Deidre McCloskey has a post entitled Factual Free Market Fairness, which has received a great deal of attention and praise, including the claim by more than one person that it is the greatest blog post ever written! McCloskey’s specific point is that the story told by philosophers who defend what she calls “high liberalism” (and what I would call modern welfare liberalism) rests on a factual mistake.
The master narrative of High Liberalism is mistaken factually. Externalities do not imply that a government can do better. Publicity does better than inspectors in restraining the alleged desire of businesspeople to poison their customers. Efficiency is not the chief merit of a market economy: innovation is. Rules arose in merchant courts and Quaker fixed prices long before governments started enforcing them.
I know such replies will be met with indignation. But think it possible you may be mistaken, and that merely because an historical or economic premise is embedded in front page stories in the New York Times does not make them sound as social science. It seems to me that a political philosophy based on fairy tales about what happened in history or what humans are like is going to be less than useless. It is going to be mischievous.
How do I know that my narrative is better than yours? The experiments of the 20th century told me so. It would have been hard to know the wisdom of Friedrich Hayek or Milton Friedman or Matt Ridley or Deirdre McCloskey in August of 1914, before the experiments in large government were well begun. But anyone who after the 20th century still thinks that thoroughgoing socialism, nationalism, imperialism, mobilization, central planning, regulation, zoning, price controls, tax policy, labor unions, business cartels, government spending, intrusive policing, adventurism in foreign policy, faith in entangling religion and politics, or most of the other thoroughgoing 19th-century proposals for governmental action are still neat, harmless ideas for improving our lives is not paying attention.
The post then goes on to discuss many more examples of how government has worked poorly and that the true method for improving people’s lives is through markets.
This is music to my ears in several octaves.
First, and most importantly, it is based on factual claims like this that I root my consequentialist justification for a moderate libertarianism. Markets work better than government, and government has an important, but limited role to play. The argument against consequentialism – that it will assign to government excessive power – is wrong on the facts.