Liberalism 1.0

Transcript

Aaron Powell: Welcome to Free Thoughts. I’m Aaron Powell.

Trevor Burrus: And I’m Trevor Burrus.

Aaron Powell: Joining us today is Deirdre McCloskey. She’s the Distinguished Professor of Economics, History, English and Communication to the University of Illinois, Chicago. Today we’re talking about an essay she wrote for an upcoming volume edited by Ben Powell on Prospects for Libertarianism. The essay’s called Manifesto for a New American Liberalism, or How to be a Humane [00:00:30] Libertarian. Welcome back to Free Thoughts.

Deirdre McCloskey: Yes. Thank you very much. Glad to be here.

Aaron Powell: You begin the essay by talking about Liberalism 1.0.

Deirdre McCloskey: Yes.

Aaron Powell: What is that?

Deirdre McCloskey: Well, this is a coinage by Dan Klein. He’s kind of a friend of mine. And he’s making the point, and I’m making the point that, we free countries were once liberal in my sense, and in Dan’s sense, and in [00:01:00] Tocqueville’s sense, and in Adam’s sense, and so forth, that it was that we were free economies without much in the way of government intervention. And then in both England and the United States, especially the United States, the word liberal was, so to speak, taken over by what I call slow socialists. They’re my friends, and I don’t think they’re evil [00:01:30] people, but for about 100 years the word has meant, in the United States, larger and larger government.

Aaron Powell: What is slow socialism, as opposed to fast socialism?

Deirdre McCloskey: Well, fast socialism would be 1917 and Communism.

Aaron Powell: Okay.

Deirdre McCloskey: Or the horror of Venezuela these days. But I was once a Marxist, and then I was a Keynesian, and that’s kind of slow socialism. You [00:02:00] want to takes the view that the government is very nice and is very competent, and so we need more of that, and less economic freedom.

Trevor Burrus: Is it slow socialism because it has no principled stopping point?

Deirdre McCloskey: That’s a very good way to express it. I’m gonna adopt that way of saying it. I’m gonna steal it immediately. Because that’s the point, there’s no limit. [00:02:30] If the nanny state as it’s often called thinks you should go to bed at 8 o’clock, then they’re soon … Well, you know, every day we get more news of this. In the state of Tennessee, if you wanna open a moving company, a furniture moving company, you have to get the permission of the existing moving companies. So you can imagine how that works out.

Trevor Burrus: Certificates of need.

Deirdre McCloskey: Certificates. [00:03:00] If you wanna braid hair, you need a license from the government, and this is crazy.

Aaron Powell: But what’s wrong with … I mean, fast socialism seems to have a bad track record, but what’s wrong with slow socialism? I mean, don’t we need these kinds of rules? If we’re gonna live together in a complex society where all of our actions impact each other, we’ve gotta follow rules, and we’ve gotta have some way to use the government to make sure that that society works for everyone‐

Deirdre McCloskey: That’s right.

Aaron Powell: … and it takes the shape [00:03:30] that we want it too.

Deirdre McCloskey: There you go. That’s the standard argument, and I used to use it when I was a kid, and Bernie Sanders uses it, and my friends on the left use it all the time, that the more complicated the economy, the more regulations we need. And of course, it’s actually kind of the opposite. The more complicated the economy, the more we need to rely on the immensely complicated [00:04:00] plans of individuals and trust, not a blind trust, but a certain trust in the market. If the market results in global warming and air pollution, then there’s a case for some intelligent piece of government intervention. But in general, we should let the market work. You know, I [00:04:30] came here in an Uber taxi. And it’s a cheaper and better service. It’s being ferociously opposed by every taxi monopoly in the world. In Germany, they’ve made it illegal. But that’s how the economy should work. People, as the English say, they have an expression, having a go. And allowing people to have a go has worked out very [00:05:00] well.

Trevor Burrus: I think that Aaron made a, the way he said, his counterargument was something he said, society is shaped the way we want it, or something like that?

Aaron Powell: Yeah.

Deirdre McCloskey: Yeah.

Trevor Burrus: That seems to be an interesting … You know, people say that‐

Deirdre McCloskey: Yeah, I know.

Trevor Burrus: … the government can make sure the society is shaped the way we want it. And they kind of gloss over how kind of crazy‐

Deirdre McCloskey: How hard it is to do.

Trevor Burrus: … that is. Yeah.

Deirdre McCloskey: I mean, the key word here, and I urge you all to watch it when it happens, is the word designed. Designed to do such [00:05:30] a thing. It’s a lawyer’s word. It’s not something that, I don’t know, a person who actually understands society a little bit would use, because design is very hard to undertake. Look, if you’re engaged in a war for survival, then design is really what you want. You want General Grant or General Lee for that matter to be focused on the one thing, and then you kind of know what you [00:06:00] need to do. But for something as complicated and rich as a advancing economy, an economy in which the poor are getting much better off than they once were, design so often doesn’t work.

