the point of convergence is where anti-statism and egalitarianism meet
That is from their new book, The Captured Economy. They discuss four areas in which public policy exacerbates inequality: housing finance subsidies, intellectual property protection, occupational licensing, and urban land-use regulation. Thus, these are four areas in which a libertarian preference for less government and a progressive preference for less inequality can be served by the same policy changes–hence the “convergence.”
I found much to like in the book, particularly the discussion of the financial crisis, which puts more of the blame where I think it belongs and less on the places where I think it does not belong. In fact, I found the discussion so congenial that I did a search for “Kling” to see if I was in the footnotes somewhere, but I wasn’t.
I quibble when they write,
Of the four case studies we examined, only with respect to financial regulation do we see the usual left-right debate of bigger versus smaller government.
As an anecdote, early in the Trump Administration I attended a three-hour session on financial regulation at the Treasury Department, with about 50 economists in the room, predominantly on the right of course. At one point, the official running the session asked for a show of hands on the question of whether banks were required to hold too much capital, not enough capital, or the right amount. Overwhelmingly, our hands went up for “not enough capital.” So I think that Teles and Lindsey are wrong to imply that the reason that we are stuck with the financial policy we have is that the left and the right cannot agree.
Among economists, left and right agree that it would be good policy to require banks to be less levered. Just as we agree that it would be good policy to build more housing in high-income cities.
Lindsey and Teles are quite aware that on these issues where economists mostly agree, there are public-choice problems. That is what they mean by the title “captured economy.” In the latter part of the book, they talk about ways of getting around these public-choice problems. They reject both the libertarian solution (shrink government) and the progressive solution (regulate campaign finance).
I would describe their suggested alternative political approaches as scenarios rather than as solutions. I am not very optimistic that their scenarios can be realized.
What are the Kling solutions to these problems?
I’ll give mine.
1) housing finance subsidies
If your going to get rid of the mortgage interest deduction I would phase it out for homes below a certain value and replace it with something of equal value to middle class families (like a bigger child tax credit).
2) intellectual property protection
I really don’t have much of value to say here.
3) occupational licensing
I’ll assume we are talking the small time stuff like hair dressers (not doctors). While the fixes write themselves, this doesn’t appear to be a huge area of concern. Most studies I see on the topic leave one underwhelmed by the size of the estimated impact relative to things that really matter.
4) urban land-use regulation
If you can’t solve the problem of the wrong sort of people moving in, you will never solve the problem of people using zoning to control the demographic content of their neighborhood indirectely.
i wonder how many bankers would lend money to institutions that carry the amount of leverage they have if those levered entities exhibited similar operating risk to the Banks ?
Liberaltarianism sounds like a futile pursuit – “convergence of anti-statism and egalitarianism.” The pursuit of egalitarianism which is not a natural condition always involves the use of the state’s legal monopoly of force. Furthermore, why is it assumed that a state of equality is desirable to pursue? Most arguments for it turn out to be complaints about poverty, rather than equality per se.
In the four cases cited, state intervention actually increases inequality. Thus, removing the intervention is both libertarian and egalitarian. Public choice and regulatory capture suggest that there may be many such anti-egalitarian state interventions that could be removed.
Harvey Weinstein joined the Women’s March in January. Because he’s “against inequality.”
The Gloria Steinem professorship in gender studies at Rutgers University? Harvey Weinstein endowed that chair.
And what was his response two weeks ago, when the scandal broke? That he’d go after the NRA, even harder than he has before.
The whole point of progressivism is to talk about inequality and to legislate for privilege.
McVeigh killed 168 people because of his anti-government beliefs. Therefore, using your kind of logic, all anti-government people want to kill hundreds.
Have a look at the list, Steve.
One big protectionist wall at the US border so that wealthy progressives who own copyrights can collect a hefty rent on their intellectual property.
Hundreds of little protectionist walls in all the sanctuary cities so that wealthy progressives who own real estate can collect a hefty rent for having taken out big loans.
Here’s another wall. A hike in the minimum wage. So that unskilled workers can’t actually get a job inside these sanctuary cities that they can’t afford to live in.
Another wall called occupational licensing. That’s in case any workers took the trouble to learn some trade or skill.
Residencies for doctors and dentists, and the very existence of the dentists’ guild, like something from a Pynchon novel. The rent-seeking that keeps nurses and doctors on different sides of a big huge wall.
The children of wealthy progressives get unpaid internships, and can still afford the most expensive suits and jackets somehow. And the most expensive sheepskin. Their parents made good use of section 529. And there are whole courses in talking about inequality.
Wealthy progressives drive expensive electric cars paid for with taxpayer subsidies. It doesn’t bother them if politicians from Berlin to London to Sydney are hiking up the price of electricity, shutting down coal-fired or nuclear power plants, paying people to burn pellets of wood in the name of “sustainability.”
There’s a cost to all the dams that don’t get built. All the stalled mining projects that wealthy progressives campaign against. All the taxes wasted on light rail and cowboy poetry. All the destructive, unproductive jobs in regulatory compliance or university administration or more diverse and inclusive hospitals. If the problem is inequality, you’re causing it.
Public choice seems to convincingly explain many observed policies that favor special interests (concentrated benefits vs. dispersed costs, rational ignorance, etc.) But, are there any “limiting principles” in public choice theory, i.e., do public choice theories ever predict scenarios where concentrated special interests *don’t* win over dispersed general interests? For example, why don’t we have tariffs on *all* imports and why isn’t there a special tax break or subsidy for *every* business activity? Isn’t there always a domestic competitor that has a concentrated interest in slapping a tariff on an import?