The Threat of Latter-Day Progressives to an Authentically Liberal Economic Policy

Abstract:     
The assumption of Democratic control of Congress last year and the probability that its majority will be increased by this year's elections portends a growing, deeply troubling ideological split within its ranks, already visible, on matters of economic policy generally and regulatory policy specifically - between the more radical (and at the same time reactionary) populists, who label themselves Progressives, and the 20th century liberals, who have dominated in the formulation of their party's economic programs for the last three-quarters century.

This paper examines the economic issues on which the two are likely to diverge, defending and proposing policies consistent with historical 18th through 20th century liberalism:

• international trade policy, in which the Progressives demonstrate a formidable misinterpretation of our huge trade deficits and insufficient appreciation of the major contribution of retaliatory beggar-my-neighbor policies to intensifying the Great Depression of the 1930's;

• threatened recartelization of industries deregulated in the 1970's and 80's - such as the airlines, trucking, and telecommunications;

• recourse to wage and price controls rather than monetary policy as a curb on inflation;

• recourse to concerted anti-competitive restrictions or rationing rather than market pricing as a remedy for congestion, and

• proposed laws imposing network neutrality obligations on providers of access to the Internet.

It concludes by proposing remedial policies consistent with the liberal traditions.

Working Paper Series