Trevor Burrus: The other one is we.

Deirdre McCloskey: Well, that’s right. We. Because the only we we have is the government. And this we‐​ness is a problem, [00:06:30] you know? We want to intern the Japanese. We want to invade Iraq. We, we, we.

Aaron Powell: I think also in design particular, there’s a loss of the sense of costs.

Deirdre McCloskey: Yeah.

Aaron Powell: Because, I mean, so design in design context, like you’re doing a … designing a new product, you know? Every now and then, they’ll do these things like a new iPhone comes out, and they’ll tear it down. Some tech site will tear it down, and they’ll add up the costs [00:07:00] of the components. They’ll be like, “This phone actually only costs x dollars to make, but they’re selling it for two or three x.” You know, “Where’s all that extra cost?” And the cost is that the design process was so expensive and so wasteful, you know? You try it, it doesn’t work, you scrap it, you try it again.

But we seem to think that design, when government does it, doesn’t work that way. The design is just, you have like this abstract idea, and then you apply it and it goes.

Deirdre McCloskey: That’s right. And the key sort of ideology behind the left [00:07:30] and behind this slow socialism is that the economy is easy. You come up with that all the time. People are saying, “Well, you know, we’ll subsidize solar panels. That’ll be easy. Everyone knows that solar panels made in the United States are the ones we want.” And then you lose half a billion dollars, which is what the Solyndra [00:08:00] fiasco was all about. And I’m not making out that the Obama administration is terrible at this, but it is that they … And this is a very deep presumption, especially by people who have never been on a farm, or who weren’t raised in a small grocery store where they worked.

I find that my students who are raised in small businesses [00:08:30] like small farms, they understand economics. They understand there’s no free lunch. They understand the price system. Whereas if you grow up like I did, as the child of an academic actually, a professor, you don’t know what your father does. You know that your mother’s the central planner in the household, and you think, “Gee, let’s make this national.” Why not central planning for 324 million [00:09:00] people in the United States?

Trevor Burrus: It definitely seems that. But that’s a really good way of describing Paul Krugman, for example‐

Deirdre McCloskey: Exactly.

Trevor Burrus: … that the economy is easy. Now what about, we’re talking about the slow socialists on the left, the so‐​called liberals, what about conservatives? Are they an issue?

Deirdre McCloskey: Yeah, there sure is. My view is that conservatives … We, as free market advocates, as Cato‐​ites, we ought to be trying to occupy the middle. [00:09:30] This thing that just happened in France with Macron … By the way, I was at a dinner party in Paris a couple of months ago before the election, and I pointed out to the assembled group that Macron in Ancient Greek means big deal. And it is a big deal that he’s occupied the middle with real liberalism. That is, freedom for people so far as social matters are concerned, transgendered [00:10:00] people or people from Morocco and so forth on the one hand, and fiscal responsibility on the other. So taking the best of the Democrats and the Republicans so to speak, in France the conservatives and the socialists.

So I think there’s a middle ground that free market advocates should be assuming. We should be taking it. [00:10:30] We are the radicals, as we once were, of course. We are the ones who can stand between these two. But, you know, look. You know someone’s a conservative if, unlike me, they think that the 1960s was the beginning of the rut. If they say, “Oh, the women came out of the kitchen and started messing around with flying airplanes and so on, and those damn blacks,” or darn blacks, or however you want to express [00:11:00] it, “they started to get uppity. And these queers, they got out of the closet, and these colonial people, once they had it all well organized in the British and French empires, and now they’ve gotten … I hate it. I hate it.”

And you know, a progressive in a deep sense is someone who believes the 1960s was the beginning of the modern era of freedom, of liberation. And we have [00:11:30] to get across somehow to our audience, and beyond our audience, that institutions like Cato and the Charles Cook Institute, and others, are … Their view of the 1960s is precisely that it was the beginning of true freedom.

Aaron Powell: But there’s a view the progressives, and they look back on the 1960s, and then they look at the great society laws‐

Deirdre McCloskey: Yeah, yeah. That’s the other set. That’s the slow socialist [00:12:00] coming. You know, you’re right about that.

Aaron Powell: So what do we say … So what they say is like, “Look, the two things go hand and hand. That we stopped oppressing people. We stopped marginalizing people, and we brought them into society. But that part of what that means is then taking care of each other, the being part of the society.” So what do we in that radical center, I suppose‐

Deirdre McCloskey: I’m an Abrahamic socialist. Jewish.

Trevor Burrus: You mean Abraham, like the Abraham?

