Why the Right Has Run Out of Ideas
Thomas Friedman’s column laments that the Republican Party is no longer offering solutions to pressing national problems. It’s also common to see similar laments about current conservative thinkers in contrast to an earlier generation like Milton Friedman.
It seems to me that much of the problem is that most of the tools that can actually be used to address policy issues are no longer considered acceptable by many Republicans and conservatives. If you have no tools to solve a problem, all you can do politically is to insist that the problem does not exist, is really a blessing in disguise, or will be automatically solved by the market and technological progress.
Consider the number of policy tools that are now considered unacceptable or at least very problematic by the Right:
- New regulations. Not acceptable — except to control sex and reproduction; immigration; recreational drugs; and infringement of intellectual property rights.
- Taxes. Completely unacceptable. Too bad for all the economists who favor emission taxes.
- Subsidies and tax exemptions. Sometimes permissible but increasingly suspect, not to mention fiscally difficult today.
- Cap and trade. Formerly in vogue with the Right, but now verboten.
- Information mandates. Resisted because releasing information may increase pressures for regulation or embarrass businesses.
- Government-business collaboration. These raise fears about favoritism or picking winners. In addition, it’s hard for the government to work with business when it has nothing to bring to the table.
- Legal liability. Still recommended on occasion, as in Ron Paul’s approach to environmental regulation and in “free market environmentalism.” But increasingly suspect: litigation involves trial lawyers, a reviled group, and gives authority to judges, which poses a risk of judicial activism.
What policy tools are left? Only tax cuts and deregulation — which is why they’re touted as the solution to every social ill. If those don’t work, the only remaining option is prayer.
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About Dan
Dan Farber has written and taught on environmental and constitutional law as well as about contracts, jurisprudence and legislation. Currently at Berkeley Law, he has al…
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All seven political tactics mentioned above are still available in California. These tactics are losing ground in those states where businesses, capital and ordinary citizens go to when they flee California. It’s fun to live in Texas and reap the benefits of California’s regulations, cap & trade, taxes, mandates, subsidies, liabilities, unions, etc, etc, etc.
All seven political tactics mentioned above are still available in California. These tactics are losing ground in those states where businesses, capital and ordinary citizens go to when they flee California. It’s fun to live in Texas and reap the benefits of California’s regulations, cap & trade, taxes, mandates, subsidies, liabilities, unions, etc, etc, etc.
Its easy to channel Milton Friedman since he is dead. Let me try: When you find yourself in a hole, stop digging. “New regulations” = dig. More “Taxes” = dig. New “Subsidies and tax exemptions” = dig. Implement “Cap and Trade” = dig. More “Legal liabilities” = dig.
One (Milton) needs to parse the other two:
“Information mandates” can be useful if it helps inform a free market. If it simply adds cost and bureaucracy = dig.
“Government-business collaborations” will work if government has something to bring to the table? In the GM bailout the government brought a disengagement of the rule of bankruptcy law to the table. Now the market understands that investment security will succeed or fail on government pique. So that has led to more real private investment as opposed to federal “investment” or subsidies to supposed investors? Milton is not sure that collaborating with the government is not just more digging.
Its easy to channel Milton Friedman since he is dead. Let me try: When you find yourself in a hole, stop digging. “New regulations” = dig. More “Taxes” = dig. New “Subsidies and tax exemptions” = dig. Implement “Cap and Trade” = dig. More “Legal liabilities” = dig.
One (Milton) needs to parse the other two:
“Information mandates” can be useful if it helps inform a free market. If it simply adds cost and bureaucracy = dig.
“Government-business collaborations” will work if government has something to bring to the table? In the GM bailout the government brought a disengagement of the rule of bankruptcy law to the table. Now the market understands that investment security will succeed or fail on government pique. So that has led to more real private investment as opposed to federal “investment” or subsidies to supposed investors? Milton is not sure that collaborating with the government is not just more digging.
I don’t agree with Friedman’s approach to environmental policy issues. But based on what he said, rather than on “channeling” him, I’m confident that the above characterization of his views is incorrect. I’m always bemused when people conjecture about what classical economists and other “free-market” thinkers would say (generally to serve their own ideologies), rather than look at what those thinkers actually have said.
Dan’s point is a valid one: mainstream economists agree that from a “free-market” viewpoint, pollution beyond what is economically efficient often results from market failures, mostly in the form of negative externalities – and the absence of any policy tools for correcting these market failures would leave us without any effective means of addressing this problem.
Thus, even Friedman famously supported resolving pollution-related market failures through governmental intervention, in the form of taxing emissions or similar market-based strategies. He said this many times publicly.
Here is just one example of Friedman’s position, from a 1973 interview:(http://jeepers1.wordpress.com/2010/02/21/a-1973-interview-with-milton-friedman-playboy-magazine/).
“Q: If consumer protection—even from monopoly—isn’t an area that is legitimately the province of government, what about pollution?
FRIEDMAN: Even the most ardent environmentalist doesn’t really want to stop pollution. If he thinks about it and doesn’t just talk about it, he wants to have the right amount of pollution. We can’t really afford to eliminate it—not without abandoning all the benefits of technology that we not only enjoy but on which we depend. So the answer is to allow only pollution that’s worth what it costs, and not any pollution that isn’t worth what it costs. The problem is to make sure that people bear the costs for which they are responsible. A market system rests fundamentally on such an arrangement. If you hit me with your car and you damage me, you are obligated to pay me—at least until we have no-fault insurance. The problem of pollution is that if you emit noxious smoke that damages me, it’s difficult for me to know who’s done the damage and to require you to be responsible for it. The reason the market doesn’t do it is that it’s hard to do. The resolution does have to be through governmental arrangements, but in the form of effluent taxes rather than emission standards. I prefer such taxes to emission standards because taxes are more flexible. If it’s more expensive for a company to pay the tax than emit the pollutant, it will very quickly raise its own emission standards.”
