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Please, Jacob -- Obama is no Adam Smith

Shikha Dalmia
November 3, 2008, 12:07pm

Unless you have a strong desire for whip-lash, you should avoid Jacob Weisberg's last two columns in Slate. In the first he declares that libertarians are wild-eyed ideologues who can't face the fact that their stubborn and single-minded faith in unfettered markets caused the recent implosion of the financial markets. This, in his mind, has spelled the early demise of the movement -- but that doesn't mean that it should be allowed to rest in peace. "Inquest is central to improvement," he declares. "And any competent forensic work has to put the libertarian theory of self regulating markets at the scene of the crime." In Weisberg's imaginary witch-burning, no doubt Ayn Rand is tied to the stake and he is holding the torch. Minds greater than my own have already debunked Weisberg's central claims that (a) Deregulation was responsible for the market collapse and (b) Re-regulating it will somehow save the day now. But in his latest column, Weisberg shifts gears completely. No longer does he accuse libertarians of being simple-minded devotees of the free market. In fact, although Weisberg does not say this in so many words, we couldn't be all that bad because, as it turns out, our gurus such as Adam Smith and Milton Freidman were ultimately re-distributionists -- a la Barack Obama. (Rand must still burn because she is not included in his pantheon of the good libertarian gods). But how does Weisberg arrive at this startling conclusion? Essentially, by turning Smith on his head and distorting Friedman's views on taxes. With respect to Smith, Weisberg maintains that Obama's plan to "spread the wealth around" is no different from Smith's maxim that "the subjects of every state ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities." To ask otherwise, Smith supposedly said, would be unfair. Thus if Obama is a redistributionist so is Smith. But to equate Obama with Smith requires a brazen exercise in sophistry given the obvious distinctions one has to ignore. Fortunately, Weisberg is up to the task. There is not a single libertarian of any flavor who would not regard it as anything but a travesty if the existence of government itself exacerbated economic inequality. In other words, no libertarian would consider it as just or desirable if, in the course of performing its core functions, the government asked more of the poor than the rich. Let alone Adam Smith, even a non-apostle of altruism like Ayn Rand, (if my high-school memory serves me correctly!), believed that the rich should voluntarily pay more in taxes than the poor. In fact, even flat taxes – that many libertarians currently advocate – are ultimately progressive given that they would require rich people to cough up far greater sums than poor people for the provision of government services. What's more, many libertarians regard the regressive nature of Social Security as a huge blot on the face of that scheme. (Social Security offers relatively better returns to the poor than the rich. But because the poor tend to die younger than the rich, it ends up transferring income from the poor to the rich). But it is one thing to try and protect the less wealthy from the burden of government and quite another to use the government to "spread the wealth around" – or achieve distributive justice – as Obama wants. It can't be denied that distributive justice is the objective of the Earned Income Tax Credit that Friedman fathered. But that's wasn't Freidman's objective. Friedman developed his ideas of negative taxation precisely because he wasn't what Weisberg accuses libertarians of being – narrow-minded ideologues. To the contrary, Friedman, whom Weisberg approvingly dubs the Robin Hood of the Right, was a pragmatist who never let the libertarian ideal that the "government that governs least, governs best" come in the way of incremental government reforms. If we are going to have a welfare state to help the poor, he reckoned, it was best to have one that was cheap, efficient and as un-intrusive and small as possible. That was best achieved, not by hiring an army of bureaucrats to dispense food stamps, energy stamps, day care stamps and rent subsidies, but by simply giving the poor cash. In fact, far from supporting any spread-the-wealth-around schemes by raising taxes, Friedman was in favor of "cutting taxes under any circumstances and for any excuse, for any reason, whenever it's possible." Why does Weisberg go out of his way to enlist Friedman and Smith on Obama's side? His overt purpose is simply to take the wind out of the McCain campaign's effort to cast Obama as a reckless redistributionist (as if the campaign was ever in any danger of taking off.) But, I suspect, there is a deeper reason too. Regardless of how high Obama is riding right now, taxation and redistribution never ultimately play well with the American public. So liberals realize that they have to do some pretty heavy-duty heavy-lifting to prepare the zeitgeist for Obama's agenda. This involves a two-pronged strategy: One, destroy and discredit the intellectual figures whose ideas might come in the way of their grand ambitions. A perfect example of that is the utterly dishonest attack on Friedman by Naomi Klein. Two, misappropriate and co-opt those figures who can't be destroyed. That seems to be Weisberg's strategy. It is intellectually dishonest -- whether it will work we will see if Obama wins today (and that's a very small if).

Shikha Dalmia is Senior Analyst


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