Deirdre McCloskey: The Abraham. [00:12:30] Abraham, named Abram. Christian, Muslim. I’m, actually, I’m Anglican, I’m an Episcopalian. And I believe that we do have a responsibility to the poor. But our responsibility is to give them opportunity, to make sure that they’re not serfs of the public schools. That they’re … You know, look. I come from Chicago, [00:13:00] and the south and west sides of Chicago are really in terrible shape. That doesn’t mean there’s not a vital and large black middle class. But there’s also a not so vital and very poor black underclass. The south and west sides of Chicago ought to be hives of industrial activity. They were in the 19th cen … or late 20th century. There was no problem getting a job in the [00:13:30] 1920s in Chicago. But we put obstacles in the way. We have interventions in the wage bargain, so called protections of various kinds, such as the minimum wage, that make it impossible for a person who’s not worth 12 dollars an hour, or 15, or 10, or whatever it is, to be hired by anyone.

And then we have zoning, which makes it impossible to open [00:14:00] a factory on the west side of Chicago as you could. And if you didn’t think that was enough to stop enterprise, we have this war on drugs which turns parts of the south and west sides into free fire zones. And this is very bad for the poor. And unfortunately, lots of these things are outgrowth of this regulatory impulse, longstanding. As you say, it starts with American [00:14:30] progressivism a hundred years ago, and then’s ramped up in the 1930s, and then especially as you pointed out, in the great society programs of the 1960s. And we ought to step back, we ought to have … You can call them by various names. We ought to have enterprise zones, for example.

Trevor Burrus: There’s a new word that is being used a lot, and it makes me cringe whenever I see it used. It’s the word liberalism, and now we’re [00:15:00] neo‐​liberalism. And I feel like any time anyone uses that word, they’re derogatory. They’re saying something bad.

Deirdre McCloskey: It’s a term of contempt. I was at a small conference at my university, at UIC, with my colleagues. I’m a professor of English and history as well as economics. And they were mainly from English and history, and they had brought this Marxoid from New York, a smart guy, who talked about [00:15:30] economic history in the United States since the war. And, you know, some of his points were good, and some of them weren’t so good, and I stood up and very politely said, “You know, maybe you should change such and such in your argument.” And I’m an economic historian, I’m not an unknown figure in this … And he said, here’s what happened, he said, “I see that you’re a neo‐​liberal,” and sat down. That was his reply. [00:16:00] And what I found very distressing is my colleagues didn’t say, “Well, come on, Deirdre McCloskey might have a little standing to talk a tiny bit about economic history. Maybe you better actually answer her.” But they didn’t do it.

Aaron Powell: You’d mentioned that you were at one time a Marxist.

Deirdre McCloskey: I was.

Aaron Powell: And moved through this progression‐

Deirdre McCloskey: I was kind of a Joan Baez Marxist.

Aaron Powell: Okay.

Trevor Burrus: So you were just in it for the folk music.

Deirdre McCloskey: Tiny bit simple minded, I have to say.

Aaron Powell: How did you change your [00:16:30] mind?

Deirdre McCloskey: Well, very slowly. I mean, I was at Harvard college. You know, Bernie Sanders and Jeremy Corbyn and I, in say 1960, we’re about the same age, we all had the same opinion. Capitalism is the problem, let’s have a revolution. The problem is that those two guys haven’t changed their opinion. I’ve changed my opinion on lots of things, including my gender. [00:17:00] But I then became a Keynesian because that was what was on offer in the economics department. I wanted to help the poor, so I became an economist. And then I became a kind of social engineer. We were gonna come down to Washington. In Harvard at graduate school, we were gonna fine tune the economy [inaudible 00:17:22].

And then I started to apply economics to economic history and I realized that these tools, these basic [00:17:30] tools of economics, supply and demand curves and so on, make a lot of sense and are useful for history. Then I got a job at the University of Chicago in 1968. I taught there for 12 years. And then in 1974, Robert Nozick’s book Anarchy, State, and Utopia sort of solidified it for me. And then I continued to drift, somewhat more slowly in the next couple three, four decades. [00:18:00] And now I describe myself as I said, as a Christian real liberal, and as a kind of Austrian economist much more than I was.

And I speak in terms of humanomics. I’m trying to combine the humanities and the social sciences in a serious way. My heroine is Mae West, who was brilliant. She was a comedienne in the [00:18:30] movies in the 1930s, and she said “I was Snow White, but I drifted. Come up and see me some time.”

Aaron Powell: I was gonna say, come up and see me some time.

Deirdre McCloskey: I’m in favor of the institution of marriage, but I’m not ready for an institution.

Aaron Powell: So you think, would you drift all the way to anarchism?

