Sunday, July 17, 2011

Eliot Spitzer's Outrageous Attack on Libertarianism

Eliot Spitzer is out with a new book, Government's Place in the Market.

It's a tiny book,  only 83 pages and Spitzer writes only 59 of the pages. The remaining pages are critiques of Spitzer's comments by Dean Baker and Robert Johnson. The book does need critiquing.

Spitzer's commentary is simply not in touch with reality. On the first page of the introduction, Spitzer writes that we have forgotten what we had learned from the crisis. What did we forget? the immediate aftermath of the bankruptcy of the entire financial system, there was a consensus that the libertarianism that had dominated Washington for 30 years was an abject failure. (p.4)
Say what? Thirty years of libertarianism? A period when the United States central bank, the Federal Reserve, boosted the money supply from $1.6 trillion to $7.7 trillion. A period during which it became near impossible to start a brokerage firm to compete against the banksters, without spending literally millions to pass through all the regulatory hurdles. A period during which government attempts to regulate every nook and cranny of our lives exploded. This Spitzer tells us was a period of libertarianism.

Spitzer contrasts this "libertarian" period with some earlier period where a:
balanced approach was what had worked during the periods of our nation's greatest prosperity... (p.5)
What the hell is he talking about? Spitzer's "libertarian period" is the most regulated period in the history of the United Sates. There was no earlier "balanced approach" that fostered "our nation's greatest prosperity." This is just fiction.

In Chapter 1, Spitzer writes relative to his theme of 30 years of libertarianism:
For 30 years a libertarian leadership dominated leadership circles, beginning politically with President Ronald Reagan...(p.16)
Ha!  Murray Rothbard in 1989 warned us about these Spitzer-type build ups of the myth of the libertarian Reagan :
Eight years, eight dreary, miserable, mind-numbing years, the years of the Age of Reagan, are at long last coming to an end. These years have surely left an ominous legacy for the future: we shall undoubtedly suffer from the after-shocks of Reaganism for years to come...

There was no "Reagan Revolution." Any "revolution" in the direction of liberty (in Ronnie’s words "to get government off our backs") would reduce the total level of government spending. And that means reduce in absolute terms, not as proportion of the gross national product, or corrected for inflation, or anything else. There is no divine commandment that the federal government must always be at least as great a proportion of the national product as it was in 1980. If the government was a monstrous swollen Leviathan in 1980, as libertarians were surely convinced, as the inchoate American masses were apparently convinced and as Reagan and his cadre claimed to believe, then cutting government spending was in order. At the very least, federal government spending should have been frozen, in absolute terms, so that the rest of the economy would be allowed to grow in contrast. Instead, Ronald Reagan cut nothing, even in the heady first year, 1981...

The much-heralded 1981 tax cut was more than offset by two tax increases that year. One was "bracket creep," by which just inflation wafted people into higher tax brackets, so that with the same real income (in terms of purchasing power) people found themselves paying a higher proportion of their income in taxes, even though the official tax rate went down. The other was the usual whopping increase in Social Security taxes which, however, don’t count, in the perverse semantics of our time, as "taxes"; they are only "insurance premiums." In the ensuing years the Reagan Administration has constantly raised taxes – to punish us for the fake tax cut of 1981 – beginning in 1982 with the largest single tax increase in American history, costing taxpayers $100 billion.

Creative semantics is the way in which Ronnie was able to keep his pledge never to raise taxes while raising them all the time...

How about deregulation? Didn’t Ronnie at least deregulate the regulation-ridden economy inherited from the evil Carter? Just the opposite. The outstanding measures of deregulation were all passed by the Carter Administration, and, as is typical of that luckless President, the deregulation was phased in to take effect during the early Reagan years, so that the Gipper could claim the credit.Such was the story with oil and gas deregulation (which the Gipper did advance from September to January of 1981); airline deregulation and the actual abolition of the Civil Aeronautics Board, and deregulation of trucking. That was it.

