shortcut for peaceful people on the left to become libertarians. Hayek and Smith and Mises are all great, but you don't need to believe in the invisible hand to believe in liberty. You just need to believe in peace.

And that's how I got over my support for government regulations on the environment; I applied this same reasoning. Here in Portland, Oregon, there were many regulations to choose from, but I started with one of the most obvious. Like many large cities, Portland recently implemented a ban on plastic bags within city limits. When I first moved here a few years ago, I thought this was a great thing. I'd read enough on the subject to know that the actual environmental benefit of paper over plastic bags is pretty negligible. But it was less about the policy itself, and more about what it symbolized. I was living in a place that shared my environmental ethic, so they would and could pass substantive laws to help the environment.

But then I applied the force test above, and the allure quickly faded. Would I use a gun to force someone to give me my lunch in a paper bag instead of a plastic one? No. Would I use a gun to force someone to drive a more fuel-efficient car? No. Would I use a gun to force someone to subsidize my bus pass? No.

If you believe in peace and keep asking those questions, then before you know it, you might be a libertarian too.

Is Libertarianism a Bankrupt Ideology?

Being a libertarian in Portland, Oregon during an election year is a slightly depressing experience. The topic of politics inevitably comes up--which I admittedly savor--and the overwhelming majority of my friends and colleagues favor Senator Bernie Sanders. Of course, there's nothing wrong with this. Indeed, I previously made the case that he could be the least bad option remaining among major party candidates.

There is some incidental common ground between your average libertarian and your average left-leaning Bernie supporter--on issues like drug policy reform, immigration, and criminal justice reform. But the underlying worldviews could scarcely be further apart. Many libertarian beliefs are on economic principles, limiting coercion, and a healthy distrust of all concentrated power. By contrast, leftists will tend to focus on outcomes and have a strong distrust of concentrated power, but only when it's in private hands.

Thus, even though libertarians and leftists share many of the same goals, political discussions between them can be confusing. The premises we're starting from are so different that it's a high barrier to overcome. As one example, the libertarian suggests a higher minimum wage will kill jobs; the leftist replies that corporations need to treat people fairly. Meeting in the middle between those two positions is obviously going to be a challenge. But that does not mean it isn't worth trying.

In what may be my only article of faith, I like to believe that intellectually honest people will eventually arrive at the same conclusions--provided they share the same values and discuss long enough. To that end, we must always be able to openly consider opposing points of view, especially if we want anyone to sincerely consider our own.

Enter, a somewhat recent article at Salon written by a former Ron Paulian who now supports Bernie Sanders. The piece was recommended to me by a friend who supports Bernie. And given that he has been the unwitting consumer of a great deal of libertarian articles from this blog, it's only fair that I should respond in kind. Here's a link to the piece we'll be discussing.

I gave up Ayn Rand for Bernie Sanders: How I grew up and traded libertarianism for a progressive “socialist”

The article touches on a variety of Sanders' key issues to make its case--ranging from vague critiques of capitalism to poverty and taxes. Unfortunately, it does not offer more than a word (that word being "Benghazi") on foreign policy--where Ron Paul's record would appear to be clearly superior to that of Bernie Sanders, for anyone that doesn't work for a defense contractor.

Not one to mince words, the article starts by describing libertarianism as a "bankrupt" ideology. Unfortunately, the author does not attempt to define this libertarianism ideology. This quickly becomes confusing, as the author proceeds to essentially conflate Ron Paul's brand of libertarianism with the following:

• The Tea Party
• Congressional Republicans who pushed the Benghazi scandal
• Donald Trump
• The right, in general, with an obligatory Ronald Reagan reference

Now, I don't assume any malintent on the part of the author, but I'd like to suggest this is a grave slander to libertarianism. Yes, libertarians shared some core grievances with the Tea Party Movement--such as the bailouts. So did Occupy Wall Street. From this fact, however, it clearly does not follow that they are part and parcel of the same whole. Moreover, it's deeply silly to blame libertarians for things that are wrong with government today because it implies that libertarians were in power at some point. Obviously, they have not been. So if one wants to critique Republicans in general or Donald Trump, please be my guest. Just don't pretend there's anything libertarian about them when you do so.

