Saturday, September 12, 2009

Libertarians And The Fight For Political Reform

On a nice quiet bike ride into work this morning, I began to think about the two party system and the one knocking loudly on the door, the Libertarians. This column is mostly about the local Libertarian Party and my view of how to advance reform in local politics.

First, I don't think you will find a brighter, more energetic group of local political activists than Libertarians. I don't think that is an accident, but a product of how the parties operate. Speaking of what I know best, the Marion County GOP leadership has for years all but discouraged intellectuals from rising to the top in the party and openly suppressed those with independent thoughts who might challenge the Old Republican Guard. My outsider observation of the Democrats is that they operate pretty much the same way. When it comes to Libertarians though, the party actively recruits educated intellectuals who are independent-minded.

What has played a role in the suppression of intellectualism and independence locally is the slating system used by the Marion County Republican and Democratic Parties, a system which you will find virtually no place else in the country. Although billed as a way of allowing local party workers to pick candidates, in fact it gives party leaders an extraordinary opportunity to dominate the candidate selection process, a process which in virtually every place else in the country is done by the party primary electorate. The last thing party leaders wants is elected officials who are independent and who will display anything but lockstep support for whatever they want done. While a few independent-minded individuals sneak through every now and then, chiefly by remaining quiet about their proclivities during the candidate selection process, those few are dominated by the many elected officials who are little more than rubber-stamps for leaderships' agenda.

Having said the positives about the Libertarians, let me now address the negatives. Libertarians have a sometimes unrealistic belief in the virtues of the private sector. I think they often look at things through rose-colored glasses, advocating policies that would work in a perfect world, but don't work in the real world. For example, during the 1990s, I was a fan of privatization. I thought the private sector could always provide sector could provide services more cheaply and more efficiently than the private sector. What I completely missed was how privatization would become politicized, a method by which politicians could leverage campaign contributions from contractors who were then rewarded with government contracts, which are often long term and have no oversight. Many privatization schemes fall short of instilling any sort of competition into the delivery of services, the very purpose of privatization. In fact in many cases, the contract simply guarantees a private monopoly over the delivery of public services.

In a similar mode, we have seen the rise of non-profit groups that exist solely for the purpose of acting as a distribution center for government funds. One thinks that the private company could distribute that money more efficiently than government bureaucrats. What we see instead are the non-profits paying executives and top employees six figure salaries. Very little taxpayers dollars trickle down to the target of the grants. Once again,the private sector is not always better than the public sector.

Yet another example is CEO pay. In the ideal world, CEO pay reflects the market and if a CEO is getting paid more than he or she is worth, the shareholders wil throw the CEO out of office. In the real world though CEOs pay is determined by Boards of Directors, made up of people who are also CEOs and in corporate management. It is a "I scratch your back, you scratch mine mentality" to CEO pay that has allowed even CEOs whose companies are going bankrupt to walk away with millions in compensation.

Government regulation doesn't always stifle the marketplace; government regulation in fact can enhance the marketplace. In the foregoing example, a securities rule restricting Board of Director membership to non-corporate management types, would empower stockholders to actually do what Libertarians expect those stockholders to do: remove CEOs not earning their pay.

In other situations, government regulation can enhance competition by providing for a level playing field that allows the market to flourish. In my old job as manager of the Title Insurance Division were were faced with the situation where some title companies would ignore the law while others would comply. In many situations though the law simply was not clear about what was or was not allowed. By crafting new rules we were able to provide a black and white regulatory framework where title companies knew the rules and they would be enforced. The marketplace was enhanced by good regulation.

Libertarians are right though to treat government regulation with suspicion. Most regulations are not designed to enhance the marketplace. They too often add cost to doing business and limit, not enhance, competition.

Locally, the Republican and Democratic Party would be well-served to encourage more bright, independent-minded folks to be active in the two parties and to advance. Libertarians though respond that that will never happen - the leadership of the two parties won't allow it. They are right that the Old Guard of both parties won't voluntarily give up power. But the power of the Old Guard is fading and, for Republicans, it is set to expire on November 8, 2011.

