But even if we wanted to focus on lawyers and doctors, why would we focus on their licensing as a driver of their high-end incomes? TCE seems to argue that there are high-end rents in these occupations, and, as we know, these occupations have licensing, so therefore the licensing must be the driver of the rents. (QED motherfucker.)

That doesn’t seem correct, and they don’t provide sourcing to really argue it. They note that it is “seemingly paradoxical” that “the United States has far more lawyers per capita than other countries” yet high-end lawyers make a substantial premium over other countries. But why wouldn’t we look at the activities of lawyers as the driver? There’s been a giant increase in the supply of lawyers since the 1980s, yet their presence in the top 1 percent is unchanged. And this makes sense, as top-end lawyers are taken from only the top 5, 12, or 20 law schools. More lawyers at the margins won’t compete away these high-end rents.

For medicine, they argue that “while failing to serve the interests of patients well, medical licensing is very effective in boosting physicians’ incomes.” Their source on medical pay just determines that doctors are paid more in the U.S. than elsewhere (Laugesen 2011), concluding that it is driven by higher fees but not by physician supply. They note that our supply of doctors per population is higher than the U.K. and about the same as Canada and Germany. Which, of course, makes sense; those countries don’t control their health care costs by having weaker licensing or having a very high population of doctors, but stronger pricing controls. (Ironically, one hypothesis their source has is that “High physician fees in the United States may reflect the cost of attracting skilled candidates to medicine in a society with a relatively more skewed income distribution.”)

Regulatory Subsidies and Rents Have a Question-Begging Baseline Problem

Even if the numbers don’t add up, maybe a focus on regressive regulations is a useful political tool? Lindsey and Teles have had a major victory already. In their book, they argue that “the lax rules for allowing class action lawsuits [creates] heavy dependence on high-priced legal expertise to navigate the artificial and gratuitous complexities of the legal environment.” This places lawyers in the top 1 percent, a regressive regulation that allows them to collect rents. The Republicans, perhaps after reading a copy of TCE, voted to repeal a rule from the Consumer Financial Protection Bureau (CFPB) that removed mandatory arbitration from financial products, giving consumers the option for a class action lawsuit. That was a win for TCE’s arguments against rents. Yet I’d argue the opposite, however, as these are rents for the financial sector. Mandatory arbitration incentivizes financial institutions to nickle-and-dime their consumers. It removes consumers’ rights as citizens to go to the courts. It gives finance more power when they already abuse the power they do have.

Whatever you make of that debate, does calling one side or the other “rents” help clarify it? I’d note that the focus on regressive regulations doesn’t actually clarify anything. I’d argue that for all the major problems we face now, the notion of emphasizing economic freedom and getting the government out of regressive regulations will do virtually no analytical work. “Get rid of the rents” (or even “economic freedom”) is meaningless here, because the question revolves around how we structure markets in the first place.

Think of some of the major debates in financial regulations: Should financial transaction be subject to a tax? Should private equity income be taxed as labor income? Should derivatives go to the front of the line in bankruptcy? Should there be a special legal regime for the failure of a financial firm outside bankruptcy? What should be the safe harbor for someone who makes a subprime mortgage that fails? Should there be a dedicated consumer regulator with power over unfair and deceptive practices? Should firms with access to deposit insurance be limited in their size or scope of activities? How much transparency should be mandated in markets for derivatives and hedge funds?

TCE describes the changes in regulatory structure during the 1980s and 1990s as a way to inhibit competitions and put up barriers. But the arguments for them at the time said that not doing them were what was really inhibiting competition. TCE argues, as traditional banks did at the time, that the lax oversight of money market mutual funds and mortgage-backed securities were a form of “regulatory subsidy.” Yet at the time proponents argued that tighter regulations on these new instruments would have benefitted traditional banking as its own form of regulatory subsidy.

Think of the major economic problems we faced in the recent decade: Is the wave of mergers and acquisitions consistent with the consumer welfare standard or antitrust, and do we need to go beyond that standard? Should public options like Medicare use its footprint to drive down health care costs? What is appropriate monetary and fiscal policy in a low-interest rate environment? How we should analyze and tackle market power? Or consider all the big questions of the Trump era: What should be the tax base? At the margins, who should be able to claim income from profits and who should claim income from wages? (Given that the top 1 percent takes home 50 percent of pass-through business income and that progressive taxation has kept top incomes in check in the past, the tax code is oddly missing from the book.) Should ISPs be indifferent to the source of their traffic? Should there be a mandate to purchase private health care? If all lower corporate taxes do is drive up share buybacks is that good or bad?

This fella showed up in a search for “cute dog begging the question.” You deserve a treat if you read this far. (Source.)

All of these have an intractable “baseline problem.” Each side of the question provides a benefit for some actors and a barrier for others. To try and judge them in terms of just getting rid of the rents and subsidies won’t get us very far. The concept of economic liberty can do no clarifying work here, and these answers aren’t just a matter of technocratic tinkering. The structuring of our markets — embedded in the laws, norms, institutions, and enforcement — determine how economic activity is exercised, and there’s no pre-state liberty baseline to draw upon. One could say that the answer is whatever involves the least amount of government, but that’s just generic anti-statist libertarianism, precisely what this book wants to transcend.

TCE argues that this agenda allows liberalism to “show that it can once again be a genuine fighting faith rather than an anemic justification for the status quo.” Yet, if one is around Washington D.C., one has heard this agenda for a while. You can feel the lanyard thick on your neck at some think tank luncheon; you can hear the polite chatter at the posh townhome of some #NeverTrump lobbyist. We live in a world characterized by inequality, weak dynamism, secular stagnation, high concentration, insecurity, large capital profits and market power. To the extent the book tries to tie their agenda, whatever you make of it, to these problems, it bounces off. To respond to both Trump and this moment, we are going to need more than just the same old “getting government out of the way.”