What Should Liberals Liberalize?

This article appeared on Cato.org on December 11, 2008

Do "liberals" generally favor liberalization? Do they favor greater freedom to choose? Liberalization is the loosening of restrictions on individual liberty.

Or do "liberals" generally oppose liberalization?

The Democrats have done well at all levels nationwide. Are the Democrats liberals? Do they favor liberalization?

If the Democrats are liberals and care about the poor, here are some things they should move to liberalize —

School choice. Giving parents the purchasing power to choose schools for their children improves education. Sweden has vouchers and it works well. Evidence increasingly shows that choice works and top-down government control doesn't.

Immigration. Let more in, including the low-skilled. Most Mexicans who come are much poorer than poor Americans, and they send part of their earnings to family members abroad. Their experience in the United States imparts liberal norms and they spread those norms abroad. Why should concern for the poor end at the border?

International trade. When two people engage in voluntary exchange, they both expect to gain, even when they live in different countries. When Americans trade with Brazilians or Indians, there are mutual gains. The trading partner abroad is often poorer than the American. As Paul Krugman and many before him have explained, free trade allows firms anywhere in the world to take advantage of scale economies, producing more for humanity while consuming fewer resources. Everyone wins. Economists overwhelmingly support freer trade.

Agricultural subsidies and protectionism. Prices of certain agricultural products are propped up by an array of governmental restrictions and cartel measures. Everyone pays the price at the grocery store, and the impact is regressive. Most economists support liberalization and the reduction of farm subsidies.

Drug prohibition. Most of the hundreds of thousands caged in prison cells on drug violations are poor. The illegal drug trade especially ravages poor neighborhoods. Those who suffer from impure, ill-labeled black-market drugs are poor. Most of those injured in black-market violence are poor. Most economists who publish judgments on the issue favor liberalization.

Occupational licensing. Licensing requirements restrict the supply and variety of services and raise prices. They also prevent poorer people from entering trades. Economists who write on the subject say that voluntary certifications, reputation, and other assurances work well, and they favor liberalization. Morris Kleiner of the University of Minnesota and Alan Krueger of Princeton University find that occupational licensing affects upwards of 25 percent of the workforce. Both have published judgments favoring liberalization.

The minimum wage. Unskilled workers have to compete against higher-skilled workers, machines, and anything else employers might do with their money. The minimum wage law strips unskilled workers of their primary means of competing: Lowering their price. Even when the minimum wage does not put them out of work, it affects the non-wage job attributes. It stands to reason that unskilled workers who get jobs at the minimum wage tend to face higher work demands, less flexibility, less on-the-job training, less non-wage benefits, and less recognition and consideration. In a depressed economy it is important that labor markets remain fluid and flexible.

The Food and Drug Administration control of pharmaceuticals. All drugs and devices are banned until individually permitted by the FDA. The costs, delays, and uncertainties suppress the development of drugs that would have saved lives. Economists who publish judgments on the matter resoundingly support liberalization.

Urban transit. State and local laws prevent market forms of transit — shuttles, jitneys, mini-buses, share-ride taxis, and smart carpools. Free-market forces have been largely forsaken to protect and serve governmentally run or planned systems that ill-serve the goals of mobility and efficiency. Economists who write on rail transit largely agree that most rail transit projects are ill conceived.

Rent control. Roughly 200 localities still have rent control. Economists who publish on the matter largely agree that it reduces the supply and the quality of rental-housing and generates conflicts. It increases prices of housing outside the rent-controlled sector. Very likely in the long-run it increases rents even in the controlled sector.

Do we think the Democrats will move to liberalize any of these?

What will they liberalize?

Why again do we call them "liberals"?

Daniel B. Klein

Daniel Klein is an Adjunct Scholar for the Cato Institute, professor of economics at George Mason University, and editor of Econ Journal Watch.