Is This What The New Deal Felt Like?

Matthew Yglesias: Nationalize Everything

At this point, I would say that the government should probably be taking over just about everything that’s available for taking over.

Brad DeLong: Time Not for a Bailout, But for Nationalization

There are three options:

  • Do nothing.
  • Bailout (a la Paulson)
  • Nationalization (a la Sweden 1992)

Do nothing was last tried in 1929-1932. The result was called the Great Depression. Let's not do that again. Let's decide between bailout and nationalization.

Nationalization has the best chance of avoiding large losses and possibly even making money for the taxpayer.

How long before we see self-described libertarians advocating nationalization on chicken-little grounds? After all, the same arguments self-described libertarians give for defending bailouts apply just as much to nationalization. Actually, nationalization makes much more sense than a temporary bailout: if certain businesses are "too big to fail," then they are too big to be run privately, and we should be honest about nationalizing them instead of erroneously pretending that there is still such a thing as a free market.

The argument, for the record, is that a depression is even worse, so anything and everything that would prevent a depression is therefore advised. I wonder if these same people were upset to see the former Soviet Union collapse, hoping that massive government intervention could keep the charade going on in perpetuity - the alternative of system failure being too horrifying to contemplate.

(Of course, system failure is exactly what libertarianism predicts. The end of the USSR was about as peaceful as anyone could have hoped; I certainly don't expect the U.S. to vote itself out of this mess any better than the Russians commanded and controlled themselves into prosperity.)

I'm no big fan of libertarian litmus tests, but at some point the term begins to lose all meaning. This is one of those points. If you feel like jumping off the bandwagon now, go right on ahead, but please don't take the term along with you when you go. There are indeed consequentialist arguments in favor of bailouts and nationalizations, but this kind of consequentialism ceases to be libertarian in any recognizable form.

Share this

Micha, are your arms getting

Micha, are your arms getting tired? You're throwing people out of the libertarian movement right and left. That has got to be draining.

I still consider

I still consider libertarians bigots to be perfectly valid libertarians, as much as I may disagree with them ethically and think that they poison the movement. It's harder to picture any sort of libertarian argument for bailouts/nationalization. In other words, insofar as a libertarian supports bigotry, that libertarian is committing a moral vice, but that moral vice can still be expressed in a form compatible (in some sense) with libertarianism. Insofar as a libertarian supports bailouts/nationalization, it is difficult to see that position expressed in a form compatible with libertarianism.

It's not a question of intellectual purity, but of linguistic accuracy. Some people might hold values they feel trump libertarian concerns, so why not just admit that instead of pretending otherwise?

Agree

If "libertarian" means anything, it's got to have some limits, and not advocating nationalization is surely one of the most uncontroversial limits.

I'm not sure how or why you're jumping from quotes from Yglesias and DeLong to the thought that libertarians are going to be advocating nationalization. Y and D have never struck me as friendly to libertarianism, let alone libertarians themselves. On the other hand - I don't read everything they write, so maybe they call themselves libertarians?

But more broadly, can someone who advocates nationalization be taken seriously on economic matters? I find myself unable.

I'm not sure how or why

I'm not sure how or why you're jumping from quotes from Yglesias and DeLong to the thought that libertarians are going to be advocating nationalization.

Because I've seen some self-described libertarians in favor of the bailouts. I'm curious if any of them will follow Yglesias and DeLong along for the ride.

Before we toss everyone out of the movement...

Micha, you write:

After all, the same arguments self-described libertarians give for defending bailouts apply just as much to nationalization.

Many economists believe that markets work well most of the time but they will occasionally become irrational and destructive*. Such people would like the government to leave the market in benign neglect, but to intervene when extraordinary events occur. They would favor temporary bailouts over nationalization.

I expect this viewpoint is common among libertarians, and especially among libertarians that support a bailout. It is hard to find an argument for nationalization in it. I don't see the slippery slope.

It is entirely possible that a person could favor a drastically reduced role for government in the day-to-day affairs of the nation, but still support government intervention in markets under extraordinary circumstances. It would be hard for me to drum such a person out of the libertarian movement.

I'm no big fan of libertarian litmus tests,

I am going to quote you on this in the future.

[*]This particular viewpoint could be called "Keynesian", in the non-Austrian-smear sense of the word.

It is hard to find an

It is hard to find an argument for nationalization in it.

It is the "too big to fail" argument that lends itself more to nationalization than to a temporary bailout. And that is precisely the argument I have heard from self-described libertarians who think that the sky will fall unless something is done.

Governmet fixing its own problems

The most common account I'm hearing from libertarians is this problem is the government's own doing (same as with the Great Depression). For example, the reason Fannie Mae is "too big to fail" is that Fannie Mae has had a lot of involvement from the state. I don't know if you saw the video I linked to earlier featuring Barney Frank.

If the reason Fannie Mae is "too big to fail" is government action, then it would not be inconsistent for a libertarian to advocate government getting completely out of the picture (at which point Fannie Mae would cease to have the government-created advantages that got it so big) while at the same time advocating that government bail out Fannie Mae this one time (since it is, thanks to government, at the moment "too big to fail").

Though I would add that that's not my position. I think it's consistent. I don't think it's correct.

Off topic (not quite) but

Off topic (not quite) but something big is coming up. No idea what but Snp is crashing.

Looks like the package isn't going through.

No, down by 20 votes

Yeah, package going down by 20 votes apparently. Thank God I don't have any money to lose.

Gold up by $30 ! What kind

Gold up by $30 ! What kind of libertarian are you.

A rather broke one, sad to

A rather broke one, sad to say. Though with luck my Wii will appreciate.

Also Somewhat Relevant

Today is the birthday of Mises.

The myth of Hoover's "do nothing"

Do nothing was last tried in 1929-1932

Wha... ?

Hoover bailed out the financial system back in 1929. Right after the October krach he had inflated banks' reserves by a whopping 10% - in just one week ! He also revived the War Finance Corporation under the name Reconstruction Finance Corporation similarly to how Paulson is establishing a defeasance pool.

The USA are going down the exact same path as back then. "Do nothing" was actually tried by President Harding in 1921 when the money exchange crashed and burned, and it worked just fine.