Deirdre McCloskey: No, in fact my first politics was anarchism, oddly enough. At the Carnegie Library in Wakefield, Massachusetts, [00:19:00] built by Andrew Carnegie, I found Prince Kropotkin’s book Mutual Aid when I was about 15 years old, and it blew me away. He was a prince of the Russian Empire, and an anarchist. Unfortunately, a left anarchist, so he believed the problem was the state. I still agree with him there. And then the other problem is ownership and capitalism, and that’s where I parted slowly. So now I [00:19:30] have a nostalgic affection for anarchists.

Trevor Burrus: When we talk about taking away some of these controls, protections that the government has put on us over the last century‐

Deirdre McCloskey: Yeah, so‐​called protection.

Trevor Burrus: … it seems to me that, aside from people’s objections, you know, our food is gonna be polluted, our air is gonna be polluted, people are gonna be … But the big one that is really important now for the conversation is inequality.

Deirdre McCloskey: Keeps changing [00:20:00] what is important.

Trevor Burrus: True, true.

Deirdre McCloskey: Now it’s inequality.

Trevor Burrus: Now it’s inequality and the corporations. The [crosstalk 00:20:05].

Deirdre McCloskey: The international corporations.

Trevor Burrus: Yeah. What do we say about inequality?

Deirdre McCloskey: Well, about the international corporations, we say, “So, dear, you as a slow socialist wanna make a corporation called the federal government larger and stronger and completely monopolistic.” That’s one way to answer. And these are not knockdown arguments. The fact is that real inequality has fallen. [00:20:30] In the first place, worldwide it’s fallen, with the economic growth in China and India, and some other places. But even inside countries like the United States, in substance it’s declined. Now, it’s true that Liliane Bettencourt, the heiress to the L’Oréal fortune, the richest woman in the world, has a bunch of stupid diamonds in her jewelry box that she never wears, and a château [00:21:00] she doesn’t ever visit, and yachts she doesn’t go on because she gets seasick and so forth. She’s got all these toys.

But basic goods are much more equally spread than they were in say 1800 or in 1900, or in 1960. Things have improved for poor people. When I was young, poor people … There were actually people starving in the United States. There were actually people [00:21:30] grossly mal‐​nourished. Now they’re, everyone, including me, are over nourished. There was no air conditioning. Take that as a simple case in point. There were horrible heat waves in Chicago and Washington and so forth that resulted in hundreds and hundreds of deaths. And then air conditioning first came to movie theaters. Then my parents got [00:22:00] an air conditioner in their bedroom in 1956. And now it’s common place.

Trevor Burrus: It’s interesting, there’s also no rich man’s air conditioning. There’s no, like‐

Deirdre McCloskey: There’s no rich man’s air con‐

Trevor Burrus: “I have a super high level air” … There’s also no rich man’s iPhone, which I think is super interesting.

Deirdre McCloskey: Exactly, exactly. Everyone … You know, I don’t wanna say everyone, because look, there are poor people. I supported two homeless people in my home for four and a half years, in my own home. And I still tithe [00:22:30] to my Episcopal church, and they’re a very efficient charity, and they do very good work. So I’m, as I told you, I’m a bleeding heart Libertarian. I want the poor to be better off, but as far as this inequality thing is concerned, aside from envy about the diamonds, which is silly, envy is insatiable. What’s [00:23:00] the real problem here? And there’s not a problem. There’s not a serious problem. The poor are much better off than they were 50 years ago, or 30 years ago, and I want that to continue. And the main way for it to continue is to have economic growth.

Aaron Powell: When people complain about inequality and systemic inequality and growing inequality, I really get the sense that it’s not so much [00:23:30] that there’s rich people with baubles that poor people don’t have, but that they almost adopt like a … Take a line out of Michael Walzer’s Spheres of Justice, and say that the issue is not that there’s within the sphere of money, some people have a lot more than others, but that having a lot more bleeds into other spheres. And so what it turns into is disparities in power, that the rich can get their way and the poor can’t, or the rich can exploit the poor and the poor can’t do anything about it. [00:24:00] And the wealth disparity is both a cause and a symptom of that, but it’s not itself the real problem.

Deirdre McCloskey: Yeah, of all the Communitarians, Mike is the most deep. Sendhil, for example, at Harvard, is not deep. He’s an inch deep. And yes, there is a danger there. But as Mike has said in print … He was [00:24:30] asked, is capitalism corrupting? There is a book that asks that. Or the market, is the market corrupting? And he said, “Yeah, it is.” And then he said, “And so are all the other alternatives.” The socialist, or the populist, let’s say, who makes crazy promises. I was talking to the Uber driver about it this week as I came over this morning. [00:25:00] That’s corruption too. And then it ends up that his family is better off, as in the case of Trump.

And I think that’s a very wise remark. And from an Abrahamic and Christian perspective, I have no trouble with that. That’s original sin, dears. Power tends to [00:25:30] corrupt, absolute power corrupts absolutely. So we need to make sure that market economy, we need to help market economies to be competitive and to free entry. You have to break apart monopolies, like the doctors.

