Seven reasons progressives should be more libertarian

2) Regulation is often intended to serve the interests of the powerful, not the vulnerable. Progressives often see government regulation as a necessary check on the power of big business. But this is a mistake. From the New Deal to the 2008 bailouts, government involvement in the economy has generally served to enhance, not limit, the power of established corporations. Businesses talk a good game when it comes to laissez faire, but when push comes to shove, established firms fear the competition that free markets create. Whenever they can, they will seek to suppress that competition by use of political, rather than economic, means. Libertarians therefore believe that limiting corporate power over politics is not merely a means of getting the right people in office, or of passing tighter restrictions on campaign financing. As long as government agents have extensive power to tax, regulate and subsidize commerce, they will use that power in a way that serves their own interests and the interests of those with sufficient political and economic clout to be of value to them.

3) Even if government wants to help the vulnerable, it often cannot. Suppose you are a politician who wants to help victims of natural disasters. After hearing horror stories of people being charged $12 for a bag of ice in the wake of a hurricane, you decide to pass a law to protect them by outlawing price-gouging. It seems simple enough. But will such a law really help? Suppose your law prohibits people from selling ice at more than $5 per bag. Those who are lucky enough to be able to purchase ice at this lower price will certainly benefit from your law. But what about those who cannot purchase ice at all? Will there not almost certainly be more such people when the price is capped below the competitive market level? Ideally, you could set the maximum price at a level that is high enough to attract new supply but low enough to prevent exploitation. But what would that price be? And how would you know it? Good intentions, even when they exist, are not enough. As the example of price-gouging shows, government attempts to help the vulnerable face severe problems of unintended consequences and insufficient knowledge, problems that the decentralized decision making of a market system are well designed to address.

4) Economic growth is overwhelmingly important. And not just for bow-tied economists with an obsession for abstract aggregations. Economic growth matters for ordinary people, and probably especially for the poor and vulnerable. Even Peter Singer, who is not generally regarded as an apostle of free markets, notes in his 2009 book The Life You Can Save that “economic growth has … reduced the proportion of South Asians living in extreme poverty from 60 percent in 1981 to 42 percent in 2005.” On a global scale, the World Bank estimates that the number of people living on less than $1.25 has declined from 1.9 billion in 1981 to 1.4 billion in 2005 — from about four in every ten persons to less than one in every four. The lesson is this: You can make small dents in poverty by taking wealth from some people and giving it to others. But to make big changes — to make the kind of changes that have dramatic effects on people’s quality and quantity of life that last for generation after generation, you cannot just redistribute wealth. You need to create it. And creating wealth is just what free markets do best.

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