(Note as well that his point that “If you hit me with your car and you damage me, you are obligated to pay me” describes the obvious reason why legal liability is also high on the list of economists’ solutions to pollution and other problems; it allows private parties to directly ensure that externalities are internalized by those who impose them.)
In the end, the only strategy Dan mentions in his post that Friedman would unequivocally oppose is direct governmental regulation through emissions standards.
I don’t agree with Friedman’s approach to environmental policy issues. But based on what he said, rather than on “channeling” him, I’m confident that the above characterization of his views is incorrect. I’m always bemused when people conjecture about what classical economists and other “free-market” thinkers would say (generally to serve their own ideologies), rather than look at what those thinkers actually have said.
Dan’s point is a valid one: mainstream economists agree that from a “free-market” viewpoint, pollution beyond what is economically efficient often results from market failures, mostly in the form of negative externalities – and the absence of any policy tools for correcting these market failures would leave us without any effective means of addressing this problem.
Thus, even Friedman famously supported resolving pollution-related market failures through governmental intervention, in the form of taxing emissions or similar market-based strategies. He said this many times publicly.
Here is just one example of Friedman’s position, from a 1973 interview:(http://jeepers1.wordpress.com/2010/02/21/a-1973-interview-with-milton-friedman-playboy-magazine/).
“Q: If consumer protection—even from monopoly—isn’t an area that is legitimately the province of government, what about pollution?
FRIEDMAN: Even the most ardent environmentalist doesn’t really want to stop pollution. If he thinks about it and doesn’t just talk about it, he wants to have the right amount of pollution. We can’t really afford to eliminate it—not without abandoning all the benefits of technology that we not only enjoy but on which we depend. So the answer is to allow only pollution that’s worth what it costs, and not any pollution that isn’t worth what it costs. The problem is to make sure that people bear the costs for which they are responsible. A market system rests fundamentally on such an arrangement. If you hit me with your car and you damage me, you are obligated to pay me—at least until we have no-fault insurance. The problem of pollution is that if you emit noxious smoke that damages me, it’s difficult for me to know who’s done the damage and to require you to be responsible for it. The reason the market doesn’t do it is that it’s hard to do. The resolution does have to be through governmental arrangements, but in the form of effluent taxes rather than emission standards. I prefer such taxes to emission standards because taxes are more flexible. If it’s more expensive for a company to pay the tax than emit the pollutant, it will very quickly raise its own emission standards.”
(Note as well that his point that “If you hit me with your car and you damage me, you are obligated to pay me” describes the obvious reason why legal liability is also high on the list of economists’ solutions to pollution and other problems; it allows private parties to directly ensure that externalities are internalized by those who impose them.)
In the end, the only strategy Dan mentions in his post that Friedman would unequivocally oppose is direct governmental regulation through emissions standards.
Sean said:
“…If it’s more expensive for a company to pay the tax than emit the pollutant, it will very quickly raise its own emission standards….”
Not if the so-called pollutant is “carbon dioxide” which is a not really a pollutant at all, but is merely an eco-political gimmick and lie that can be economically avoided by getting out of “eco” states like California which are hopelessly mired in delusions, corruption and poverty.
Sean said:
“…If it’s more expensive for a company to pay the tax than emit the pollutant, it will very quickly raise its own emission standards….”
Not if the so-called pollutant is “carbon dioxide” which is a not really a pollutant at all, but is merely an eco-political gimmick and lie that can be economically avoided by getting out of “eco” states like California which are hopelessly mired in delusions, corruption and poverty.
Sean, I interpreted Dan’s blog post to make a much broader assertion than the narrow issue of environmental policy. Your assertion that ” the only strategy Dan mentions in his post that Friedman would unequivocally oppose is direct governmental regulation through emissions standards” is contradicted by the very interview you cited. The interview covered much more than the correct approach to environmental regulation. I think a fair reading of that interview demonstrates that Milton Friedman would be in the “stop digging” camp rather than merely mitigating the effects of the policy tools listed.
Friedman’s approach on the limited topic of environmental policy was consistent with his broader economic theory — pricing signals (of which taxes become an element) inform the marketplace and, in turn, causes society to make choices that, in turn, inform emitters whether to persist or modify. Friedman was, I believe, a great believer that what has been documented more recently as “the intelligence of crowds” is a superior basis for organizing society than reliance on a small number of experts, no matter how well-intentioned and skilled.
Sean, I interpreted Dan’s blog post to make a much broader assertion than the narrow issue of environmental policy. Your assertion that ” the only strategy Dan mentions in his post that Friedman would unequivocally oppose is direct governmental regulation through emissions standards” is contradicted by the very interview you cited. The interview covered much more than the correct approach to environmental regulation. I think a fair reading of that interview demonstrates that Milton Friedman would be in the “stop digging” camp rather than merely mitigating the effects of the policy tools listed.
Friedman’s approach on the limited topic of environmental policy was consistent with his broader economic theory — pricing signals (of which taxes become an element) inform the marketplace and, in turn, causes society to make choices that, in turn, inform emitters whether to persist or modify. Friedman was, I believe, a great believer that what has been documented more recently as “the intelligence of crowds” is a superior basis for organizing society than reliance on a small number of experts, no matter how well-intentioned and skilled.