The Gipper deregulated nothing, abolished nothing. Instead of keeping his pledge to abolish the Departments of Energy and Education, he strengthened them, and even wound up his years in office adding a new Cabinet post, the Secretary of Veterans Affairs. Overall, the quantity and degree of government regulation of the economy was greatly increased and intensified during the Reagan years. The hated OSHA, the scourge of small business and at the time the second most-hated agency of federal government (surely you need not ask which is the first most-hated), was not only not abolished; it too was strengthened and reinforced. Environmentalist restrictions were greatly accelerated, especially after the heady early years when selling off some public lands was briefly mentioned, and the proponents of actually using and developing locked-up government resources (James Watt, Anne Burford, Rita Lavelle) were disgraced and sent packing as a warning to any future "anti-environmentalists."

The Reagan Administration, supposedly the champion of free trade, has been the most protectionist in American history, raising tariffs, imposing import quotas, and – as another neat bit of creative semantics – twisting the arms of the Japanese to impose "voluntary" export quotas on automobiles and microchips. It has made the farm program the most abysmal of this century: boosting price supports and production quotas, and paying many more billions of taxpayer money to farmers so that they can produce less and raise prices to consumers.

And we should never forget a disastrous and despotic program that has received
unanimous support from the media and from the envious American public: the massive witch hunt and reign of terror against the victimless non-crime of "insider trading." In a country where real criminals – muggers, rapists, and "inside" thieves – are allowed to run rampant, massive resources and publicity are directed toward outlawing the use of one’s superior knowledge and insight in order to make profits on the market...

Foreign aid, a vast racket by which American taxpayers are mulcted in order to subsidize American export firms and foreign governments (mostly dictatorships), has been vastly expanded under Reagan. The Administration also encouraged the nation’s banks to inflate and pour money down Third World rat-holes; then bailed out the banks and tin-pot socialist dictatorships at the expense of U.S. taxpayers (via tax increases) and consumers (via inflation)...

 I am convinced that the historic function of Ronald Reagan was to co-opt, eviscerate and ultimately destroy the substantial wave of anti-governmental, and quasi-libertarian, sentiment that erupted in the U.S. during the 1970s.
Yes, Rothbard knew, way back, that the interventionist Reagan would be the strawman libertarian for those like Spitzer to use as an example of supposed libertarianism that has failed us. Although, it would probably be difficult for even Rothbard to imagine the degree to which Spitzer would stretch the concept.

To Dean Baker's credit in his review of Spitzer's commentary, he calls out Spitzer for his claim that there has been a 30 year period of libertarianism. Baker writes:
The role of the government in the economy has changed over the last 30 years, and in some cases grown...Banks such as J.P Morgan and Citiroup were arguably too big to fail even three decades ago...This had nothing to do with Ayn Rand's libertarianism. Huge financial institutions simply took advantage of taxpayers by getting insurance by not having to pay for it.

Similarly, the quest for less regulatory control of banks that hold FDIC-insured deposits is not a story of deregulation. It is an effort by banks to exploit the government's insurance policy. (p. 60-61)
In a concluding section, because of Baker's strong attack, Spitzer retreats from his claim that there was 30 years of libertarianism. He writes:
Dean Baker properly calls the libertarian ideology of the past 30 years a mere facade behind which government actively participated in the crafting of rules and priorities that benefited specific groups--banks, big pharma. certain land owners. 
Quite a change from the first section of Spitzer comments! But, then Spitzer adds:
I surely do not believe that more than a few intellectuals of the right actually subscribed to the theory that a market could exist without our government and rules-enforcement. Virtually all who mouthed libertarian rhetoric fully understood that the battle was over whose interests would be protected and how the fruits of the economy would be distributed. (p. 79-80) 
Thus, Spitzer continues his attack on libertarianism, not by attempting to point to weaknesses in liberty, but by telling us that many who mouthed libertarian rhetoric weren't sincere. The point Rothbard made about Reagan. But, this Spitzer charge does nothing to prove in any way that those who sincerely call for a libertarian society are wrong.

Spitzer by charging in the first part of the book that we have had a libertarian policy for 30 years that didn't work, and his dramatic fall back position that there was a lot of insincere rhetoric about libertarianism, fails to touch at the heart of libertarianism.
I hasten to add, Spitzer does include in the book tales of some battles against corporations that he had, while he was New York's attorney general, and he attempts to use these examples as proof that government intervention in the economy is necessary. But these examples all fail to recognize that in a free market, the private sector would come up with solutions to all the cases Spitzer believes must be handled by government. A very early stage student of libertarianism would be able to spot the errors in Spitzer's contention that the problems he raises could only be solved by government.

