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“The End of Loser Liberalism: Making Markets Progressive”

In his new book, The End of Loser Liberalism: Making Markets Progressive, Dean Baker argues that progressives hurt their cause whenever they accept the conventional wisdom that conservatives are for the “free” market while progressives are for government intervention in the market economy.  In a much-needed counter-narrative, Baker stresses that this is both bad policy and bad politics.  He takes apart this fundamental misframing of economics and details how conservatives actually use the government to twist markets to their advantage and points out that they are just smart enough not to own up to it.

Using real-world examples and plain language, Baker, economist and co-director of the Center for Economic and Policy Research, explains that markets are an incredibly valuable tool and asserts that progressives should look to structure them in ways that lead to more equality, just as conservatives have structured them to help the wealthy get wealthier. He asserts that by accepting conservative-influenced market outcomes largely as a given, then restricting their battles to redistribution after the fact, liberals have condemned themselves to a losing position. 

Baker also demonstrates how the government’s key economic policy levers — for example, the Federal Reserve’s control over inflation and unemployment rates as well as the value of the dollar — have enormous impact on how the economy affects regular people. He shines light on many other ways that the government has massive influence on markets, but which rarely appear on political radar screens — such as patents on prescription drugs that multiply their prices, trade barriers that maintain high incomes for highly paid professionals at the expense of those who pay for their services, and the implicit government subsidies enjoyed by “too-big-to-fail” banks. 

Baker points out that amount of income and wealth shifted towards the rich by such government policies swamps the sums at stake in most other economic policy debates. He urges progressives to go to where the money is — by exposing how conservatives depend on the government to intervene in markets in their favor — and not condemn themselves to fighting what will mostly be losing battles over the crumbs.

By releasing The End of Loser Liberalism: Making Markets Progressive under a Creative Commons license and as a free electronic download [http://bit.ly/p0kq5B], Baker walks the walk of one of his key arguments — that copyrights are a form of government intervention in markets that leads to enormous inefficiency, in addition to redistributing income upward. (Hard copies will be available for purchase, at cost, in the near future.)  Distributing the book for free not only enables it to reach a wider audience, but Baker hopes to drive home one of the book’s main points via his own example.

  1. Keith Wilde
    August 30, 2011 at 11:00 am

    This is truly the most important contribution that political economists can be making.

  2. Mojo Rhythm
    August 31, 2011 at 10:32 am

    Agreed. Another good resource to check out is the lecture by Noam Chomsky entitled “Free Market Fantasies: Capitalism in the Real World.” That is personally what woke me up to the hype and the nonsense peddled in the belt-way media.

    My favorite example proving my point (that conservatives are really for Big Government) is as follows:

    Ronald Reagan is portrayed as the archetypal conservative. He is the prime example of what a president for limited government, free markets, and a strong national defense should look like. However, during his entire presidency, he only held to the third attribute with any consistency.

    Contrary to popular myth, he despised free trade, implementing more tariffs and protectionist measures than any other post-WWII president, setting new records for protectionism, ostensibly to keep superior Japanese goods out of the market.

    Contrary to free market doctrine, he was the first president to ever bail out a “Too Big to Fail” company–a logical consequence of his deregulatory bonanza. Last time I checked, a free-market would not allow such a thing.

    Contrary to principles of limited government, he raised taxes eleven times during his presidency. But given that it was payroll and Medicare taxes (i.e. taxes that the middle class and poor pay), he got a free pass from the MSM and smugly persisted under his arranged marketing identity of “Small Government Conservative.”

    Did Reagan have any saving grace when it came to the budget? No. Once he was anointed with the key to the public coffers, he proceeded to empty them like a deranged meth addict. By the end of his second, miserable term, Ronald McDonald had pissed away so much public money that he had literally transformed the United States, once the worlds leading creditor, into the world’s leading debtor. Despite these stubborn facts, the beltway media shamelessly continues, up to this day, to parade him as a fiscal conservative.

    Urgh.

    If Reagan (and by extension, conservatives in general) was the man for free-markets and limited government, then Larry Summers and Kenneth Rogoff are “Keynesian economists.”

    • Dave Taylor
      October 3, 2011 at 10:53 am

      Much the same applied in Thatcherite Britain, where the only growth was in fraudulent monetary services.

      Without the elimination of taxes by moving from bond-mortgaged government to constitutionally rationed “out of thin air” credit authorisation, government has to retain power to bind us and make its own own budgetary allocations. This is logically inconsistent with “small government”, i.e. the breakdown of its powerful ministries into manageably small types of activity (perhaps subdivided into small areas) with rationally determined, ring-fenced resource budgets – effectively “small business” services provided not at the whim of absent overseers but by paid-anyway people who see them as important.

  3. Mike Meeropol
    September 1, 2011 at 12:27 pm

    The reference to Noam Chomsky is very apt. Noam is an avid reader of Dean Baker’s work and has publicly argued that Dean is a very important economist to read — high praise coming from a most respected source!

    I would caution attacking Reagan for running budget deficits. The deficit as a percentage of GDP rose to 6% during the 1982-83 recession and that is appropriate — I would argue that the Reagan deficits did more good than harm during the 1980s since the economy was quite sluggish — even during the recovery.

    (I apologize for the following shameless self-promotion).

    IN my book, SURRENDER (How the Clinton Administration Completed the Reagan Revolution) I show that except for the year 1984, the Reagan recovery was very weak — and unemployment persisted at very high levels for almost the entire decade. The major complaint about Reagan and his policies (don’t forget the high interest policy of the VOlcker-Greenspan FED) was that it began to decades long increases in inequality and financialization that ultimately gave us the meltdown of 2008 ….

  4. October 3, 2011 at 8:49 am

    What has destroyed the wages of working people in US is immigration (which also increases the absolute size of the poverty class), “free trade” and Fed-created inflation – issues the authentic Right (think Pat Buchanan) opposes just as ardently as any leftist (which progressive wants an immigration moratorium?).

  5. Dave Taylor
    October 3, 2011 at 10:09 am

    Following up what Paul Davidson just wrote on “a million economists can be wrong”, emigration can be reduced to those people really wanting to by their home countries giving everyone a fair ration of credit and we giving them our surplus and know-how: encouraging them (as we do our kids) to think it an honourable achievement to become able to do likewise – to progress from dependency to making at least a token return to being able to give something worthwhile (not necessarily material) for distribution by traders not only to their own dependents but to other nations falling on hard times.

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