Libertarianism Declared Dead

[Puppycow]

Jacob Weisberg writes in Slate that just as the collapse of the Soviet Union in 1989 finally proved for good that communism was an unworkable ideology, the financial crisis of 2008 proves that libertarianism is also dead.

A source of mild entertainment amid the financial carnage has been watching libertarians scurrying to explain how the global financial crisis is the result of too much government intervention rather than too little. One line of argument casts as villain the Community Reinvestment Act, which prevents banks from "redlining" minority neighborhoods as not creditworthy. Another theory blames Fannie Mae and Freddie Mac for causing the trouble by subsidizing and securitizing mortgages with an implicit government guarantee. An alternative thesis is that past bailouts encouraged investors to behave recklessly in anticipation of a taxpayer rescue.

There are rebuttals to these claims and rejoinders to the rebuttals. But to summarize, the libertarian apologetics fall wildly short of providing any convincing explanation for what went wrong. The argument as a whole is reminiscent of wearying dorm-room debates that took place circa 1989 about whether the fall of the Soviet bloc demonstrated the failure of communism. Academic Marxists were never going to be convinced that anything that happened in the real world could invalidate their belief system. Utopians of the right, libertarians are just as convinced that their ideas have yet to be tried, and that they would work beautifully if we could only just have a do-over of human history. Like all true ideologues, they find a way to interpret mounting evidence of error as proof that they were right all along.

To which the rest of us can only respond, Haven't you people done enough harm already? We have narrowly avoided a global depression and are mercifully pointed toward merely the worst recession in a long while. This is thanks to a global economic meltdown made possible by libertarian ideas. I don't have much patience with the notion that trying to figure out how we got into this mess is somehow unacceptably vicious and pointless—Sarah Palin's view of global warming. As with any failure, inquest is central to improvement. And any competent forensic work has to put the libertarian theory of self-regulating financial markets at the scene of the crime.

. . .

 

[The Central Scrutinizer]

Libertarianism was never alive.

 

[Highly Selassie]

Oh, those wacky liberals at Slate are at it again! When will they learn that the invisible hand is omniscient, omnipotent and omnipresent?

 

[rdaneel]

oh, Slate, Slate, Slate.

Don't you understand that this proves that the Fed and fiat money are the purest of evil?
If we'd only stuck to the gold standard none of this would have happened.

 

[Highly Selassie]

I watched the Bill Moyers interview with George Soros that was linked in that article. Here's an interesting snippet from the end of the interview:

BILL MOYERS:But in both socialism and capitalism, you get the rhetoric of empathy for people.
GEORGE SOROS:And it's a false ideology. Both Marxism and market fundamentalism are false ideologies.
BILL MOYERS:Is there an ideology that...
GEORGE SOROS:Is not false?
BILL MOYERS:Yeah.
GEORGE SOROS:I think the only one is the one that I'm proposing; namely, the recognition that all our ideas, all our human constructs have a flaw in it. And perfection is not attainable. And we must engage in critical thinking and correct our mistakes.

Critical thinking, pshaw! What a bunch of whacked-out liberal nonsense!

 

[Francesca R]

libertarians are just as convinced that their ideas have yet to be tried

Well that's true enough. Fortunately they are very unlikely to ever be tried.

 

[UnrepentantSinner]

Of course economic libertarianism is self-correcting. It happens all the time... 1929, 1987, 2008..

 

[soylent]

Well that's true enough. Fortunately they are very unlikely to ever be tried.

There are some people, who I contend to be completely banans, who want to build artificial islands in international waters that could act as independent states. The people proposing this are invariably libertarians.

See(hear?) for instance: http://www.econtalk.org/archives/2008/10/patri_friedman.html

 

[SaulOhio]

let me see. Libertarians warn, time and time and time again, that the system we have now, with its central banking, fiat currency, and fractional reserve banking system, is headed for a crash. The market crashes, as they predict, and this is proof that they are wrong?

My turn:


As our government keeps piling more and more regulation on the economy, all the time claiming to be trying to fix it, why hasn't it gotten fixed, yet? Why do we keep seeing these collapses if the regulations are necessary to prevent the collapse?

I notice a lot of ridicule of libertarians on this thread, but no actual argument, except to blame the recent collapse of the economy on libertarian policies, which Francesca says have not been implemented. Interesting logic!

 

[SaulOhio]

Of course economic libertarianism is self-correcting. It happens all the time... 1929, 1987, 2008..

You are claiming that libertarianism was tried in 1929? You mean the Fed was abolished, and we had a 100% reserve gold standard? I didn't know that!