In summary, the book is an outrageous attack on libertarianism and a complete failure at making the case for government intervention in the economy.


  1. Spritzer is so ignorant he doesn't even know that his war on coporations is a war on the state. Corporations are created through a politcal act. The minute they recieve the status of limited liability they become beholden to the center of power that granted it. From that point forward they can no longer be considered a purely free market entity. That doesn't mean that everything a corporation does is evil. It means that most of the problems with corporations that Progressives find intolerable are caused by the state in the first place.............. as usual.

  2. Please post your review on Amazon so that potential buyers are forewarned.

  3. The latest Keynesian narrative is story of the "Golden Age of Capitalism" from 1945-1973 when we had benevolent and informed bank "regulation".

  4. the grovelling continues, in an attempt to get back into the elites good books.

  5. I would take this as a sign that Ron Paul is being more effective than we even imagine. Who would even bother mentioning "libertarianism" a few years ago?

    In a way, this is awesome!

  6. Ugh. I often find it odd how people can categorize the last 30 years as anything resembling free markets and/or related to libertarianism. If anything, I would say that two forms of collectivism have prevailed: The left-socialism of handouts to the downtrodden and the right-fascism of the corporatocracy. It is funny to me when people say that such and such politician is a centrist, because to me this only means that he balances these two aspects of collectivism, and that he is a full-fledged statist- this has been every president in my lifetime. Even more interesting is that many on the left in American politics still think that the Koch's are libertarians.

    It is like an Orwellian nightmare.

  7. What Anonymous 2:15 said.

  8. I don't think the following two statements can be disputed:

    1. Few if any critics of libertarianism have even a passing familiarity with the essential concept of the non-aggression principle.

    2. NO critic of the Austrian School has the slightest familiarity with even basic Austrian School concepts such as the knowledge problem or the essential nature of economic calculation. Post Keynesian troll "Lord Keynes" and his million citations (supra) hasn't a clue about the basic concepts even when his ignorance is pointed out to him.

    Our opponents do not even know what we are saying. I submit that we have to take into account the "intellectual level" of our opponents (such as it is) in our future endeavors.

  9. With all that is going on today in politics and economics and he could come up with only 59 pages of material? LMAO. Talk about a vapid thinker! Given the large period of time he is covering, the enormity of the subject matter he is discussing and the paltry 59 pages he uses to discuss it, one has to assume his work employs an extreme amount of reductionism. Its sounds like a book written by a dull lazy thinker targeting generally uninformed non-critical thinking people. It should sell well in the US.

  10. It's very common that people argue with libertarianism and the Austrian school by the blaming government-created problems on the private sector.

    It works every time because it takes us too long to explain how the government created the problem.

    We need catchphrases that are shorter than 10 words that we can repeat over and over again.

    We need short, snappy slogans to help libertarianism. Look at what the liberals and "conservatives" use:

    "A lack of regulation caused the recession"
    "We've tried free markets, let's try something else"
    "The economy would have crashed if there was no bailout"

  11. On the topic of our crazed opponents, the following is real and not from The ONION. King MMTer himself, Warren Mosler pleads:

    MMT to President Obama and Members of Congress:

    Deficit Reduction Takes Away Our Savings
    Yes, it’s called the national debt, but US Treasury securities are nothing more than savings accounts at the Federal Reserve Bank.
    The Federal debt IS the world’s dollars savings- to the penny!
    The US deficit clock is also the world dollar savings clock- to the penny!
    And therefore, deficit reduction takes away our savings.

    Simply amazing.

  12. You're all ducking the greater point. Libertarians do not believe in prohibitions on victimless crimes Like prostitution. If we really lived in the Libertarian age then the former Governor of New York would not have to publish inane fiction books in an effort to salvage a political career destroyed by his dalliances with whores.

    Eliot Spitzer's own pathetic life is the best available evidence that his book is pure rubbish.

    And that my friends is irony....

  13. I like Deuce's post, except to say that I always refer to you-know-who as Client #9. The guy is and always be a piece of refuse and nothing more.

    The notion that there were no government controls or restrictions of financial markets is a sick joke, and proves that Client #9 really was clueless about Wall Street (or is lying, which I think is the more accurate choice). The housing market has huge amounts of government intervention and guarantees, which is precisely why so many financial institutions jumped onto it: if the investments went bust, Uncle Sam would bail them out -- and he did.

