Defending Free Markets From Big Government's Taint - Pacific Standard

Defending Free Markets From Big Government's Taint

Analysis: A noted Libertarian political philosopher takes issue with the idea that the parents of market deregulation gave a wink and nod to big government.
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Anytime I run across some piece of writing that asserts the world, especially the United States, has been in the grips of market fundamentalism or the doctrine of laissez-faire capitalism, I tend to drop everything and pen a firm response. It's a lie, nothing less.

Take the case of Ryan Blitstein, who has written, in the course of a review of a book in the October 2008 issue of Miller-McCune, that "America now faces the blowback from 40 years of political dominance by right-wing market utopians, who championed extreme industry deregulation only to increase government's size and power." Mr. Blitstein blames this on the late professor Milton Friedman, the Nobel Prize-winning economist who did, indeed, champion the free market capitalist economic system. (A short response from Ryan Blitstein appears at the bottom of this article.)

However, Milton Friedman was not very influential in his efforts. Indeed, during the years in which he argued for freedom in lieu of government planning and direction of the economy — through the various ways that is done and advocated by believers of the wisdom and virtue of government officials — the various political groups that have governed have been less and less committed to free market capitalism. And Ryan Blitstein acknowledges this but then still insists that what is at fault is the free market. Never mind that he himself admits that no such thing as free market capitalism has existed since the New Deal of 1933, if not since the establishment of the Federal Reserve system in 1913.

Ryan Blitstein keeps talking about hypocrisy, but the only hypocrisy that he can identify occurred among politicians and champions of greater and greater scope for government involvement in the market place. Milton Friedman and other supporters of the free market, such as Ludwig von Mises, F. A. Hayek, James Buchanan and even Alan Greenspan — who has always supported the free market but was willing to try to work with the politically more palatable mixed economy — never endorsed big government, certainly not a government with the humongous scope of authority that most politicians champion. All the free market advocates I have run across over my 45 years of interest in political economy have been severely critical of the provisions of the welfare state and the impossible mixture of capitalism and socialism. They have repeatedly warned about what will happen in time if this kind of public policy is continued.

Of course, there are ways to postpone the inevitable, mostly by printing money and placing the burden of the nation's debt on yet to be born future generations (who are not here to protest and to vote their interest). But in time, one simply cannot get blood out of a turnip, nor even fake such an outcome.

Politicians, of course, keep promising that they will do just that because that is how they gain office, by fooling their constituents into thinking that they are magicians. With more and more government involvement, which produces worse and worse public policies and economic consequences, the politicians and their cheerleaders simply postpone the fiasco that we are now experiencing. But, sadly, most voters keep thinking, these politicians can perform miracles just by wishing to do so.

One group in society that hasn't faced up to its systematic malpractice is the liars who keep blaming the mess on human liberty — if you do not treat people like children are treated by their nannies, they will cause havoc.

Well, some will, and there will be some havoc. But if you leave it all for government to fix, the havoc will be of far greater scope than anything that market failures, so called, tend to create. Markets are, in fact, self-correcting pretty soon after the mistakes made in them come to light.

Enron is a good example of this. But when the market is undermined and politicians pretend to be able to square the circle, then all hell breaks loose.

People like Ryan Blitstein are the ones who are mostly responsible for the failure of Americans to learn economic realities. But they will not confess to this, not unless they are repeatedly called on their intellectual misconduct.

Tibor Machan's Web site is at www.Tibormachan.com.

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A response from Ryan Blitstein:

Prof. Machan doesn't seem to understand that when a journalist writes a book review, he is summarizing claims made by the authors, and attempting to analyze them. If he had read Jacobs' and Brown's book -- or actually thought through my review, instead of twisting my words to create a straw man that would serve to broadcast his views -- he'd see that the authors were trying to describe what happens when politicians adopt (or claim to adopt) extreme views like his. The results, in their analysis, are a mess. They (and I) don't "blame" Milton Friedman. It's possible, as Machan claims, that politicians have misunderstood and misused free-market ideology -- in fact, my review notes a "disconnect between a national narrative trumpeting small government and steadily increasing expectations of government." If he disagrees with that narrative, or the authors' research results, fine. But to call a book reviewer a liar and accuse him of intellectual misconduct is unproductive and wholly against the spirit of constructive debate.

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