The author isn't making a philosophical critique of libertarianism, so we won't offer a philosphical defense. Instead, we'll touch on a few of the hot political topics mentioned and discuss the libertarian position on them. (Or to be more precise, since libertarians don't agree on everything, this is really just my take on them.)

Taxes and Poverty

From the article:

For too long, the anger and passion has been driven by Tea Party types and libertarians. Their solution seems to be throwing more gasoline on a trailer-park fire. Inequality? Cut taxes for the wealthy and implement a “flat tax.” Poverty? Eliminate the social safety net and cut food stamps.

Inequality is a problem, but poverty is a bigger problem. On the left, these are thought of as essentially the same issue. They are not.

To see why, imagine for a moment some future state in which the 1% has grown massively more wealthy than they are today, controlling say, 90% of all the wealth. But in this same world, the economy has expanded sufficiently that even the poorest people have shelter, access to clean water, and are no longer food insecure--that is to say, a world in which extreme poverty no longer exists. If the same economic system that produced massive inequality also eradicated poverty, would this be an acceptable outcome? I would say yes. 

Of course, you may object that the hypothetical world I've offered is implausible. But in fact, if you look at trends in global poverty over time, it's what we see occurring in the world today. The top income bracket has gotten progressively more wealthy over time, but extreme poverty around the world is the lowest it has ever been.

Reasonable people can disagree about just how much wealth redistribution programs might help or hurt the progress on poverty. But at face value, it is true that the same capitalistic system that has produced today's inequality, has also caused a dramatic reduction in poverty around the world. The problem is that we often imagine the economy as a fixed quantity, in which case wealth redistribution seems imperative to fix poverty. But if the economy is not a fixed amount--and clearly it's not--it follows that it is also critical to support policies that maximize economic growth as well. Those policies would likely include things like cutting taxes (for everyone).

Which brings us to the bogeyman of the "flat tax". Without getting too much in the weeds here, if one is going to have an income tax, it should not be truly flat. It should be progressive up to a point. So perhaps, the first $50,000 is entirely tax free, and then the rest is taxed at a flat rate of X%. That's the only credible kind of flat tax plan; it's difficult to make a strong case for why the government needs to take a cut of a desperate person's first few dollars of income. On this, the author and I should agree.

Of course, I say "should" there because the fact is that America already has a flat tax. Sure, we don't call it that; we call it the payroll tax. But that's what it is. It's a roughly 15% flat tax on everyone's income, starting from the first dollar earned.* And, as part of Bernie's new healthcare proposal, he wants to raise it considerably. For more on this, please see our previous discussion on Bernie's new tax. A literal flat tax is not a good thing--but that's true for payroll taxes as well as income taxes. And before one begins to contemplate welfare programs to help the poor, maybe we should start by preventing the government from taking the money they already have.

The question of a social safety net is a harder one. Certainly, returning 15% of their income is a great start towards reducing the need, but it's unlikely to eliminate it entirely. The general opinion of libertarians would be to suggest that private charity tends to be far more effective than direct government assistance. The reason is because the private charity has to prove to its donors that it's actually making a difference in order to keep getting donations and existing. In contrast, the government gets the taxes automatically and doesn't really need to prove to anyone that it is solving the problem. This understanding might recommend a policy that further encourages charitable contributions.

In the long-run, most libertarians would probably agree that a minimal or non-existent safety net was ideal. But we're a very long ways from that in any case, and cutting such things is nowhere near the top priority. For now, the focus should be on protecting the benefits of the most vulnerable people by setting the distribution programs on a more sustainable financial course. We recently outlined such a program in a series of articles on Social Security.

Socialism Inverted
From the article:

Sanders calls himself a socialist, which is just about as big an American insult as you get. Conventional politicians and business people decry the evils of socialism, except when they are wallowing in it. America has the most generous socialist government that has ever existed in human history, but it only applies to millionaires. If you’re on the board of a bank or massive corporation, the government has unlimited socialism for you. No cost loans, favorable bankruptcy laws, bailouts and tax breaks without limit. At the same time, unemployed students cannot discharge student loans no matter how bleak their financial circumstances. Socialism has been inverted. Rather than deployed for the poor and struggling, it’s doled out endlessly to people who don’t need it.

