The emergence of Rand Paul as a leading contender for the Republican presidential nomination marks an important turning point: Extreme libertarianism has entered the mainstream of American politics.
This shift has been coming for 30 years, a period of growing attacks on government as "the enemy" combined with extolling the laissez-faire idea that the free market can solve all our problems.
These attacks have not emerged out of thin air. Billions of dollars have been spent by corporations, foundations, and wealthy individuals to fund a large conservative policy and media infrastructure on the right, led by think tanks like the Heritage Foundation, the Cato Institute, and the American Enterprise Institute.
In recent years, though, the right has moved even further to the right, as more base Republican voters have embraced libertarian ideology and deep-pocketed funders like the Koch brothers have put more resources behind promoting this extreme worldview. Meanwhile, a new generation of young libertarian politicians—including not just Rand Paul, but Ted Cruz, Paul Ryan, and others—has put a polish on positions that once were considered fringe.
The good news is that rising libertarianism is being met with rising pushback. The financial crisis and a prolonged economic downturn have spotlighted the dangers of deregulation and a hands-off approach to an economy that so clearly is not working for ordinary Americans.
Over the next year, Demos aims to sharpen and amplify the growing challenge to libertarianism. In concert with one of our strong supporters, Gordon Gamm, we are launching a concerted effort to critique and discredit libertarian ideas.
The Gordon Gamm Initiative (GGI) will have two components. The first is a series of reports that will look at key libertarian ideas and unpack them in ways that show how shallow and unworkable they are. Demos won’t be able to counter every bad economic idea being promoted on the right. But we can and will take on some of the central myths of libertarianism.
The most dangerous of these myths is that the free market alone can ensure a stable and productive economic system. In a paper to be published this fall, Demos Distinguished Fellow Robert Kuttner will credit business and the market for its creative force of economic growth. But the paper will make a strong argument that excessive reliance on the market to perform economic activities not only leads to inequality; it also leads to economic inefficiency and inevitable economic crashes. Using historic and current examples, Kuttner will show how wrong the libertarian prescription is for America and why we need a proper balance between government and the market.
Demos will also critique the “market knows best” philosophy by looking at the financial sector, where libertarian ideas have been applied in ways that produced disasters like the crash of 2008, but also, every day, produces deeply distorting effects on the economy. While Wall Street is supposed to serve Main Street by mobilizing capital for productive purposes, deregulation has led to the opposite: Wall Street has been extracting wealth from the real economy to serve its own ends. This fall, Wallace Turbeville and Kuttner will publish a report showing how tighter regulation of Wall Street is a key to both stabilizing and growing the U.S. economy.
Finally, Demos will directly counter another dangerous libertarian myth, which is that market actors can self-regulate, and be trusted to safeguard the public interest without oversight from government. Nearly every day brings evidence that contradicts this myth, with an unending stream of news stories of how corporations do harm to workers, consumers, investors, or the environment in pursuit of the bottom line. But too often the bigger picture lesson of these abuses is not hammered home: namely, that we need active government oversight of the private sector, and we need to protect and strengthen the safeguards Americans have put in place over the years to insure the health of food and drugs, the effectiveness of safety systems in the workplace, and financial regulations that balance the interests of consumers and the public against the needs of business.
In the coming year, Demos will publish a paper by Distinguished Senior Fellow Michael Lipsky that makes exactly that broad point. The paper will show that effective, calibrated regulation improves our health, our well-being, our safety, and our lives. Regulation also helps businesses by guiding them to compete in ways that enhance the value of their products, and clarifies the rules under which they must operate. Lipsky will contrast these outcomes to the negative consequences of deregulation.
The second component of the GGI will be an ongoing, continuing effort to spotlight the failures and myths of libertarianism, responding to new political and policy developments in the run-up to the 2014 election, where libertarian ideas and candidates are sure to figure prominently. We will produce a weekly blog on PolicyShop that will highlight the failures of libertarianism day in and day out.
We are convinced that the Gordon Gamm Initiative at Demos will contribute significantly to public understanding of the deep flaws of libertarian, free-market fundamentalism, and will make a consistent case that there is a better way that is much more productive for our economy and our country.
So, stay tuned, and stay connected.