Grasping For The Populist Mantle: The Conservative Response To "How Liberals Win"

My argument that liberals should bargain with corporations and not outright fight them, in the New York Times opinion piece "How Liberals Win," [1] is not terribly populist, for better or worse. And I expected people on the populist left would not readily accept it. But I wasn't expecting conservatives to use my piece as an opportunity to claim the populist mantle for themselves.

But there is a mini-movement simmering on the right, led by people like The Big Ripoff author Timothy P. Carney [2], A Capitalism for the People [3] author Luigi Zingales and Matt Lewis of the Daily Caller [4] and my "The DMZ" co-host on Bloggingheads.tv [5].

They argue for conservatives to cut ties to "big business," including support for various subsidies, and adopt a more libertarian approach. And they argue that corporations, far from being out of sync with liberalism, want to engage liberals on government regulations so they will get preferential treatment and undercut smaller competitors. In other words, liberals and corporations are in cahoots to screw the little guy.

They [4] all appear [6] to believe [7] my piece proves their point. But here's what they misunderstand about the history of liberalism.

1. Compromise ≠ Love

Yes it's true that liberal presidents have bargained with corporations to advance liberal reforms. But that does mean liberals actively seeking or readily accept regulatory regimes that favor stodgy big businesses over innovative entrepreneurs.

Carney highlights [6] my example of the New Deal's National Industrial Recovery Act, in which I noted President Roosevelt, " won collective bargaining, minimum wages and maximum hours in exchange for a temporary suspension of antitrust law, so businesses could fix prices." Carney retorts, "The [National Recovery Administration] created government-enforced cartels. Tailor Jacob Maged went to jail for breaking the cartel. Kosher grocers were prosecuted for, among other things, charging too little."

I agree, that part of the compromise was not good! Most compromises usually involve something that some party believes is not good.

My point was not that every inch of NIRA was wonderful, or that whenever liberals compromise with corporations that the concessions become part and parcel of liberalism. My point was that most of the time liberals achieved lasting reforms when they initially swallowed concessions proposed by corporations, and conversely, went bust when they tried to defeat corporations outright. Imperfect deals often get improved over time, whereas failure to deal often means letting problems fester for years and years.

In the case of Roosevelt's Recovery Act, after a couple of years most people concluded that the NRA agency wasn't working all that well, but few wanted to turn the clock back on workplace standards. So when the Supreme Court struck down the heart the law, Roosevelt salvaged the labor reforms in separate legislation, and the "government-managed cartels" were scrapped. The liberal part stayed. The big business part died.

Some additional historical context is useful here. NIRA was enacted in very desperate times. America had hit rock bottom with the Great Depression, obvious answers were few, conservative judicial interpretation of the Commerce Clause limited what government could try and the country had minimal experience with economic regulation.

Roosevelt handled it through constant experimentation. If big business felt it needed price fixing, fine, let's try it. If it doesn't work, we'll learn from it and try something else. It was a crude early attempt at national economic regulation, not the quintessential ideal of liberalism. And because Roosevelt was willing to test ideas, and willing to seek common ground with corporations to enact liberal ideas, we are now considerably more knowledgeable about how regulations work.

2. Small Is Not Always Purer Than Big

Carney also points out that when President Bill Clinton was trying to enact universal health coverage, the "Big 5" health insurers were initially more favorable to the prospect of legislation than the small and mid-size insurers, suggesting that Clinton's intention was to favor the big and crush the small.

But in that case, the smaller insurers at the time simply held the more immoral ground. As noted in the book, "The System," the smaller insurers were defending the practice of "redlining" other small businesses with "elderly or accident-prone workforces," a practice that denied coverage to millions with pre-existing conditions. Clinton was trying to cultivate support from the most likely places, not trying to give bigger companies favorable treatment because of their size. (Though his team was not very flexible and he eventually failed to win the support of the big insurers too.)

Furthermore, there's nothing stopping a liberal regulatory bill from adhering to the needs of small businesses when warranted. President Obama's health care bill makes plenty of accommodations [8] for small businesses.

Carney also criticizes Obama's food safety bill, linking to an older post of his charging the bill with harming the ability of small farms to compete. [9] But the final bill responded to those concerns and had exemptions for small farmers. [10]

Liberalism is flexible. Libertarianism is not. Which brings me to my last point.

3. Our Policies Should Reflect More Than One Value

I suppose one could argue that we shouldn't have regulations that only bigger businesses might be able follow. Why shouldn't a smaller insurance company be allowed to stay in businesses by shunning more expensive customers?

The thread in the Carney, Zingales and Lewis critiques is that any bargain struck with corporations risks "meritocracy" in Lewis' words [4], "freedom of entry" in Zingales' [7] and "competition" in Carney's. [6]

All good values for a healthy market, values which smart regulations can and should respect. But there are other values to think about too.

We also need markets where business freedom doesn't negate individual freedom. The customer needs "freedom of entry" too.

For example, Zingales recently proposed scrapping our system of subsidized student loans in favor of a system where private venture capitalists invest in students -- specifically, "bright students" -- [11] in exchange for a portion of the student's eventual income. He makes the case that it would save money. Maybe. But I see nothing in his argument that even considers if there would be enough money to ensure everyone who wants to go to college would be "free" to enter college without worrying about debilitating debt.

Carney criticizes my praise of President Lyndon Johnson's Transportation Department, saying of course big businesses would get behind that because it would "become a huge treasure trove of government contracts." Um, so what? Transportation infrastructure is an area that government simply has to play the dominant role. Roads and rail and air routes can't be randomly built if we ever want to be free to reliably get from Point A to Point B. Some entity has to connect the dots and keep everything safe.

Either our government is going to do it all itself, or it will contract some of the work out to private companies. So long as the contracting process is fair and open, there is no "crony capitalism" to speak of. Only a radical libertarian could object.

The conservative trio appears to hold libertarian market values above all else. Zingales writes, "A pro-market advocate defends freedom of entry in all cases." [7] Really? No matter how bad the operator? Even if it means letting a climate crisis metastasize unabated, or sparking another global financial crisis? That value must trump all?

Liberalism in practice is not so rigid. It balances important values that are sometimes in tension. It is willing to hear out opposing views and make strategic concessions in pursuit of the greater good. It keeps experimenting and improving and refining.

And because of that, we have a five-day work week, safe food, an interstate highway system, and soon, near universal health coverage.