There's not much to disagree with here. Obviously, corporate welfare isn't literally the only kind of welfare, but it is the most insidious sort. No libertarian worth their salt would dispute that.

But notice that all the items the author highlights as problems are things the government has done for corporations. He's right to complain about them. But we must also ask how it became that way.

Here, libertarians would point to the problem of concentrated benefits and diffuse costs. Government will consistently fail to act in the public interest when it comes to questions of corporate welfare because the incentives are wrong. It'd work with just about anything, but let's consider the case of GM, which got bailed out during the financial crisis. The management and investors of GM had a very powerful incentive to see that deal go through--their very livelihood was at stake. But by contrast, the average taxpayer didn't have as strong incentive to oppose it. The loan was around $11B, and even if we assumed it wouldn't be paid back, that would come to less than $40 per individual citizen (assuming ~300 million Americans). So, who do you think Congress is going to hear from more, the people trying to save their whole company, or the people that might save $40, at some point, by opposing it? That's not a hard question.

Coincidentally, Bernie was in favor of that form of corporate welfare (though he ultimately voted against a bill including it because it also included bank bailouts). But the bigger point here is that large central governments are inherently corruptible because of the problem above. And you can hope for campaign finance or lobbying reform to solve that problem, which has plagued us for years. But those reforms suffer from the same fundamental challenge in getting passed. Even if they could work, the lobbyists have a much stronger incentive to block the reforms than the average voter does to support them.

Alternatively, you could solve it by eliminating the government's power to play favorites in the first place. A weaker government with less discretion--as the Constitution envisioned--isn't worth corrupting. So if you care about corporate welfare, libertarians would suggest your first goal should be to limit the size of the government that provides it.

Walmart and Totalitarian Corporations
From the article:

Corporations benefit from weak labor and a beaten down population. Many are almost too powerful to tame. Walmart generates more money in sales in a year than the GDP of Norway. (Don’t worry I’m sure it doesn’t do anything evil with all that money.) Walmart and like-sized corporations are no longer businesses. They are instead autonomous, totalitarian states existing right in our own nation. They care only for their own interests, unconcerned with national borders or anything like the public good.

Here, I'm particularly interested in the description of Walmart as a totalitarian state. The folly in this should be obvious. If I disagree with Walmart's policies or just hate the color blue, I don't have to shop there. I can just drive to a different store. And in my particular case, living in Portland where Walmart has been banished by public opinion to the deep 'burbs, shopping at anywhere besides Walmart is actually more convenient. But the key is that, to my knowledge, Walmart isn't forcing anyone to do anything. The employees don't have to work there; the customers don't have to shop there.

The whole interaction is voluntary.

I have a sneaking suspicion the same could not be said of your run-of-the-mill totalitarian state. By definition, the totalitarian state (and actually, any government) has a monopoly on just about everything it does, and almost none of it is voluntary. I don't go to the DMV, because I love the experience. I go there because I have to. And I don't pay taxes because I hate money and love financing wars. I pay them because if I don't, my property would be confiscated or I'd eventually go to jail. If I think the government is wasting my money or providing poor service, my only real recourse is to vote once every two years for a candidate that may or may not care about my pet issue. By contrast, if Walmart does something I hate, I can stop giving them money the very next day.

Since Walmart is a favorite punching bag for everyone, however, perhaps it's useful to say a word in their defense. Yes, I realize it's their marketing slogan, but there is some truth to the idea that Walmart helps its customers "Live Better". Walmart made its mark on the world by relentlessly driving down prices in its stores. One could object to some of the means used to achieve this--paying low wages, overseas labor, etc. But Walmart doesn't exist to give jobs to Americans. It exists to sell cheap products, cheaper than anyone else, and make a profit doing it. In the process, it just so happens to help poor people afford more goods and have a higher standard of living than they otherwise would.

So we can look at it as an autonomous totalitarian statelet, with all the nefarious undertones that entails. But we could also look at it as one of the most successful poverty relief agencies in the world--since we're just using words without any real connection to their meaning. In reality, it's neither of these things. It's just a business pursuing its own narrow profit-motive. Fortunately, the resulting benefits extend beyond the board room.

