Wednesday, March 4, 2009

Libertarianism and the Crisis



As the economic crisis continues to deepen, a lot of Americans are questioning the system that allowed it to happen, for good reasons. The writing was on the wall when Barack Obama was elected President, in a move that sent a very strong signal of the desire for political change in America.


As the U.S. government has struggled to deal with the economic crisis, the American public has grown more skeptical of the ability to solve it, when it seems that bailouts, stimulus packages and housing programs have little effect on economic recovery.


If an economic recovery is unattainable, then the only alternative is economic restructuring, meaning that current systems will have to be replaced by new ones. The Obama administration’s response has recently been to move left on the political spectrum, for instance by proposing national health care (as an eventual goal) instead of privately provided health care. This is actually a type of restructuring, as it amounts to the replacement of a system.


The response from Republicans has been confused and offered little else than calls to curb spending. With respect to the economic structure that allowed the crisis to build up, Republicans were the ones to create it (along with Clinton). As a result of that, the incumbent American right has little to say in terms of criticisms of the economic structure, and that is where Libertarians come in.


Voices from the Libertarian movement have grown stronger in recent months. the reason for that is simple: Libertarians advocate economic restructuring from the perspective of people on the right that is unrelated, and in some cases goes in contrast to, the views of traditional Republicans.


To sum up so far, Libertarians and Democrats currently claim to have economic solutions, whereas Republicans, in essence, don’t.


The Libertarian movement in The United States is multifaceted and sometimes confusing. The thinking behind the philosophy is always based on individual liberty, if you leave aside some more unusual philosophical currents such as “communist libertarianism”. The libertarian movement is by far the strongest in the U.S. out of any country, and perhaps as many as over 10% of the population describe themselves as libertarians.


Libertarians don’t like to be placed on the traditional political scale, but I would argue that there is no problem doing that, and that anything else would be philosophically incoherent. The political scale is rather simple: the more government intervention one supports, the further left one is, and the less government intervention one accepts, the further right one is. The furthest right is an anarchist, and the furthest left is a communist.


The reason that libertarianism in America is surrounded by confusion is that cultural issues have a much stronger position in politics than in most other countries. In the public consciousness, things like abortion, gay marriage and drug politics have been thrown into the traditional political scale. This however, is not philosophically coherent. The traditional political scale is based on notions of government intervention, or lack thereof.


Both Libertarians and Republicans support a hands-off approach to income distribution and the economy in general, but Republicans do not support a hands-off approach to cultural issues, which Libertarians do. That fact sometimes makes Libertarians appear, in the eyes of Americans, to be further to the left than Republicans. I argue that this cannot be so.


You cannot create a working political scale based on inherently different and complex issues such as abortion and gay marriage, which is why you must break such issues out of the political equation in order to reach philosophical coherence.


Libertarians support even less government intervention than Republicans, often dramatically so, which makes them further to the right than Republicans, and indeed further to the right of any other significant political movement in the world.


As I mentioned earlier, the reason that Libertarians have come into the spotlight more recently is that they have offered different ideas as solutions to the economic crisis. These ideas are meant to deal with the problem that there is an enormous mountain of debt in America, and that the current state of the economic system is unsustainable. The ideas are not without merit, considering how deep the crisis is, but I believe them to be far too dramatic, and very misguided.


A lot of Libertarians believe that the gold standard should be re-introduced, and that the Federal Reserve should be abolished. The results of doing that are very complex, but it has to do with the money supply.


By re-introducing the gold standard and getting rid of the Federal Reserve, the government would be much more constrained in its spending, and the size of government programs would have to be dramatically reduced. In other words, such a move is completely in line with the philosophy of as little government as possible.


Citizens would, for the most part, not rely on the government for the stability of their money, they would rely on gold itself. If the gold standard were introduced today, either the value of everything in society would have to go down dramatically, or the price of gold would have to go up dramatically. Either way, it would completely change the country.

Making these suggestions a reality would almost amount to a dismantling of the government as we know it. This in addition to the further and dramatic deregulation in most areas of economic, financial and private life that Libertarians support can only be described as anarchism. “Freedom of choice” can usually be translated as “every man for himself”, but that doesn’t sound as good.


It is therefore strange that Libertarians should come into the spotlight during this crisis, which was created to a large extent by deregulation, weak government oversight and a weak government in general.


Furthermore, Alan Greenspan, whom many today recognize as one of the major culprits of the crisis, is a life-long libertarian and follower of Ayn Rand’s philosophy. And although he was working within an institution that Libertarians wish to have abolished, he was doing so in the most Libertarian way he knew how: by deregulating and supporting an unfettered market in any way he could.






Moreover, I advise that the winner-takes-all voting system should be destroyed (which, by the way, would almost certainly lead to The Libertarian Party becoming much more influential in U.S. politics. But that’s OK, because all I care about is that every vote is counted!)

6 comments:

an average patriot said...