  14. If we just lived through a libertarian period, how did Spitzer ever get arrested? Duh.

  15. If Spitzer had written a critique of the “Working Girls” in the New York area, a subject of which he reportedly has firsthand knowledge, then his paltry 59 pages would be filled with credible information, perhaps even useful to someone, somewhere.

    But his amazing ignorance of true free markets, Austrian themes, and economics in general, makes this booklet (refuse to call it a "book" at less than 70 pages) completely useless, even possibly damaging.

    ~Texas Chris

  16. I've read from some within the certain Libertarian circles(some of which I respect) that they had "respect" for Spitzer because his interviews were more cerebral than the average MSM ramblings/questions.

    I've never really understood that notion...and this stupid leaflet Spitzer's putting out only confirms that.

    He may have the intellect to fully understand "Libertarianism" and all of it's divisions/nuances...but it's clear he isn't interested in applying any of it to such a task.

    In the big picture if this guy is considered one of the better interviewers/commentators in MSM it shows you exactly how low the bar really is.

  17. Eliot Spitzer is a wuss who fell in line after the Bush Administration ousted him from the NY governorship. I give Spitzer credit for his editorial in WaPo, "Predatory Lenders' Partner in Crime," which revealed the Bush Administration's successful blocking of individual states' attempts to regulate the out of control mortgage industry. Two or three weeks after this editorial, the whole prostitute scandal erupted for Spitzer. Coincidence? Or cause and effect? I vote the latter.

  18. I assume the 59 page book is also written at an 5th grade level for the freaking morons that would actually buy this stupidity. Does the book have pop-up pictures and come with a box of Crayolas?

  19. Spitzer's yet another lawyer and clueless to the fact that Saint Reagan's performance record NEVER matched his Free Market rhetoric.

  20. This article and the discussion below is a classic, textbook example of what utopian ideologies, which libertarianism is, lead to. The implementation never measures up to the utopian ideal, so when the ever imperfect implementation clashes violently with reality and wreaks havoc, the adherents demand the redoubling of efforts to force the reality into their utopia. Soviet communists thought this way too. If libertarian ideology ever got implemented in practice, the end point would be freedom gulags to reeducate the recalcitrant.

  21. Anon@1104AM, libertarianism is as far from "utopianism" as you can get. Libs realize that people are imperfect, and will always have base motives, needs and wants that have to be met with scarce resources BUT we also allow for a framework of social interaction that takes that into account and appropriately punishes violators.

    If anyone is utopian, it is people like you that think The State can save us all from ourselves while at the same time turning a blind eye to the constant state violations of life and liberty. State worshipers like you will still be able to hold your beliefs, you just won't have the power to impose them on other people!

  22. @Anonymous at 11.04

    "Libertarians" who believe in freedom gulags and market enforcement are actually called neo-conservatives.

    Nice try.

  23. But look, if we allowed libertarianism to dominate our country, then politicians would not be able to acquire the services of prostitutes at taxpayer’s expense, resulting in a massive crash in the sexual services market and bringing the entire economy down with it.

    I’m really surprised Spitzer failed to mention that.

  24. Today is my favorite day in recent memory. William Anderson, my favorite Libertarian writer and thinker, piggybacked on MY post.

    Suck it Eliot Spitzer!

  25. If you think this is bad, wait until China crashes and Spitzer blames it on 50 years of libertarian thought there.

  26. It's so painful to think that Spitzer might make a little money from this junior high garbage and that some people will actually be influenced by it. I can just see the collective light bulbs going off in reader's heads: "Oh...I get it was those damn libertarians and their free markets...if only we had more balding cretins who pay for sex with other peoples money looking out for us... ".

    I'd love to see this clown take on the likes of Bob Murphy about the "wild west" of the last three decades.

  27. I am sure Little Timmy "Turbo-Tax" Geithner will purchase a copy...Then get an idea for his book - Libertarianism: How Free-Market-Mongers Bankrupted the USA.

  28. One day Elliot Spitzer VI will ook back at 2011 and say:

    "Obama's 4 year Libertarian regeme led to our current crises" and he will then beg the current inflator in chief to cure all economic ills and print up another hundred quadrillion in liquidity.

    ~Texas Chris