The fallacy of liberaltarianism, the failings of corporatism, and the future of the right

One of my favorite non-political blogs is The Future of News. Steve Boriss wrote a fantastic piece titled The Fight for Free Speech: Will We Be the Greatest Generation? about the idea of net neutrality. Referring to a NYT editorial, he says:

The Times ignores the fact that the First Amendment is designed to protect us against suppression of ideas by the government, not the private sector, which has neither the power nor the motive to suppress ideas.

This mistake that Boriss points out is, I think, the liberaltarian fallacy. It assumes that government action is going to protect you from business, rather than get coopted by business. Libertarians intituitively understand that this is absurd, but conservatives and, recently, Republicans, have been unable to make that argument. I suspect that we will not be able to achieve a majority until we have both an intellectually and politically serious critique of both government and big business. Read on.

The Founders understood that the only way to stop a greedy, venal politician is with another greedy, venal politician with opposite interests. In the same way, economics teaches us that the only way to stop an greedy, venal businessman is with another greedy, venal businessman. If you try to stop a greedy, venal businessman with a greedy, venal politician, they will just get in bed with each other.  Adam Smith captured that point nicely:

The proposal of any new law or regulation which comes from [businessmen], ought always to be listened to with great precaution, and ought never to be adopted till after having been long and carefully examined, not only with the most scrupulous, but with the most suspicious attention. It comes from an order of men, whose interest is never exactly the same with that of the public, who have generally an interest to deceive and even to oppress the public, and who accordingly have, upon many occasions, both deceived and oppressed it.

The Economist, reprinted here, updated this with a spot-on critique of President Bush, and by extension, the GOP:

Mr Bush is the classic instance of a conservative politician who confuses support for particular businesses with support for enterprise in general. These seemingly similar ideas are in fact directly contradictory.

The progressive left (and John McCain) is basically correct in their critique of the current GOP that we are in bed with big business. We need to understand and fix this legitimate critique. Because of this we have lost our credibility in arguing for genuine free-market approaches, like cutting corporate taxes and corporate welfare, which is what The Economist is arguing for in that piece. But there is also a libertarian critique that we need to re-embrace.

I would point out that the two most energized activist bases in the GOP Presidential primary, Ron Paul and Mike Huckabee supporters, should find something to like in this. There is probably a reasonable place to land where you criticize the hedge-fund managers (a standard Huckabee attack) for rent-seeking (making Ron Paul supporters happy). To quote Hernando de Soto, who addressed in his book The Other Path the Latin American conflict between crony-capitalism and socialism, "may they one day realize that I am just as radical as they are." Center-right politics works precisely when it is optimistic, as de Soto was.

Boiling this down:

1. We have allowed libertarian-like arguments to be used to attack the private sector. This is what I will call the liberaltarian fallacy.
2. We have not sufficiently demonized rent-seeking by the private sector. In this way, we have become too corporatist. We have forgotten that Adam Smith is right.

I would argue that because of (2), we have not been able to develop an intellectually serious critique of liberaltarianism, which has damaged us among the value adding creative class like software engineers that are increasingly siding with the Democratic party (more on this soon).

Ultimately, we know what the medium term future is going to look like. Democrats will get on the take, as Democratic Senators Chris Dodd and Kent Conrad already are and as Jim Johnson demonstrated himself an expert at. (Note that Matt Stoller, in a moment of either dishonesty or ignorance, describes this as "the free market" as opposed to rent-seeking companies and corrupt politicians) They will be corrupt, and we will attack them for it.

But to really win, we are going to have to develop a serious anti-government and anti-big business critique. Only when people see that the Democrats have (and indeed already are) whored themselves out to business will we be able to credibly get the majority back.. But we aren't going to win by advocating for our own crony capitalism. We are going to need a reform agenda that attacks precisely this problem. And it is going to have to be relevant to the information ecomony that we are increasingly moving towards. (again, more on that in a bit)