The Unearned Compliment of Neoliberalism By Bryan Caplan

Most free-market economists take “neoliberalism” as a term of abuse. Rather than actually respond to our arguments for smaller government and less regulation, the hard left just switches to name-calling.

I disagree. People who denounce neoliberalism are unintentionally paying free-market economists a great compliment. But sadly, we don’t deserve this compliment.

How so? Well, free-market economists have two kinds of views. Some are distinctive, such as:

1. We should sharply increase immigration.

2. We should heavily deregulate housing.

3. We should substantially cut government spending on health care and education.

4. Government should tax pollution rather than regulate it.

However, free-market economists also have numerous conventional views, such as:

1. The sky is blue.

2. Government shouldn’t spend tax dollars on projects with very unfavorable cost/benefit ratios.

3. Governments shouldn’t have large permanent budget deficits.

4. Redistribution has some noticeable disincentive effects.

So what? Well, when people decry neoliberal policy, they mostly target free-market economists’ conventional views. The reason is plain: Prominent government policies are often based on our conventional views. For example, many governments occasionally decide that their deficits are too big or too long-lasting, and pragmatically retrench. “Neoliberal austerity“? Please.

Our distinctive views, in contrast, are so unpopular that virtually no government will touch them. What politician wants to run on a platform to cut education spending by 5%, much less 50%?

The result, strangely, is that the critics of free-market economics inadvertently glorify us. They make it sound like we have a monopoly on common-sense and basic prudence. And we totally don’t! You don’t have to be a free-market economist to ask, “Are we really getting $1 billion worth of value from this literacy program?” You don’t have to be an economist at all. “Are we really getting $1 billion worth of value from this literacy program?” is what any responsible agent of the taxpayers would say. Sure, it’s not a nice question. But when you’re in charge, only a demagogue fails to ask.