Libertarians take the position that the two parties will never reform and the only way to effectuate reform is to work outside the two-party system. While that is a legitimate argument for better or worse the two-party system is hard-wired into the brain of the electorate. Although well-meaning folks often with good ideas, the baseline Libertarian vote has hardly advanced over the past 25 years. To the consternation of my Libertarian friends, I have long said that the best way to bring about reform is to fight within the traditional two parties to take over the party machinery. While that's undoubtedly a difficult fight, at least success promises a chance to advance to the general election winner's circle, a place that Libertarians have historically been shut out of.


Sean Shepard said...

Appreciate your kind words in the direction of Libertarians, Paul.

Thought it was worth noting though that you are right about what has happened to privatization, but again that is with government directing the effort not when government is taken completely out of it. For example, privatizing various functions of entitlement management when, maybe, the entitlement shouldn't have existed to begin with. Often times libertarians mean "privatization" not in "outsource it" but in "get out of that business" terms.

Also, you make a great point about how many non-profits are redistribution mechanisms for taking government money and ensuring big salaries for the non-profit management. But, again, we have the problem libertarians vehemently want fixed ... government doling out money to private organizations without a product or service of fair value in return. Let people decide what charities, programs, artists, museums or whatever else to support.

Just the $5 million in "crime prevention grants" (some of it to churches if I read right) plus $1 million for the Arts could be hacked out of the city budget and yield a .03 drop (from 1.62 to 1.59) in the local income tax rate - further whittling away at Peterson's 65% increase from 2007.

BUT, we don't see that commitment, we see things like councilors accepting that the arts council word that it has low salary overhead but not seeing through the next layer, what is the overhead/salary of the organizations they then give those funds out to? Add it all up - it's still just transfers of money from poor taxpayers to connected, well-dressed panhandlers.

And, I agree that sometimes the "theory" of libertarianism in some (few) areas might not work outside of a perfect world; but, we know the other direction works even less so in most cases.

As you indicated, there are good, thoughtful people in the other two parties but their fight is against each other, which leaves little room for logic and reason in far too many discussions.

jabberdoodle said...

wow -- let me digest this for a while.

A perhaps minor mention might be made that my relatively quick review of your entry at first does not exactly demonstrate what is right with the Ls (not saying they don't have their pluses), but more what is wrong with the Rs.

Overall, I need to reread this for a while. At first blush, I cannot argue with any thesis with which I am familiar. Can't really say how the R party conducts its affairs. But, slating is absolutely irrational = IF you actually think about it for more than the time it takes for your knee to jerk.

I know said...

"Locally, the Republican and Democratic Party would be well-served to encourage more bright, independent-minded folks to be active"

The local elite albeit Republican or Democrat runs out well rounded bright independent minded folks and will not them be active when they out perform and the good old boys get their toys stepped on!

Check your email and let's bring out the facts of privatization, arrogant stone walling and out right illegal use of honest services is.

I know said...

"Locally, the Republican and Democratic Party would be well-served to encourage more bright, independent-minded folks to be active"

The local elite albeit Republican or Democrat run out well rounded bright independent minded folks and will not them be active when they out perform and the good old boys get their toes stepped on!

Check your email and let's bring out the facts of privatization, arrogant stone walling and out right illegal use of honest services is.

M Theory said...

I think you are one of the best citizens our city has and I agree with all you say here.

Except one thing.

The Republican party cannot be reformed anymore than you can expect that the abusive husband will stop beating his wife. Not only is your abusive husband beating you, he's beating your community. And you keep holding onto to the misguided notion he'll stop; that he can be reformed.

He can't be reformed because he's a sociopath; a fact you don't want to accept.

You want reform? You and every other Republican out there who is fed up, need to leave and start a new life.

That's no different advice than you would hear from any mental health professional who counsels a battered woman.

It's time fed up Americans leave the Republican party in droves.

Paul K. Ogden said...


I focused more on the Rs because that's what I know best. I don't think the Ds operate much differently. The Ds though are, I think, slightly less retaliatory for running against the slate. The leadership of the Rs make it sound like you've committed a mortal sin when you did that. Of course it's the leadership that benefits from slating not the indivdiual PCs.