Why are Libertarians Ignored When it Comes to Corporate Welfare?

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Ben Cohen
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cato

No one's listening guys...

Libertarians often like to bring up the US Postal Service as an example of public sector inefficiency. They argue that it would be far better run in private hands and wouldn't cost the tax payer anything. As Milton Friedman once stated: "If you put the federal government in charge of the Sahara Desert, in 5 years there'd be a shortage of sand." It's a popular line of argument and Libertarians are invited all over the media to reiterate it.

There is some truth to the Libertarian critique of the public sector (although the problems with the post office actually have nothing to do with government inefficiency). Anyone who has waited in line at the DMV knows full well that much could be done to improve service and efficiency. This a problem world wide - my brother recently dealt with his local council on an issue regarding water leaking into his apartment in London - a process he described to me as being close to torture. He sent letter after letter, month after month and spend literally hours call waiting trying to get someone to deal with the problem. And that was well over 6 months ago and the problem is still yet to be resolved. The truth is, government isn't always great at running things and private companies are sometimes better.

But Libertarians are never able to acknowledge the massive inefficiencies and systemic flaws in the for-profit sector. One glaringly obvious example was the financial meltdown in 2008, where Wall St literally devoured itself in an orgy of self interest and greed. Self interest was supposed to be the driving force of a productive society in Libertarian philosophy, but left unchecked by regulators in the financial sector, it didn't quite work out that way. Even Alan Greenspan admitted that his worldview was wrong when it came to the power of markets to regulate themselves. In a testy back and forth with Rep. Henry Waxman in Congress, Greenspan conceded that his model was not fully operational:

You have to -- to exist, you need an ideology. The question is whether it is accurate or not. And what I'm saying to you is, yes, I found a flaw. I don't know how significant or permanent it is, but I've been very distressed by that fact.

Perfectly balanced markets and ingenious companies that solve all problems through innovation and efficiency exist only in the minds of Libertarians themselves. I took part in a debate with The Daily Caller's Neil Munro a couple of weeks ago, and I brought this point up. Munro amazingly argued that government to blame for the financial crisis, a leap of logic only the most dedicated of ideologues could manage to make. When reality does not conform, Libertarians simply argue that the philosophy itself was not followed correctly. We see this playing out in Europe right now. As austerity measures continue to fail, more cuts are implemented and governments resort to greater reliance on the private sector to restore their countries to fiscal health. And thus the crisis gets worse and worse as the measures used to solve the problem are the ones causing it. But this is not important to the Libertarian, who is concerned only with the world and the way he/she perceives it to be.

So why has this seemingly ridiculous philosophy become so widely accepted? When the Judeo-Christian explanation of human existence was debunked by the theory of evolution, the scientific community absorbed the new information and moved on. No serious scientist believes that humans were created 6000 years ago in God's image. Yet there are serious economists and politicians who genuinely believe that free markets are the solution to everything, and their belief system has been forced upon the public who are suffering the consequences.

Sadly, there is a very simple explanation as to why this childish belief system has been so widely propagated. And that is because it works in the interests of the wealthy.

Business owners and the very rich know full well how important government is in creating and protecting wealth - particularly their own. Most successful sectors of the economy in America were funded, protected and bailed out at some point by the government; aviation, the automobile industry, the internet, tech, agriculture finance and so on are, and were all the recipients of tax payer's money. The ultra Libertarian Cato institute regularly publishes reports on corporate welfare within the federal budget. As Stephen Slivinski wrote in a policy analysis piece for Cato back in 2007:

The federal government continues to subsidize some of the biggest companies in America. Boeing, Xerox, IBM, Motorola, Dow Chemical, General Electric, and others have received millions in taxpayer-funded benefits through programs like the Advanced Technology Program and the Export-Import Bank. In addition, the federal crop subsidy programs continue to fund the wealthiest farmers.

The previous year, the government had spent $92 billion in direct and indirect subsidies to businesses and private-sector corporate entities. While that number has decreased in recent years - around $80 billion in 2012 according to an in depth look at business subsidies in the New York Times -  it remains a steadfast feature of the American government.

While business leaders spend a lot of time lecturing everyone on the virtues of the free market, you won't hear them discuss corporate welfare or the handouts their business have received from the tax payer. Megalomaniac and JPMorgan Chase CEO Jamie Dimon regularly blasts government interference in the market and belittles people who aren't as rich as him, conveniently omitting that his own bank needed almost $100 billion in taxpayer subsidies during the financial crisis.

In a way, you have to feel sorry for the ideologically pure Libertarians. They get wheeled out on business shows, get promoted way above their pay grade to write about business (just look at the nonsense Megan McArdle gets to write for The Daily Beast) and raise lots of money from enormously wealthy business owners to start fancy think tanks.

Yet no one listens to their protests about corporate welfare. Libertarians are only invited to talk about the brilliance of free markets and the poor abusing welfare. While they write reports on corporate welfare, you'll rarely see them on Fox News talking about it.

It is an alliance that works out quite well though - Libertarians get to go on television and have well paid careers as pundits, and businesses get free market ideology rammed down the public's throat on a daily basis. As a result, you get a well trained population that believes government is bad and markets are good while their kids go to crumbling public schools, their roads fall apart and the health insurance industry jack up their premiums every month. The conditioning is so effective that evidence no longer seems to matter anymore - you can watch European economies go down the toilet and America's fiscal health teeter on the brink as the cuts from the sequester go into effect - and still believe that the only answer is to cut more and increase the influence of the private sector.

So Libertarians will continue to rail against corporate welfare - as long as no one is really listening to them.