 

[geni]

You are claiming that libertarianism was tried in 1929? You mean the Fed was abolished, and we had a 100% reserve gold standard? I didn't know that!

The gold standard is by definition goverment regulation. Libertarianism requires that indivduals be allowed to trade with gold backed currency but also that they be allowed to trade with say land backed currency or indeed oil backed currency.

 

[SaulOhio]

The gold standard is by definition goverment regulation. Libertarianism requires that indivduals be allowed to trade with gold backed currency but also that they be allowed to trade with say land backed currency or indeed oil backed currency.

And our government has not followed THAT policy, either.

Lets see, Congress and the presidency have been controlled by the Democrats and the Republicans, both branches of the government alternating between one party and the other. All government policy, including economic policy, is controlled by either the Democrats or the Republicans. Said policies lead to an economic meltdown, so logically, the blame for the meltdown goes to:

the Libertarians

Of couse.

 

[geni]

And our government has not followed THAT policy, either.

Not so you are indeed free to trade with people in gold should you so chose. They are free not to accept it of course. Standard common law stuff.

Lets see, Congress and the presidency have been controlled by the Democrats and the Republicans, both branches of the government alternating between one party and the other. All government policy, including economic policy, is controlled by either the Democrats or the Republicans. Said policies lead to an economic meltdown, so logically, the blame for the meltdown goes to:

the Libertarians

Of couse.

Small l libertarians. Which is rather what is makeing things difficult for Libertarians now. Small l libertarians arguments have been applied and the results have proven somewhat other than what most people would have wished.

 

[Francesca R]

Perhaps if people experiencing non-payment of debt owed could threaten and use lethal force (after all it is defence of their property) then the credit crisis would have seen seamless resolution without the daylight robbery of bailouts.

 

[The Central Scrutinizer]

Not so you are indeed free to trade with people in gold should you so chose. They are free not to accept it of course. Standard common law stuff.

Pretty basic stuff, to you and me. Over the head of a Libertarian.

 

[SaulOhio]

Perhaps if people experiencing non-payment of debt owed could threaten and use lethal force (after all it is defence of their property) then the credit crisis would have seen seamless resolution without the daylight robbery of bailouts.

And what does any of that have to do with Libertarianism?

There is something which Libertarians also agrue for, called the "rule of law", which means you don't take the law into your own hands.

Again, you are useing a strawman argument by equating libertarianism with anarchy.

 

[volatile]

And what does any of that have to do with Libertarianism?

There is something which Libertarians also agrue for, called the "rule of law", which means you don't take the law into your own hands.

Again, you are useing a strawman argument by equating libertarianism with anarchy.

Hold on - a libertarian who wants the rule of law? Don't you guys hate governments, laws and rules?

 

[geni]

And what does any of that have to do with Libertarianism?

There is something which Libertarians also agrue for, called the "rule of law", which means you don't take the law into your own hands.

Again, you are useing a strawman argument by equating libertarianism with anarchy.

Um no. The idea of allowing the use of leathal force when property is in danger has turned up in non-anarchy based legal systems. South african law used to work like that for an example.

 

[SaulOhio]

Hold on - a libertarian who wants the rule of law? Don't you guys hate governments, laws and rules?

There is a small, vocal, anarchist wing to the Libertarian party, but most argue for LIMITED government, not no government. Libertarians blame excessive government intervention in the market for most of the problems, but maintain a clear, carefully and strictly defined role for government in defending peoples right to life, liberty, and property.

geni: What I meant was that we still have fiat money, fractional reserve banking, and a Federal Reserve. No way you can blame the behavior of an economy that has all that on Libertarian policies.

In 2003, the Federal Reserve set its interest rate to 1%, in an attempt to stimulate the economy. The money borrowed at this rate ended up fuelling the housing bubble. It was diverted to the housing market by Fannie Mae and Freddie Mac, and other measures intended by the Carter and Clinton administration, and perpetuated under W. Bush (I am bipartisan on this issue, I blame both parties) and intended to create an "ownership society" where everyone could own their own home.

How this can be blamed on the Libertarians, I have no clue.

I am not myself a Libertarian, since I strongly disagree with them on a number of issues, especially foreign affairs, but since I agree on many economic issues, I hate to see their position unfairly attacked.

 

[Francesca R]

There is something which Libertarians also agrue for, called the "rule of law", which means you don't take the law into your own hands.

No bother. Just make it the terms of the contract that if Joe homeowner doesn't make his mortgage arrears you can shoot his brains out.