Greenspan engineered this collapse for Bush! I am sick of telling people that the timing too is no coincidence.

The Bastard rode into the sunset proud of his destruction.

It was a pleasure today watching Obama's meeting in the White House on reforming health care!

Everyone seems to be behind it including Doctors. He was repeatedly thanked for getting this going by everyone including both party's.

A real pleasure watching the President being all inclusive and looking for help and advice.

At this point I believe Obama is being criticized for what Bush started but a bit of socialism seems to be what we need to save us now!

Anonymous said...

Can you explain this quote taken from the NYT about where the money to AIG is going?

Quote:
"Tens of billions of those dollars have merely passed through A.I.G. to its derivatives trading partners, shielding them from losses. The Fed has refused to provide the names of those financial institutions, and senator after senator, Democrat and Republican, said that was an outrage".

Jacob said...

Yes,

what AIG was doing was selling insurance against losses on risky investments, kind of like selling home insurance in a hurricane zone. AIG never thought it was going to have to pay, but the biggest hurricane in 80 years came, and now AIG has to pay. The company didn't have nearly enough money, so they couldn't pay the insured what they were owed.

Those that were insured against the losses, but not paid, decided to shut up about it, so as to not create a financial panic (this was back late last year). The insured companies are banks like Bank of America and Citigroup, along with hedgefunds and investment banks. They are the ones that have now been paid money.

So basically, the money that the senators are asking about is money for the insurance that the abovementioned companies had bought from AIG. So, again, taxpayer money has gone to the same companies that got the original bailout from Paulson. the money has, again, gone down a black hole, through an insolvent institution, to other insolvent institutions.

Unfortunately, politicians don't understand enough about the crisis to realize this.

Anonymous said...

Jacob, please allow me to ask a few questions and perhaps even correct some inaccuracies...

for instance by proposing national health care (as an eventual goal) instead of privately provided health care.

He did? You mean to have doctors working for the government? That's interesting, considering that Europe is going in the other direction. Are you sure he doesn't mean providing national insurance coverage of some sort?

The libertarian movement is by far the strongest in the U.S. out of any country

Every country has aspects of libertarianism represented within its respective political and economic structure. For example, in the Nordics people want choice and personalized care, not restricted assembly line medical services like those which existed 15-years ago when the systems were fully socialized (I was there, it was horrible).

To accommodate people's wishes, there's been a move toward privatization of medical clinics and services (but not necessarily full privatization of insurance; that remains mostly collective). Hence a degree of libertarianism has been achieved and people have benefited enormously.

The political scale is rather simple: the more government intervention one supports, the further left one is, and the less government intervention one accepts, the further right one is. The furthest right is an anarchist, and the furthest left is a communist.

No, it's not that simple. Each issue must be analyzed separately and assigned its own left-right scale. Consider that fascism is widely considered to be a far-right movement, yet it is all about "government intervention." Hence, it is considered far-right, but also far-left albeit on a different scale (yours).

Also, anarchism can exist anywhere along the spectrum; it's not limited to the right or left extremes. Thankfully I don't hear anyone seriously advocating anarchy these days, although both Republican and Democrat neocons are wading dangerously close to fascism.

Both Libertarians and Republicans support a hands-off approach to income distribution

No, left-Libertarians support income distribution based on the justification that the environment (land, air and sea) is commonly owned, and that an entity which deprives another of the environment's use owes remuneration to the latter. Of course, this can be implemented in many ways without infringing upon private property rights as such. You can google that one.

Conversely, right-Libertarians don't support the idea of commonly shared environment. Instead, they support a more individualist definition of property rights as concerns the environment. Their sense of environmentalism comes from the concept of tort. However, there is no basis for involuntary redistributionism as with left-Libertarianism.

Libertarians support even less government intervention than Republicans, often dramatically so, which makes them further to the right than Republicans

In your left-right scale concerning regulation, that's probably true. It's with good reason, since both statist Republicans and statist Democrats often favor 'regulation' that's designed to benefit big players: in particular, corporations which 'sponsor' and even write them.

However, in terms of redistributionism, Libertarians can easily be further to the left than Republicans--and even Democrats! See above. But it doesn't mean that they support government actually running 'programs.' Here's an example:

http://economistsview.typepad.com/economistsview/2006/11/milton_friedman_1.html


Libertarians of all persuasions would sooner leave 'programs' to private entities whenever possible. As a compromise, in the American sense, states can run certain programs but without involvement of the federal government; it's based on a constitutional issue that I often hear espoused by Ron Paul.

Incidentally, center-left-Libertarian candidate Mike Gravel supported a form of single payer health care. I don't remember the exact implementation, other than he wanted to cut insurance companies out of the profit loop.

A lot of Libertarians believe that the gold standard should be re-introduced

Yes and no. A monopolistic gold standard could potentially be worse than the (privately owned!) Federal Reserve system that currently exists. A more sensible approach would be to let banks issue their own gold, silver or 'commodity bundle' certificates backed by 100% real assets they hold in reserve as required by law. These could be used for consumer purchases--e.g. via electronic transfer. Currently, legal tender laws prohibit this.

