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Libertarians: Champions of the Oppressed

August 6, 2013

In a previous post, I examined how libertarian beliefs fit in a “civilization/barbarism” framework. In this post, I try to show that libertarian beliefs are also compatible with a “oppressor/oppressed” worldview held my many liberals.

One of the largest splits between liberians and liberals is a difference of opinion over whether government or corporations are a bigger threat to the oppressed. Liberals worry about concentrated power, but only concentrated corporate power. Libertarians worry primarily about concentrated governmental power. The logic goes that the government has a comparative advantage in the use of coercion, so is more dangerous than a corporation when misused. The liberals would counter that the government is controlled by elections and so has better feedback mechanisms to prevent abuse than corporations which are often run by a small group. Libertarians reply that corporations are only viable if they are able to satisfy their customers and people can always buycott firms they don’t like. Then liberals might say, yes well, firms can be monopolies, or they can use use deceptive marketing, or they might resort to other tactics to abuse some groups while getting money from other groups.

Libertarians are quick to point out that corporate power is problematic when it is allied with the government and thus gains the ability to use coercion to gain some advantage in the market. There is a tension in libertarian thought between hailing the market as a great institution which levels the playing field, railing against government intervention in the market, and sometimes ignoring that concentration in the market often leads to intervention. Monopolies don’t have to be pernicious, but they often are and sometimes political intervention can limit their harm. On the flip side, I’ve often seen liberals fail to recognize what a double edged sword regulation can be and how often it fails to achieve its desired ends. Antitrust, occupational licencing, farm subsidies, patents, and trade barriers are all examples of regulations which have backfired in the face of the “Baptists” who tried to use regulation to contain corporate power or help the poor.

Even ignoring the threat of corporatism, the government has been the oppressor more times in human history than progressive liberals care to admit: slavery, denial of civil/womens/gay rights, genocide, and war all spring to mind as examples of government led oppression, all of which libertarians consistently opposed. While civil rights gains were government led, the worst abuses of civil rights were committed by the government mere decades before. There have been countless wars conducted for the benefit of the elites on the backs of the lower classes. As Axl Rose so eloquently said “it [war] feeds the rich while it buries the poor.”

Incentives and Moral Hazard
If you give money to people for doing something, they will do more of that thing. That’s obvious and non-controversial, until people start applying it to poverty. Let’s say you have a simple welfare program where you give $5,000 to everyone below the poverty line every year. Suddenly, people close to the poverty line are going to be a lot less enthusiastic about earning a little bit more money. If the poverty line is $15,000, you’re going to see a lot of people hanging out at $14,900 so they can get that money. Even people who were earning $25,000 might think about reducing their effort. If working 60 hours a week gets you $25k, maybe instead you could work 35 hours a week and get $19,583. You cut your work by nearly half and only reduced your income by about a fifth. That’s a lot of extra hours you could use to do home cooking, maybe have a vegitable garden, repair your own clothes instead of buying new ones, etc.

Now, all this may sound awfully hard-hearted. How can this rich guy be advocating cutting welfare to people working overtime just to get slightly above the poverty line? But it’s not about the overall level of welfare benefits, it’s about the structure of welfare. Right now, the poor suffer from higher marginal tax rates than the rich.

marginal_tax_1
Source.

Instead of having large “tax cliffs”, libertarians often advocate “path out of poverty” approaches. More hardcore libertarians focus on removing government interventions which prevent the poor from escaping poverty, such as the minimum wage, occupational licencing, the government monopoly on schooling, and the many anti-poor paternalist policies. More moderate (statist) libertarians suggest replacing the minimum wage with a higher EITC, changing unemployment benefits to a lump sum, replacing the huge structure of welfare programs with a simple cash transfer which is slowly phased out, and educational reform.

Just as uncharitable people might suggest that libertarians don’t care about the poor, an uncharitable person might suggest that liberals are preventing the poor from improving their lot and creating a dependent class. But both groups are earnestly trying to reduce poverty and their worldviews simply differ on how best that is accomplished.

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