Trevor Burrus: You mean the AMA?

Deirdre McCloskey: The plumbers. I mean the AMA, the American Medical Association. And when have the rich not been the rulers? [00:26:00] Gabriel Kolko, a new left historian back in the 1960s, wrote about the ICC, the Interstate Commerce Commission, which was to leash the railways and prevent them from exploiting the farmers. And in fact, they did the opposite. They got captured, as Kolko documented, very quickly by the [00:26:30] railways. Instead of reducing fares, they raised fares. And then they got to regulate trucking as well. And we at the University of Chicago Economics Department were delighted at Kolko.

So here’s a man of the left, we’re supposed to be on the right. I don’t think we really were, but. Supposed to be on the right, and he and we were agreeing. Namely that, [00:27:00] well, we called it the golden rule. Those who have the gold, rule. And we hated it as much as Kolko and the new left did.

Trevor Burrus: Does liberalism, if it’s working well in the sense of growing betterment, you know, trade‐​tested betterment, does it contain the seeds of its own demise in a sense by producing enough wealth that people start wanting to take … Because it seems like if everyone’s toiling in the field, A, you’re not taking things for granted, and I think people [00:27:30] start to take wealth for granted in an affluent, liberal society. And B, you understand that everyone else is also working in the field. But then when you start seeing, oh, there’s a hedge fund manager, who does an important‐

Deirdre McCloskey: Yeah, yeah. He’s working the field, but he’s behind the hedge.

Trevor Burrus: … he’s behind the hedge. Touché. And [inaudible 00:27:47], well, I don’t see what he’s doing now. He’s managing that hedge and he’s making a lot of money, and so now he can just take away …

Deirdre McCloskey: Yeah, that’s right. But this as you know is an old theme in the study of [00:28:00] modern society. Marx said that capitalism would raise its own gravediggers, and lots of people have made this point.

Trevor Burrus: Schumpeter, too.

Deirdre McCloskey: Schumpeter did. And what’s his name, the sociologist did. And I just don’t think it’s inevitable. I think we can rage, rage against the dying of the light. But it is a problem. It’s this problem that we grow up in [00:28:30] socialist societies, they’re called families. And so every generation has to be taught, especially now. As you said, we grow up in families that are very far from production. If you grow up in a farm or in a small business, you kind of understand there’s no such thing as a free lunch. You gotta work to get more medical care. You can’t just raise the minimum [00:29:00] wage to 100 dollars an hour and we’ll all be better off. And you know what prices do. You kind of understand the economy. I find my students who come from farms and small businesses catch on to economics much faster than I did.

And there are a lot more Is in the economy now than there were when I graduated from college in 1964, and ton more than there were in 1900. One third of the American population was [00:29:30] on farms in 1800, 1900.

Trevor Burrus: So people who just sort of don’t understand, their academics or their lawyer fathers, or things like that.

Deirdre McCloskey: It’s not just … That’s right. It’s not just the pointy head intellectuals. If your dad and mom goes off to the office and you have no idea what it means, or even if you go visit the office. That’s nice, take your daughter to work day, you still don’t understand what mom is doing. She’s talking on the phone a lot, [00:30:00] you don’t know what that’s all about, and what it has to do with the meat that comes to you in a nice cellophane package in the store, and you think that’s where meat comes from. Where does meat come from? It comes from the supermarket.

Aaron Powell: On the question of poor and the role of government in their lives. So on the left they say we need to effectively financially help the poor [00:30:30] because‐

Deirdre McCloskey: Yeah, and I’m actually in favor of that in some circumstances. A hand up, a hand out in the right circumstance.

Aaron Powell: Sure. But you right in the essay that what we really need to do is kind of get out of their way, is let them, is trust them to‐

Deirdre McCloskey: Much more.

Aaron Powell: … know what’s right for them. So on the … I mean, this is an argument that gets traditionally made more on the right, is that do the poor know what’s best for them? I mean, [00:31:00] aren’t there people, classes of people, individuals, who really do need their lives guided by someone who knows better? And I’m thinking, and in part like, so we saw the 2016 election to some extent was a whole bunch of people who were not the elites fed up with elites telling them what to do, or telling them what they couldn’t do, and so lashing out and saying, “No, we know what’s best.”

Deirdre McCloskey: Yeah, that’s right.

Aaron Powell: But then their things that they picked as the “We know [00:31:30] what’s best” would be catastrophic, not just for the elites but for themselves.

Deirdre McCloskey: Yeah.

Aaron Powell: And so, is there … I mean, can we kind of trust them to run their own lives?