Fiat money would be another solution, but it should be issued debt-free by the government with no bogus Federal Reserve to channel tax money into the hands of private bankers. The fractional reserve Ponzi scheme should also be abolished; it's nothing more than a profit generator for the private banking industry, a destabilizer of the economy, and a handy way for war hawk politicians to circumvent democracy.

By re-introducing the gold standard and getting rid of the Federal Reserve, the government would be much more constrained in its spending, and the size of government programs would have to be dramatically reduced.

Well, no. It just means that you have to pay-as-you-go. No more national credit card. Do you know that in Europe it is more common to buy flats and houses mostly with cash than to take loans? In Germany, you can't even get a loan to finance most of a house purchase. Only very small loans are possible, with no interest tax deduction. I guess Germany learned its banking lesson during the Weimar period. America is learning it now.

Libertarians support can only be described as anarchism.

Again, no real anarchism is necessary or desirable since the democratic process is working just fine. But if you do a small amount of research, then you'll find plenty of American presidents in history who's policies fit your definition of "anarchy." In particular, see the ongoing battle to stop private bankers from controlling US currency: those presidents who acted against it would be your "anarchists." Unfortunately, they've lost for now.

Furthermore, Alan Greenspan, whom many today recognize as one of the major culprits of the crisis, is a life-long libertarian and follower of Ayn Rand’s philosophy. And although he was working within an institution that Libertarians wish to have abolished,

Look, anyone can claim to be a Libertarian, just like anyone can claim to be a Communist or a follower of some religion. But it's up to us to determine their true inner motivation. Even though Alan Greenspan was a supporter of the gold standard, many regarded him as nothing more than a tool for the neocons regarding Middle East policy. As such, he served their purpose well by inflating inflating inflating!--and just look at all the new military bases and pipelines being built there now. Mission accomplished...and as we are now seeing in the financial turmoil, it was at our expense.

And again, 'gold standard' sounds good and appeals to many fiscal Conservatives (as opposed to neocons!). But it can be implemented in many ways that are just as repugnant as the current debt-based fiat money system. The real question is whether someone supports a gold standard that is non-monopolistic. If not, then he's no Libertarian.

Regards,
Libertarian

Anonymous said...

I wrote above:

"In particular, see the ongoing battle to stop private bankers from controlling US currency: those presidents who acted against it would be your 'anarchists.'"

Just so there's no confusion here, I meant to write "monopoly-seeking private bankers--" ones who seek government license to act as the sole custodians of the money supply. The Federal Reserve is such an organization of private bankers.

This is very different from allowing non-monopolistic banks to issue gold or other commodity certificates. Since they don't have monopolistic control over the money supply, they don't present a danger.

Regards,
Libertarian

Jacob said...

Anonymous,

one of the main reasons I wrote this article was to put some of what I believe to be ideological confusion surrounding libertarianism, into perspective. I believe that the ideological confusion is a result of the non-ideological nature of American politics.

One of the most interesting things about libertarianism today is the intellectual stringency with which its supporters view problems, as opposed to the "pragmatic" (i.e. corrupt) ways of the two major parties.

I view fascism more as a traditional strongman rule, than an ideology. Fascism is more like the old rule of a despotic king than an organized set of ideas. I don't believe fascism to be an actual ideology.

Libertarianism, however, is a very organized set of ideas, and as such it should be considered an ideology. To bring "left libertarianism", "anarchistic libertarianism" and "anarcho-capitalism" under the same umbrella is in my mind incorrect. You can draw parallels between many different ideologies, but that does not make them related.

I believe that something like "left libertarianism" and "anarchistic libertarianism" are too different to be considered part of the same movement.

So-called "left libertarianism" would, in my mind be better described as "social liberalism" (keeping in mind that the American definition of "liberalism" is different from the traditional definition. What I'm talking about is the traditional definition).

There is a problem with labels here.

Like you said, libertarian values can co-exist with social values. In Sweden, like you said, one can now choose where to receive care. Indeed, it is possible to go to any country in the EU for EU citizens and get care for free. British women have been known to go to Spain to give birth, and Scandinavians are going to Poland for cheap dental care. The common denominator, though, is that everything is paid for with tax money. If you want to receive the best care money can buy, you can always got to private clinics in Switzerland or the U.S..

Also in Sweden, you can choose any school you want your child to go to, for free (there are only two private schools in the whole country). All this was advocated by a "social liberal" party in Sweden, called "Folkpartiet".

What I'm basically saying is that I don't believe that a lot of what is known in the U.S. as "libertarianism", should be called that. Left Libertarianism should be called social liberalism, and Greenspan's brand of Libertarianism should be called anarcho-capitalism. Most of the other currents of American libertarianism seem to be connected with an earlier era in American history, and could be labeled something like "historic libertarianism".