Via Will Wilkinson, I see that Brink Lindsey has helpfully taken apart Jacob Weisberg’s ridiculous
argument series of almost entirely unargued-for statements claiming that the financial crisis disproves libertarianism, thus saving me the trouble of having to do the same:
As every good hack does, [Weisberg] bulls ahead with completely unjustified certainty. We’ve just experienced a global disruption of financial markets on a scale not seen in seven decades. And we’re still in the middle of it: the ultimate extent, severity, and consequences of this crisis remain unknown. Yet Weisberg can already sum up the story in a single sentence: the libertarians did it!
Yet part of what’s so strange about Weisberg’s article is that while that last sentence of Lindsey’s clearly sums up its thrust, he generally fails to come right out and say it: hence he remarks that the meltdown was “made possible by libertarian ideas”, that “the libertarian theory of self-regulating financial markets” has to be put “at the scene of the crime”, that opponents of tighter regulation “took the hands-off positions they did because of their political philosophy”, that the belief in “market fundamentalism” is “the best explanation of how the natural tendency of lending standards to turn permissive during a boom became a global calamity that spread so far and so quickly”, and so on. It’s those dread libertarian ideas, in other words, if not the libertarians themselves, who were responsible for getting us into this mess.
But this is all a bunch of nonsense. For one thing, and with due apologies to Richard Weaver, “beliefs” and “ideas” can do nothing on their own: they are no more actors than markets are, and their power to make a difference in the world rests on the willing cooperation of those who hold or – note well – parrot them. And so when Weisberg dismisses with a shrug the role that was played by self-serving lobbyists in fighting against regulation, or refuses to address the roles played by implicit or explicit government guarantees of banks and federal policies designed to increase homeownership, he shows himself to be no better than the Marxist ideologues whose defense of communism post-1989 he compares to the libertarian resistance to blaming Milton Friedman for all the world’s evils. Contra Weisberg, America has not had a “free market” to anything even approaching the extent to which the Soviets had a centrally planned one, and libertarians have been warning for years of the dangers of cheap credit and the other policies that led to the housing bubble whose bursting was the initial cause of the financial sector’s meltdown. As Tyler Cowen puts it in responding to Weisberg, the Icelandic crisis doesn’t demonstrate the essential unworkability of small, socially democratic nations: how, then, can the failure of a market that was not a free market demonstrate the bankruptcy of free market ideas?
That’s not to say that better regulation wouldn’t have helped to lessen or avert the financial crisis: it pretty clearly could have, and it’s all but indisputable in hindsight that, given the role that the federal government was playing in inflating the housing bubble to dangerous levels, those who, whether for reasons of ideology or - much more often, I think – political convenience, stood in opposition to increased regulatory measures were acting irresponsibly. But to insist, as Weisberg does, that it is libertarianism as such, as opposed to the opportunistic co-opting of libertarian ideas by those who had a buck to gain (and ultimately lose, as it turned out, several times over), that deserves blame for the financial crisis is the mark of an ideologue indeed. As Wilkinson recently put it in a similar context, it is in times like these that hackery abounds.
P.S. And that, dear readers, is why a serious left-libertarian alliance is a pipe dream.
P.P.S. Michael Moynihan offers some related thoughts.