Deirdre McCloskey: Well, you know, as you said, that’s the conservative line. It’s also the left wing line. And we, people from Cato and so forth, we think that there’s a third possibility, that they are not … We don’t believe [00:32:00] in compulsion. We don’t believe in violence. We’re in favor of persuasion, of sweet talk as I call it. And we believe that people should be left alone on the whole. You know, so it was said that these people can’t take care of themselves about women, about blacks, about colonial people. In Holland, where I’ve lived for a number of years, they used to say at the height of [00:32:30] the Dutch empire mainly, what’s now Indonesia, they said, this would be around 1900, the standard line was, “Well, we’re no longer extracting tremendous amounts from Indonesia.” Although in some ways they still were. “We’re their guardians.” And then you’d say, “Well, how long is that gonna go on?” “Oh, about 200 years,” said the Dutch. The well‐​meaning Dutch. [00:33:00] The left, at least of the kind of imperialists viewed it this way.

So I just think this business of people not taking care of themselves is not good. The Protestant reformation was mainly significant for making the modern world, not the way Max Weber said it was, by changing people’s psychology, making the more afraid [00:33:30] they weren’t gonna get into Heaven or something. But it’s mainly church governance. Instead of the priest saying, “We’ll take care of this. You don’t need to bother.” It was the priesthood of all believers, especially on the radical side of the reformation.

Trevor Burrus: You write about … You said it a little obliquely, sometimes directly, but we say sometimes Libertarians [00:34:00] are taking bad rhetorical tactics. And I think‐

Deirdre McCloskey: They are.

Trevor Burrus: … you kind of say that sometimes they actually champion selfishness‐

Deirdre McCloskey: They do.

Trevor Burrus: … and [crosstalk 00:34:09] that is not.

Deirdre McCloskey: This is the Ayn Rand problem.

Trevor Burrus: The Ayn Rand problem?

Deirdre McCloskey: That’s how I think of it.

Trevor Burrus: So what sort of Libertarians are you finding out there, what are the kind of mistakes are they making other than‐

Deirdre McCloskey: They gotta stop saying, “Screw you, I’m rich.” That’s what the country club says, and that’s just not an intelligent way of talking, because we don’t, [00:34:30] at least I, and I think it’s true of both of you, we don’t want to disdain the poor. We want them to do well, and we want them to flourish in a free society, the kind of society that can be, as Langston Hughes, the great African American poet said, “an America that can be and should be.” And it’s some [00:35:00] good, sensible, practical vision, it can be done. And if we keep sneering at the poor this way, that’s not a good move. And what we should be saying, what Cato should have emblazoned on its front‐

Trevor Burrus: Marquee, yeah.

Deirdre McCloskey: … the front of the building is, “We want to help the poor.” Every speech we give, every article [00:35:30] they write. “We think that this regulation or that in the federal government is a bad thing because it hurts the poor.” And that should be our focus, and then we can take the middle, as Emmanuel Macron, we hope, we pray, in of all places France. Henry Kissinger once joked, “France is the only successful Communist [00:36:00] country.” ‘Cause it’s been centralized for four centuries, they’ve been working on it.

Trevor Burrus: You also write that you think that, in your rules for rhetoric, you think that we need to make sure that we talk about criticized conservatives just as much as we did the left.

Deirdre McCloskey: Yeah. I think we need … What liberals, real liberals, or bleeding heart liberals, or whatever, should be doing is getting [00:36:30] away from being placed on this one spectrum on the right. Because when I announce that I’m a Libertarian, people say, “Oh, you’re a conservative.” I say, “No, I’m not.” Hayek’s essay, Friedrich Hayek’s essay at the end of the Constitution of Liberty is a quite good essay, Why I Am Not a Conservative. And we ought to keep on … As he points out, it’s quite interesting, he’s got a good way of formulating [00:37:00] it, he says that, “Conservatives have great faith in evolution up to the present.” That all the things that evolved, all the English constitution, everything on it, it’s wonderful, it’s wonderful. It evolved, that’s a good thing. But they’re terrified of future evolution. And that’s where Hayek disagrees with them.

Trevor Burrus: It seems to me, sometimes conservatives are socially planning where the left is economically planning, and [00:37:30] if they’re trying to, for example‐

Deirdre McCloskey: Yeah, that’s right. Free on the social side, free on the economic side, we’re the party of freedom. We’re the real radicals, and we can harness the imagination of the young in a way that these old farts, if you’ll pardon the expression.

Trevor Burrus: I once did a debate on marriage, for gay marriage, against a conservative, and I just started talking about divorce law, which conservatives have been playing with forever. [00:38:00] Resisting no‐​fault divorce and things like this. And really that’s just, if you’re fixing the rules of divorce, you’re just price fixing the exist cost of marriage in a social planning problem that’s just a perversion of Hayekian principles, verse any other sort of price fixing.

Deirdre McCloskey: I express it that the conservatives want to get into our bedrooms, and the slow socialists want to get into our businesses, and I think they should lay off both of them.

