Beware the Populist Feedback Loop

Dear Capitolisters,

An increasingly common tactic on the populist right is to label skeptics of new government programs (protectionism, subsidies, etc.) “free market fundamentalists” who dogmatically oppose any and all government regulation and believe in the perfection of free markets (or whatever). The ploy is hardly new—Wikipedia (citing the U.N.!) notes that the term is a common pejorative that’s been employed by pro-“interventionist” lefties like Joseph Stiglitz, Paul Krugman, and George Soros—but it’s recently become the go-to label for many on the nationalist right who have long championed protectionist and other market-skeptical policies or who see the Rise of Trump as their golden ticket to political power and, perhaps, even riches. Indeed, one can hardly read an op-ed by or article about these up-and-coming policy entrepreneurs without encountering some form of “market fundamentalist” rhetoric, which is used to quickly brush aside any and all criticism of populist policy as religious zealotry unworthy of serious consideration (and, of course, the cause of all of our current economic and political problems, be they real or imagined).

The tactic, I must admit, has proved successful in the media, likely because it confirms the market-skeptical views of many journalists and editors (and the left-leaning experts they routinely publish). However, the “market fundamentalist” pejorative ignores several essential facts that reveal its baselessness. First, few, if any, serious libertarian or conservative critics of populism actually oppose all forms of government intervention in the economy. Instead, they (we) are skeptical of incessant allegations of pervasive “market failures” and of the government’s (politicians’) ability to fix those that truly exist. Where those two tests are met, they (we) readily concede government intervention may be appropriate or even necessary. (See, for example, Russ Roberts’ discussion here, Michael Munger here, or this one from me on libertarianism in a pandemic.) 

Second, criticism of populist interventionism is not based on blind faith or ideology—though I freely admit a natural bias toward liberty—but instead on a vast repository of evidence showing that we should be strongly biased in favor of economic freedom and against populist economics, which not only make us poorer but create the economic conditions that can breed more (and worse) populist policies in the future.

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