19 October 2009

"Populism, Left and Right"

Econlog | Arnold Kling | Populism, Left and Right

Shane Greenstein writes,
Russ Roberts is normally a free market economist, but in his essay he sounds like an old fashioned populist. When a firm does something to turn Russell Roberts into a populist then -- perhaps -- something is actually amiss with attitudes on Wall Street.
Pointer from Mark Thoma.

The problem as articulated by Russ Roberts is corporatism--the close ties between big business and big government, leading to profits that are created by special favors rather than by serving consumer interests. For populists on the left, the solution to corporatism is more government. For populists on the right, the solution is less government.

On the left, the argument is that Wall Street is bad, so we need government to rein in Wall Street. On the right, the argument is that government favoritism is bad, so we need to rein in government.

For the most part, the two sides talk past one another. The left accuses those of us on the right of excess faith in free markets. We view those on the left has having excess faith in government.
Besides being a little too loose with the first person plural in that last paragraph, Kling is dead on.* From what I have read in the way of reviews this is the fundamental schizophrenia of Michael Moore's Capitalism: A Love Story. He's actually criticizing corporatism, but he keeps claiming what he's doing is criticizing free market capitalism. (Here's one take on that theme from John Stossel.) There's a world of difference between the two obviously, but Moore doesn't really seem to see the distinction, or doesn't care about the distinction, or finds the distinction true but a distraction from his agitprop message that would only confuse the simple audience members and hinder them from achieving understanding of his according-to-HoyleMoore truths.

(* Who, exactly, is this we, kemosabe? Judging by context, he seems to be using "we" to mean both libertarians and rightists. Perish the thought they are coincident!)

What's frustrating to this libertarian is that it's in the interests of leftists who dislike corporations and markets and in the interests of large corporations themselves to blur the distinction between pro-corporations and pro-free market. That leaves humble, empty-pocketed libertarians without close ties to government leaders like myself (not to mention actual libertarian business owners like Coyote and TJIC, for whom there are more than just ideological stakes**) without an unambiguous, uncorrupted label to rally behind.

(** Apologies to those fine gentlemen for dropping their names as examples; I do not wish to speak on their behalf. I have, however, read each of them for a number of years, and I feel comfortable they both would agree with my opinion that the terms capitalism and free-market are misapplied by both anti-market leftists when they mean corporatism and by entrenched corporations trying to firm-up their regulatory capture.)

Kling continues:
What we observe historically is that government regulators intend to make markets better, but they fail to do so. See my paper, Not What They Had in Mind. Sooner or later, the regulatory regime erodes, and it winds up serving narrow corporate interests, not broader consumer interests.

The new Rogoff and Reinhart book says that the four most dangerous words in finance are "This time is different."
Amen, again.

Any system that has a critical dependence on enlightened, altruistic technocrats being in control is doomed to failure. Human civilization does not work that way.

Rule to live by: Whenever people say "This time is different," it never is.

Without comment, I give you GWU senior Chad Swarthout backing Moore into a rhetorical corner and getting him to admit that the real problem he has is government power and not the free market:


  1. You have me pegged quite well. No appologies necesary - Coyote

  2. I was pretty sure I wasn't going astray there, but I didn't want to presume.