Aaron Powell: [00:38:30] Are we, I guess so far as direction goes, headed in the right way? I was struck, I think yesterday, I saw a survey of voters in 2016 came out that put them on the standard economic, social, liberty quadrant chart, and then had dots‐

Deirdre McCloskey: [crosstalk 00:38:53]

Aaron Powell: … for where they voted, who they voted, Trump or Hillary, and then yellow for other, and there weren’t a lot of yellows. [00:39:00] And what was really striking was, first that the unsurprising thing, that in the maximal freedom on both, there were almost no voters. But that the kind of standard line that the conservatives are for economic freedom but not for social freedom, and then the progressives are for social freedom but not for economic freedom, was not borne out by this data at all.

Deirdre McCloskey: Oh, really?

Aaron Powell: That in fact what you saw was that the conservatives were … [00:39:30] So, the Trump voters, all the red dots, were clustered, yes, very low on social freedom, but also were very much, like they were basically in the middle on economic freedom. Like they leaned against economic freedom. Then the liberals were in a similar‐

Deirdre McCloskey: [crosstalk 00:39:50] They’re not liberals, don’t call them liberals.

Aaron Powell: Sorry, the progressives were in a similar boat, that they didn’t care about their economic freedom, but their social freedom wasn’t terribly high either. And [00:40:00] that seems to be, I mean, anecdotally with the rise of the waves of protests on campus and the economic populism‐

Deirdre McCloskey: Protests against free speech.

Aaron Powell: … on the right, are we drifting … You know, because it used to be like, well, at least group was kind of half good. But now it feels like the groups are, there’s no good.

Deirdre McCloskey: That’s an interesting observation, and it sounds kind of accords with what I can see.

Trevor Burrus: Well, Bryan Caplan calls it the median voter is a national socialist.

Deirdre McCloskey: Yeah, the median voter [00:40:30] is a national socialist. There were three ideas that the intellectuals, or I call them the clerisy, have had in the last three centuries. One was very good. It was the 18th century idea from Voltaire to Mary Wollstonecraft of liberalism, of freedom. The other two were nationalism and socialism. They were invented in the 19th century, and they were terrible ideas. And then if you like them, you ought to try national socialism, which [00:41:00] as [inaudible 00:41:01] says‐

Trevor Burrus: Double your pleasure, double your fun, yeah.

Deirdre McCloskey: That’s right. Double your pleasure, double your fun, or quadruple your fun. So, I don’t know. I think that the demonstration effect of successful liberalism, say in India or China, so far as economic freedom is concerned, is [00:41:30] pretty powerful. You know, we can screw it up. We did in August of 1914, and the European civil war began, which ended kind of in 1989. So that’s why we need to have programs like this, we need to talk up economic freedom and social freedom and try to get people to move off of this, I agree, this kind [00:42:00] of fascist consensus that they have. I’m optimistic about how fast culture can change, how fast political culture can change. The United States in the first world war was an isolationist power, didn’t think it was a good idea to intervene, and then within months, [00:42:30] with a very skillful guy in charge of propaganda for the government, it switched, and we were forbidding people to give sermons in German, just like‐

Trevor Burrus: Or to each their kids German, for that matter.

Deirdre McCloskey: Or to teach their kids German, or to speak German in public. So these things move very fast. Gay rights, for example, [00:43:00] didn’t move at all and then oof, changed. And so if we keep at it, I mean, we, the kind of elite clerisy, can only do a little bit. As they say in country music, the rubber meets the road with the popular culture, with the movies, with [00:43:30] country music indeed, with rock music, you know? It’s not so much the New York Times which foretells the future, but the New York Post. And we’ve got to get those people going in the right direction. I’ve seen a couple of movies in the last couple of years which encouraged me. Joy, about Joy Mangano, the inventor [00:44:00] of the self‐​squeezing mop, which was a pro‐​capitalism movie. And the other one was this one about McDonalds, with‐

Trevor Burrus: The Founder?

Deirdre McCloskey: Yeah, The Founder. It’s an excellent movie. I didn’t quite see the end of it, so I’m not sure if it was entirely pro‐​capitalist, but it was. A lot better than the Wall Street movies. So we gotta keep at it.

Trevor Burrus: It seems that we also can be optimistic about things like Uber, Airbnb‐

Deirdre McCloskey: Absolutely.