Summing Up
The author concludes by emphasizing the common ground that leftists and libertarians share, and an implicit call to have them join the Bernie movement. One wonders how many libertarians would still be reading after the balance of the article was spent alternately mischaracterizing their views and expressing total contempt for them. The article was less about refuting libertarian ideas and more about simply declaring them to be wrong. Which is fine. He's entitled to his opinion, and I'm sure many Salon readers appreciated his take.

Still, he is right to point out the common ground. Leftists and libertarians share many of the same goals; we just see different paths forward. And if we are to find common cause more often, we must begin by first understanding the ideas in depth--both our own and colleagues' on the other side. Because you can't critique an idea you do not understand. And you cannot persuade anyone if you start by denouncing them and their ideas as "bankrupt".

*Technically speaking, it's actually worse than a flat tax in terms of progressivity. After a certain dollar threshold, high-income individuals are exempt from paying a portion of the taxes on the remainder. This makes it an explicitly regressive tax. 

Charles Koch's Olive Branch to... Bernie Sanders?

Yes, you read that headline right. Recently, Charles Koch penned an op-ed in the Washington Post aimed at emphasizing areas of agreement between principled leftists and libertarians.

If this sounds strange to you, you can certainly be forgiven. On the left, the billionaire Koch brothers are commonly seen as the symbol of all that is unholy and wrong about American politics. And in certain ways this association is a plausible fit. Their company, Koch Industries, is significantly involved in the petroleum industry, it is the second largest private company in the US, and they are politically active. The combination of these factors naturally created a big target.

But when one looks beyond these surface-level characteristics, the logic breaks down a bit. The Kochs identify themselves as libertarians after all. And even when you find an attack on them from the left, their libertarian ideology isn't denied. Rather, it just illustrates how "extreme" and dangerous they are.* It's almost as if these critics think that if you believe hard enough in the Republican party, you somehow become a libertarian.

In reality, however, lumping libertarians in with modern-day Republicans is deeply lazy. It's also confusing. How many Republicans do you know that are antiwar, pro-marijuana legalization, and supportive of criminal justice reform? If you got above five, we'll need to compare notes.

Libertarians actually have a quite a bit of common ground with liberals. We may not always agree on the solutions, but we care about many of the same problems. Koch's article is a hopeful step towards reminding us of that.

The whole article is worth reading, but the following excerpt gives you a sense of the conciliatory tone adopted:

The senator [Bernie] is upset with a political and economic system that is often rigged to help the privileged few at the expense of everyone else, particularly the least advantaged. He believes that we have a two-tiered society that increasingly dooms millions of our fellow citizens to lives of poverty and hopelessness. He thinks many corporations seek and benefit from corporate welfare while ordinary citizens are denied opportunities and a level playing field. 

I agree with him.

This is a great article because it seeks to do the important work of breaking down the tired left-right divide in American politics--or what Matt Welch aptly called the "Effort to Make Us All Dumb."

Surely, some will dismiss the content entirely based on its source.** But liberals that approach it with an open mind may discover an olive branch in a war that should have never started. The opposite of liberalism isn't libertarianism; the opposite of Bernie Sanders is not Ron Paul. On many issues that matter--wars, criminal justice reform, etc.--libertarians and liberals share a common foe. And that foe is theallegedly moderate politicians in both parties like Hillary Clinton or Marco Rubio that supported the very policies that are now in desperate need of revision. We forget this fact at our peril.

*The Rolling Stones piece linked to above has a fantastically dismissive tone which at one point casually references "screw-the-poor ideology" of Ron Paul--since that's obviously a fair way to characterize the most antiwar candidate either party has produced since at least World War II.

**To be sure, no one is denying that the Kochs may have supported some objectionable groups or candidates at times. Looking at the laundry list compiled by Wikipedia, there are at least a couple that seem seriously incompatible with a libertarian perspective on many issues (Heritage Foundation and the American Enterprise Institute, for example). In any case, the merits of an argument ought to depend more on the ideas offered than the byline.