Libertarian populism is viable and necessary

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Article Highlights

  • When liberals talk about “fairness,” conservatives and libertarians often wince, suspecting the liberals mean more big-government redistribution.

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  • Fairness is actually a virtue in policy, and it doesn’t necessarily mean socialism.

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  • Everyone sees the GOP as the party of the rich. This hurts the GOP among people are who aren’t rich.

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When liberals talk about “fairness,” conservatives and libertarians often wince, suspecting the liberals mean more big-government redistribution.

But fairness is actually a virtue in policy, and it doesn’t necessarily mean socialism. Also, if you can portray yourself as the candidate seeking fairness, that’s a political gain.

This is much of the work that libertarian populism can do: through new policies, rejiggered policy preferences, and clear and bold rhetoric, advocates of economic liberty could benefit politically by making this clear: the game is rigged in America today, government is rigging it in in favor of the well connected, and that free and open markets are the way to unrig the game, and help the middle class.

In the past few days, Ramesh Ponnuru and Will Wilkinson, both of whom have strong free-market leanings, knocked the idea that libertarian populism can be winning politics.
 
I have to admit I laughed out loud (at my own expense) when I read Wilkinson’s line, “proposing to abolish America’s import-export bank [sic] is not exactly a scintillating political idea,” Wilkinson wrote.

Sure, much corporate welfare is mostly unknown except to the beneficiariess. Also, Ponnuru wants a policy platform that credibly can claim to “tangibly affect most people’s lives,” and abolishing corporate welfare only indirectly benefits the middle class. The benefits of a level open playing field will accrue to the average American in a diffuse and slow way, as political privilege is cleared away and the economy grows. So how do you get people to care about clearing out corporate welfare?

Let’s ask Barack Obama, who seems pretty good at winning elections.

Obama, for instance, thought it was a winning tactic to rail against “tax breaks for corporate jets.” He did so consistently on the campaign trail. He did so in the debates. He makes the argument even after winning reelection.

This Obama line of attack has all the supposed weaknesses Wilkinson and Ponnuru attribute to abolishing the Export-Import Bank. First, the policy he’s talking about it is obscure to the extreme.

As Wilkinson might put it, restoring seven-year Modified Accelerated Cost Recovery System for Part 91 aircraft is not exactly a scintillating political argument. But a skilled politician can present it in a compelling way: end tax breaks for corporate jets, in this case.

I think one could also get some political mileage out of trying to abolish Ex-Im. Point out that a government agency operates much like Fannie Mae, but instead of subsidizing housing, it’s subsidizing jumbo jets at taxpayer risk. Most of the agency’s subsidies go to handful of huge corporations — and two of the biggest recipients have CEOs in Obama’s inner circle. This agency even once helped build a new factory complex in Mexico to replace work being done in Bloomington.

Seems you’ve got some good populist fodder there.

But where’s the acute benefit to the middle class? Ponnuru would ask. It’s hard to pinpoint easily: the guy who didn’t get a loan in 2012 because the bank loaned to an Ex-Im-guaranteed corporation might get the loan in 2017 after Ex-Im is gone. But that’s not the best sales pitch.

Again, though, look at Obama’s corporate jet line: abolish a tax break that reduces revenue $300 million over a year, and how do you help regular folks? Even if you handed that money out, the average American would get a dollar.

So, why did Obama rail against this tax provision? I suspect he did so to signal to the median voter that Obama and the Democrats are on the side of the regular guy.

And guess what? Obama and his party have succeeded in making this argument. See the chart below from Pascal Emmanuel Gobry at Forbes.

Everyone sees the GOP as the party of the rich. This hurts the GOP among people are who aren’t rich. It also probably turns off some rich people (recall, Obama won the rich vote in 2008). Libertarian populism could be understood as an effort to make the GOP no longer the party of the rich, in both reality and perception.

This shouldn’t be that hard. Just point out that we have a Democratic Party that practices trickle-down big-government economics. Then promise to end the economic privilege created by bailouts and subsidies.

Want to reach out to immigrants? Maybe become more explicitly the party of entrepreneurs, and kill regulations that protect the big guys from competition.

Also, offer libertarian policies that have acute benefit to the working class, such as drastic cuts in the payroll taxes. Maybe let people buy whatever kind of light bulb they want. Don’t force them to buy health insurance. Allow them to buy prescription drugs from Canada.

Do this enough, and do this consistently, stop talking like Mitt Romney, forget about top-rate income-tax cuts, and maybe believers in economic liberty can begin to be seen as the party of the regular guy.

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Timothy P.
Carney

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