Interventionist Romance

November 30, 2008

by Chidem Kurdas

 

James Galbraith puts a dramatic spin on recent history in his new book, “The Predator State.” He argues that the American government was used to plunder public resources for private gain. That certainly rings true, one obvious new example being the pork projects added by Congress to the financial bailout bill. You might think Mr. Galbraith favors limits on the state. 

 

No such thing. He calls for more government with nary a mention of restraint. The twist is that he attributes the looting of the Republic almost exclusively to Republicans.

 

“Today, in the great policy house of the conservatives, there are only lobbyists and the politicians who do their bidding. There are slogans and sloganeers. There are cronies and careerists,” he writes.

 

By implication, the liberal policy house is not dominated by lobbyists, politicians who do lobbyists’ bidding, sloganeers, cronies or careerists. There the trouble turns out to be an excessive faith in markets, a confusion from which Mr. Galbraith aims to free the liberal mind. Hence the book’s subtitle: “How conservatives abandoned the free market and why liberals should too.”

 

In his telling, the intellectual foundations of the Reagan revolution have collapsed—monetarism led everywhere to financial crises while supply-side tax cuts did not noticeably boost work or investment. So the Bush administration threw away all the useless market ideology and instead ruled as an instrument for corporate control and the diversion of public resources to private hands.

 

In presenting the exploitation of state capabilities for private ends  as a special case created by Republicans, Mr. Galbraith does not clarify why Democrats are less prone to rent seeking. Perhaps he’s missed the immense public choice literature about rent seeking, which explains that the activity is systemic and not confined to any one set of politicians—thus bailout pork was bipartisan.

 

Neither does he explain why Democrats are beguiled by free market arguments that by his reckoning no longer fool conservatives. Could it be that, having lost the game in 2000, Democrats simply had less opportunity to help themselves to the spoils of political power in the past eight years? And that being the case, maybe they made a virtue out of necessity by espousing some market positions.

 

In any event, Mr. Galbraith  advocates public planning and intervention without grappling with the inherent dilemma that the wider the government domain, the more opportunity for rackets at the expense of consumers or taxpayers. He suggests that planning need not be corrupt, ignoring the many ubiquitous organized interests and the fact that rational self-seeking politicians will cater to them.

I can’t imagine where Mr. Galbraith encountered the pristinely public spirited liberal policymakers he wants to purge of free market notions, but even if they exist, the idea that they can figure out the “public good” is logically incoherent.

 

James Buchanan wrote some 30 years ago that the mystique of the state somehow working its way toward some transcendental public good is still around in many guises, even as public choice economics removes the romance. The dreamy view of government may now have another resurgence—and likely result again in political failure.

 

If the book presents an illusory vision of government, its take on the free market is so biased as to be a caricature. Freedom to choose merely means freedom to shop, Mr. Galbraith suggests.  “The word market is a negation,” meaning transactions not dictated by the state, he writes. He apparently has not given much thought to the role of voluntary action.

 

A market means voluntary exchange by individuals. Arguments that state compulsion is necessary to achieve certain ends have been around for ages and there is no shortage of state apparatuses that either forbid or mandate certain actions. If you add more state compulsion, less voluntary space is left for individuals, and you have to police people to make sure they comply.

 

It’s not an efficient way to run an economy, as even the Chinese communist party recognizes. And it certainly creates great opportunity for government players to help themselves, whether directly or indirectly by helping their associates and supporters.

 

But Mr. Galbraith has not written this book to analyze the problems of state-dictated action. On the contrary, the effect of his argument is to release interventionists from concern with the consequences of their policies. After all, if supposedly market-oriented Republicans don’t care, why should left liberals worry about all that free market cant? 

 

Today a number of pundits point to market failure and call for another New Deal. Like  Mr. Galbraith, many regard political failure as a minor issue compared to market failure. The good news is that there are researchers who study how politics functions in the real world. Click for public choice program

2 Responses to “Interventionist Romance”

  1. Superheater Says:

    Must be tough to go through life having nothing to offer but the continuation of Dad’s cottage industry.

    What a hack.

  2. chidemkurdas Says:

    Good point


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