Trevor Burrus: … because [00:44:30] I always say that there’s a big gap between our position papers, our op‐​eds, listening to free thoughts, ’cause a lot of people just don’t consume any of that. But if they ride Uber, and they suddenly demand, they say, “Don’t take away my Uber, you taxi cab cartel.” There’s a taxi cab cartel, they just learned. They didn’t even know before‐

Deirdre McCloskey: They didn’t even know it existed‐

Trevor Burrus: … and they want Uber now‐

Deirdre McCloskey: [crosstalk 00:44:52], and it’s, by the way it’s spreading all these lies about Uber. It’s clear that that’s the source. Speaking of the … It’s [00:45:00] sort of the deep state of the taxi monopolies. But I heard a very interesting talk by an entrepreneur in the computer industry. In fact, I have a friend in the computer industry too, and he says the same thing, that computer stuff is ahead of the regulators. Now, power generation, [00:45:30] medicine, is not ahead of the regulators. The regulators have been sitting on that like some giant toad for a century. But the computer people are so creative and are making up stuff every day, new apps, new this, new that, and Washington hasn’t quite figured, or Springfield for that matter, hasn’t figured out how to stop [00:46:00] it. And so maybe there’s some optimism on that side of the economy.

The problem is in these traditional industries, the regulation is so heavy. My only positive hope for the Trump administration, if it lasts very long, is that it will deregulate. Now we’ll see if he can actually do anything at all.

Aaron Powell: [00:46:30] So it sounds like you’re making … Our colleague Jason Kuznicki published a book about the history of the concept of the state, and he makes what, I think he refers from the book, is a state in the gaps argument, riffing off of the god in the gaps argument, that, you know, the state is basically, when we don’t know how to solve something, we just kind of fill that in with, the state‐

Deirdre McCloskey: Yeah, but that was dangerous in theology.

Aaron Powell: Sure. But so it sounds like‐

Deirdre McCloskey: It may be [00:47:00] dangerous in politics, too.

Aaron Powell: Yes.

Deirdre McCloskey: So he agrees.

Aaron Powell: Yes, but so what we’re saying with the technology I think, then, is that one of the values that it has is it kind of shrinks those gaps.

Deirdre McCloskey: Yeah, that’s right.

Aaron Powell: Like those areas that we didn’t think like, “You can’t do this thing without the government.” Because the technology moves so fast, because you can deploy an app so quickly, whereas you can’t deploy like a new power system or a new cancer drug quickly. People can latch on and can see it in their own lives‐

Deirdre McCloskey: Well, and I just wrote [00:47:30] an essay available on my website about economics. I’m gonna be presenting to the History of Economics society in a couple of days in Toronto. And I point out that since 1848, the way economists, academic economists, have made their reputation is by pointing out imperfections, one after another. Ignorant consumers who don’t know that they shouldn’t consume alcohol, say, or monopolies in the 1890s, that was the big talk. [00:48:00] Externalities and economies of scale in the 1920s. The tendency to endless unemployment in the 1930s. Bad investment in the 1940s. Informational asymmetries, my friend George Akerlof got a Nobel Prize for that. And Joe Stiglitz, he’s also a nice guy, but he’s a [00:48:30] fool in so many ways.

And I point out in this essay that none of these have been shown to be important, yet at the same time that economists have been listing … I chronicled, hear this, 105 imperfections.

Trevor Burrus: Did you just go to Samuelson’s book for every year, [crosstalk 00:48:54] for every edition?

Deirdre McCloskey: Exactly. This is [crosstalk 00:48:54]. I was educated in Samuelson’s book, by the way. He was my mother’s [00:49:00] long time mixed doubles partner, in case you care.

Trevor Burrus: Now that is the best piece of random trivia I have ever heard.

Deirdre McCloskey: And that’s right. Paul in the book spends, you know, five minutes on supply and demand and then he spends the rest of the book talking about how it doesn’t work. Monopolistic competition, I was a student of Edward Chamberlin in the 1960s, and it was his thing. And on and on, and now [00:49:30] inequality. The alleged inequality, which I don’t think is correct. I did a long review of Piketty’s book. But meanwhile, this terribly imperfect capitalism, exchange tested betterment, increased the real income of the average worker by a factor of 30. That’s [00:50:00] 3,000 percent since 1800 in most countries. A little, since the United States in the 1800 was already one of the richest countries in the world, a little less for us, but say a factor of 20, 2,000 percent. What, with this imperfection? And that’s the problem, that’s the scientific problem. They haven’t …

When a physicist proposes an amendment of Newton’s laws, [00:50:30] he, namely Einstein, tells how big it’s gonna be. Says, “Look, for things moving at close to the speed of light, such and such will be true, and light itself will bend around the sun, to this extent” … And economists never do it. They say, “Oh, woe is me. There’s monopoly. We’ve got to bring the government in. Woe is me, there’s informational asymmetry, we’ve got to bring [00:51:00] the government in. Woe is me, people don’t have enough education. We’ve got to bring the government in.” That’s funny. Always the solution is to bring the government in to fill the gaps.

Aaron Powell: Thanks for listening. This episode of Free Thoughts was produced by Tess Terrible and Evan Banks. To learn more, visit us at www​.lib​er​tar​i​an​ism​.org.