While doing research about the decreasing dangers of police work, I came upon some good work by libertarians. Unfortunately, this also brought too much of the typical brain dead libertarian economic analysis. In particular, at The Freeman, I found an article by Corey Iacono, 5 Economic Myths That Just Won’t Die. It was apparently the cover story of the December issue. It’s an excellent example of conservative affirmative action. If only I could spout this kind of nonsense, I too could be published in a seemingly popular magazine.
A big part of the problem is that the myths are no such thing. No one, for example, goes around saying, “Capitalism isn’t economically superior to socialism.” There literally is no such thing as a pure capitalism or a pure socialism. The libertarians are the only ones who claim that there can exist some kind of perfect capitalism. And even they fall to pieces when you bring up tort law or almost any other practical matter. But even if we grant Mr Iacono his myth, he doesn’t counter it. He only argues that liberalizing socialist countries increases economic growth. That is not the same as showing that capitalism is economically superior to socialism. There is a balance and going too far either way makes things worse.
Typical of the article is its argument against, “Countries like Sweden and Denmark prove that high taxes don’t harm economic growth.” He avoids the subject altogether. He does mention one paper regarding the Danish economy that is not based upon data but on a non-standard economic model. Otherwise, his argument is that in a general sense lower taxation leads to higher economic growth. Again, no one really argues with this. The argument has been that taxes of the rich do not hurt the economy — in a recession at least — because they don’t spend most of their money and so it is just added to the piles of cash rushing around the economy hopelessly looking for places where it can be used. But such economic complexity is anathema in libertarian thought.
The article isn’t without some actual claims that are made, “The government ended child labor. In a free market, child labor would still exist.” But I hardly think it is a myth. He quoted an article by the Economic History Association that stated that child labor ended primarily due to improved incomes of working people from 1880 to 1940. The problem here is that incomes improved due to the rise of labor unions and various government activities. Given that the United States has been seeing little to no increase in real wages for the working classes over the last four decades, we ought to see a rise in child labor if it weren’t for laws. The same argument that Iacono made has been made for a century and a half for how the Civil War was unnecessary because the free market was just about to destroy slavery. In this case, Iacono is apparently fine with generations of children working in coal mines because the bright light of the libertarian utopia is only a few generations away!
His next myth was, “Free trade doesn’t lead to better economic outcomes in the real world.” Free trade is mostly a scam to keep rich countries rich and poor countries poor. There is no way that a banana republic becomes anything else if it can’t protect its infant industries from destruction by powerful foreign corporations. Let me outsource the rebuttal to Ha-Joon Chang’s excellent Bad Samaritans:
The poor growth record of neo-liberal globalization since the 1980s is particularly embarrassing. Accelerating growth — if necessary at the cost of increasing inequality and possibly some increase in poverty — was the proclaimed goal of neo-liberal reform. We have been repeatedly told that we first have to “create more wealth” before we can distribute it more widely and that neo-liberalism was the way to do that. As a result of neo-liberal policies, income inequality has increased in most countries as predicted, but growth has actually slowed down significantly.
But by far the worst of the “myths” was, “The idea that economic growth helps the poor is trickle-down economics — it doesn’t actually help them.” No one says that economic growth doesn’t help the poor. No one. But he doesn’t address this anyway. He actually goes on to argue in favor of trickle-down economics. He wants growth, which he claims that we get “through methods such as limiting the size of government and lowering barriers to international trade.” The size of the government is generally irrelevant, but it is unquestionably actively harmful in the middle of the worst economic period since the Great Depression. There is no “crowding out.” Corporations are already sitting on hundreds of billions of dollars because they don’t see any point in investing. And what possible barriers to international trade is he talking about? As I’ve discussed, our big new “free” trade agreements are more about making countries less democratic and making it easier for owners to collect their rents.
All of this is just the same old libertarian hokum. This isn’t economics; it is theology. It is worship of the free market and the idea that any interference with it will make it angry and turn against us. Economics started as a part of moral philosophy. But amongst libertarians, it has lost all its moral context. It is no longer about the best way to facilitate the sharing of resources. It is about feeding an ideology that can never fail and only be failed. Unfortunately, Corey Iacono isn’t even a priest in the cult of the free market; he’s just one of the true believers sitting in the pews.
Afterword
Iacono wrote a followup article, 5 More Economic Myths That Just Won’t Die. It is an improvement in that it actually contains a widely believed claim that is, in fact, false, “Immigrants take American jobs and reduce American wages.” But three of the remain four myths are all the same: government can’t create jobs. It’s pathetic. But it has 464 shares, because there are scads of people out there who just can’t get enough hokum when it tells them what they want to hear.