William E. Hudson - The Libertarian Illusion: Ideology, Public Policy and the Assault on the Common Good

The Libertarian Illusion

Ideology, Public Policy, and the Assault on the Common Good

William E. Hudson
Providence College

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Library of Congress Cataloging-in-Publication Data

Hudson, William E.
The libertarian illusion : ideology, public policy, and the assault on the common good / William E. Hudson.
p. cm.
Includes index.
ISBN 978-1-933116-50-1 (alk. paper)
1. LibertarianismUnited States. 2. CommunitarianismUnited States. 3. Industrial policyUnited States. 4. Welfare stateUnited States. 5. United StatesSocial policy. I. Title.

JC599.U5H72 2008
320.51'2dc22

2007045638

N ot many Americans have ever heard of libertarianism. Those who have understand only vaguely what the term means. Even fewer understand something of libertarianism and embrace its goals. And only a handful of American politicians2008 Republican presidential candidate Ron Paul is one of the exceptional fewadopt the libertarian label. Despite their ongoing obscurity in American mainstream political discourse, libertarians have had enormous and increasing influence in public policy debates over the past thirty years. Thanks to well-funded think tanks, articulate policy proponents, and organized networks linking policymakers, libertarian policy alternatives have been major contenders for enactment in a wide variety of policy arenas and have been adopted in some. After his 2004 presidential victory, President George W. Bush embraced an essentially libertarian vision for the countrys future labeled the Ownership Society. The package of policy initiatives comprising this vision, such as private accounts for Social Security, failed to be enactedpartly due to the collapse of Bushs credibility because of the Iraq war debacle. Nevertheless, libertarian policy alternatives continue to attract attention and support from many politicians. In the 2008 presidential campaign, each of the Republican candidates put forth proposals in areas such as health care, tax policy, Social Security reform, and deregulation drawn from the libertarian well. The libertarian vision, or as I label it in this book, illusion, is bound to influence policy debates for many years to come.

In this book, I argue that libertarian policy solutions are illusory in three different ways. First, and most important, policy proposals derived from libertarian ideological principles do not deliver what they promise. Just like the iceberg on this books cover, libertarian policy claims shine white in the sun when first they appear, but this attractive surface hides a disastrous reality beneath. The reality of libertarian policies, lurking below the waters surface, will be demonstrated through an examination of policy areas in which libertarian proposals have been enacted, such as economic deregulation and tax policy, and through analysis of the likely effect of libertarian proposals to privatize Social Security or establish a consumer-driven health care system. The libertarian illusion promises wonderful policy benefits that fail to appear and fails to anticipate the unpleasant consequences that actually result. California politicians and citizens who expected libertarian-inspired electricity deregulation to provide plentiful low-cost electricity found themselves victims of the libertarian illusion when it only produced price spikes and rolling blackouts. Likewise, airline passengers stuck for hours in delayed planes on airport tarmacs in the summer of 2007 were victims of the libertarian illusion that market forces alone could organize an efficient airline industry. For the future, libertarians paint an illusory picture of all Americans purchasing individual health insurance coverage and providing for their retirements through private investment accountsa recipe, I argue, for a health care disaster and impoverished senior citizens.

Second, libertarian policy proposals are illusory because the manner in which they fulfill libertarian ideological goals is rarely spelled out explicitly in policy debates. Again, like the iceberg on the cover, much of what is being proposed in libertarian policies lies unseen under the water as we sail toward the innocent block of ice on the surface. For example, agreeing to allow individuals to deposit a small part of their Social Security taxes in personal investment accounts is sold as Social Security reform, but the long-term consequence, as we see in , flat tax proposals are presented merely as a method of simplifying the income tax, but they actually place the entire national tax burden on the shoulders of ordinary wage earners and eliminate taxes on wealthy investors whose incomes derive from their investments. There is always more than meets the eye to libertarian policy proposals. This book will look under the water to see what is there.

Finally, libertarians claim their policies will lead to a nation of expanded individual freedom and autonomy, of ownership and personal responsibility. Libertarian America is a place where individuals are not dependent on government for their retirement security, but instead own their own retirement accounts. It is a place where each of us chooses our individual health insurance plans (or chooses not to have one at all) according to our own needs and expectations about our health. It also is a place where a much smaller government taxes less and does much less, allowing individuals to determine through the free market how their resources will be used. The illusion here is that such an America would be a better place in which to live. According to the libertarian vision, when it comes to navigating the hazardous sea of life you are on your own. Alone on the stark and lonely sea depicted on the cover, you must avoid the icebergs in your path by yourself. If your retirement investments fail to yield an adequate income in your old age, you must bear the consequences. If the health insurance plan you chose proves inadequate to cover the costs of an unforeseen illness, you must either forego treatment or exhaust your savings. In this book, I will advocate an alternative, communitarian vision of an America in which we help each other navigate lifes waters. In solidarity with our fellow citizens, we craft policy solutions that share the risks and hazards of life so that no one must face an iceberg alone.