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How Good is Libertarian Economics?

By       Message Farid Khavari     Permalink
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Libertarian positions on social issues are attractive, but not Libertarian economics, which we already suffer from: the rise of the 1%, the crushing of the middle class, cutting food stamps for millions of working poor who can't live on the minimum wage, stopping unemployment for 3.5 million people who can't find jobs, freedom from regulation for banks and fracking, freedom from taxes for corporations with billions in profits--all thanks to Republicans and Democrats.

I don't blame Libertarians for crony corporatism and elite capitalism--these things go back for hundreds of years (if not to the beginning of civilization). Adam Smith (Wealth of Nations, "invisible hand") warned about the perils of laissez-faire non-regulation in 1770. It is easy to understand distrust of government, the many examples of the public sector screwing things up, and the desire to get rid of government telling business what to do.

However, most of the economic problems we have today are due to de-regulation, or non-regulation, in favor of special interests. The present crisis began with the cancellation of the Glass-Steagall Act under Bill Clinton allowing banks to become securities players and vice versa, and the rise of completely unregulated derivatives. Pharmaceutical companies charge Americans higher prices than any other country. Banks and student loans have driven up the cost of college even faster than that of medical care and have made debt-slaves out of millions of young people.

I respect the non-aggression principle, but I find it at odds with the desire to minimize or eliminate regulation. I do agree that the government should be less involved in welfare programs--for corporations as well as for people--but that can only come in the form of regulation/change of laws (in ending corporate welfare), and by having maximum employment at living wages if the government is to reduce social costs. What we have now is a low minimum wage, and government benefits to low-wage workers to make up for it are in effect welfare payments to the corporations.

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I find a disconnect between distrusting public institutions to regulate things fairly, and trusting other public institutions (courts) to fix things that are wrong. For example, we have the Clean Water Act (CWA). Allowing frackers exemption from the CWA is deregulation or non-regulation, in effect, applauded by many libertarians. In fact, the CWA would protect us from this insanity if we would let it.

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Farid A. Khavari, Ph.D., is a noted economist and independent candidate for Florida governor in 2014. He is the author of 10 books including Environomics: the Economics of Environmentally Safe Prosperity (1993) and Toward a Zero Cost Economy (more...)

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