Yesterday, I published a post entitled, “Defending Freedom: Welch vs. Weisberg,” in which I described the reply of libertarian Matt Welch to Jacob Weisberg’s attack on libertarian philosophy in Slate.

Welch handled the issue well, I thought, and now he has an update, in which others take on Weisberg’s argument. He links to nine other replies, and each is a solid reply. Weisberg’s just out of his depth.

Here are excerpts from some of the replies that Welch’s gathered:

From Ilya Somin:

There are several problems with Weisberg’s thesis. First, the US had hardly been following free market financial policies in the years prior to the crisis. Many commentators have pointed out the central role of government sponsored enterprises (GSEs) such as Fannie and Freddie Mac in promoting subprime and other risky mortgages that investors were willing to acquire in part because they believed that the GSEs would be backed by a government bailout if anything went badly wrong. As the term “government-sponsored” implies, Fannie and Freddie were hardly free market institutions….

Recent American economic policy has not been especially pro-market in areas outside finance regulation either. During his first five years in office, George W. Bush presided over the biggest expansion of government spending in decades, including a major increase in regulatory spending.

Second, even if one can say that the US was following market-based policies in recent years, the same can’t be said of European nations such as Germany, Iceland, and Spain, all of which have had mortgage/financial crises at least as severe as ours. If the financial crisis discredits “libertarianism” in the US, does it also discredit German social democracy? In my view, neither is true. But Weisberg’s logic points in that direction….

Here is where Weisberg’s analogy with communism circa 1989 breaks down. The problem with communism was not that communists had handled some one isolated crisis poorly. It is that communism’s overall record over many decades was one of repression, mass murder, and economic decline – all with few or no offsetting benefits. Economic liberalization over the last several decades, by contrast, has lifted millions out of poverty around the world and greatly increased both personal freedom and standards of living.

From Radley Balko:

As I mentioned this morning, what gets me is this notion that libertarian ideas have been tried, and failed. That’s not the case at all. This administration has denounced libertarians at every turn. Its ideas come largely from the moral right and from the neoconservatives, two groups wholly at odds with libertarianism.

From Brink Lindsey:

In an article for Slate (another version appears in Newsweek) entitled “The End of Libertarianism,” Jacob Weisberg mocks libertarians and other free-market supporters for arguing that interventionist government policies contributed to the financial crisis. In italicized exasperation he cries, “Haven’t you people done enough harm already?” According to Weisberg, it’s already clear that, when it comes to what caused the meltdown, “any competent forensic work has to put the libertarian theory of self-regulating financial markets at the scene of the crime.” Consequently, he argues, libertarians in general have now been utterly discredited. “They are bankrupt,” he concludes, “and this time, there will be no bailout.” ….

But consider the fact that it wasn’t until Milton Friedman and Anna Schwartz’s Monetary History of the United States — published in 1963, three decades after the event — that our contemporary understanding of the causes of the Great Depression began to take shape. That understanding has been further refined by contributions from, among others, Ben Bernanke and Barry Eichengreen during the 1980s and ’90s.

So serious people will be debating what triggered the current crisis for a long time to come. I’ve been reading voraciously in recent weeks, trying to get some handle on what’s going on, and I can tell you that there is nothing like a consensus among scholars yet — and certainly not a consensus in favor of some simple, monocausal explanation.

With regard to government interventionism as a cause of the crisis, Charles Calomiris and Peter Wallison have marshalled strong evidence that Fannie and Freddie played a major role in inflating the real estate bubble. Despite the fact that these two gentlemen have forgotten more about financial markets than Weisberg will ever know, Weisberg dismisses their analysis as not only wrong, but risible….

Yet Weisberg’s simplistic morality tale that good prudent liberals were foiled by go-go free-marketeers doesn’t come close to mapping reality accurately. When exactly did Democrats try to arrest and reverse the steady relaxation of lending standards? When did they try to rein in the GSEs? Meanwhile, European banks are being battered by this crisis as well. Does anybody really think that European financial regulators are closet libertarians?

Far be it from Weisberg, though, to let such inconvenient questions get in the way of his cheap ideological point-scoring. Indeed, he isn’t content just to blame libertarianism for the financial crisis. He goes so far as to claim that libertarianism as a whole has now been decisively repudiated. Wow, talk about contagion! Because of what some people said about financial regulation, we no longer have to pay any attention to what other people say about trade, health care, energy, taxes, federal spending, etc. Here Weisberg further burnishes his hack credentials by demonstrating his facility with the wild, unsubstantiated smear….

If one (alleged) error means we never have to listen to someone again, why is anybody still listening to Jacob Weisberg? After all, Weisberg admits that he “blew the biggest foreign-policy decision of the past decade” by supporting the Iraq war. (Full disclosure: I blew it, too, but my colleagues at Cato — whom Weisberg wants to write off for all time — got it right.) By his own standard, then, Weisberg should have had his pundit card permanently revoked….

Libertarians have every reason to hold to the core of their beliefs, ideological attacks from big-government opportunists notwithstanding. If the incumbent national administration had been more oriented to the market, I am convinced America (and the incumbent national administration, too) would be in better shape.

We are a proud and worthy movement, and we have every reason to defend confidently the “individual liberty, free markets, and peace” for which we have always stood.

Over at Reason’s Hit & Run, Matt Welch responds to the big-government loving author of In Defense of Government, Jacob Weisberg of Slate. Weisberg, in a Slate post entitled, “How the Financial Collapse Killed Libertarianism” contends that

The best thing you can say about libertarians is that because their views derive from abstract theory, they tend to be highly principled and rigorous in their logic. Those outside of government at places like the Cato Institute and Reason magazine are just as consistent in their opposition to government bailouts as to the kind of regulation that might have prevented one from being necessary. “Let failed banks fail” is the purist line. This approach would deliver a wonderful lesson in personal responsibility, creating thousands of new jobs in the soup-kitchen and food-pantry industries.

Welch responds, in a post entitled, “The Eternal Death of Libertarianism“:

There is no space in Weisberg’s conception of “libertarians” for people like, for instance, me: Not remotely a utopian, not “of the right,” never read an Ayn Rand novel, spent high school playing sports instead of reading political philosophy, don’t want to do history over (except for Game 5 of the 1986 ALCS), and don’t pine for some presumably awful world where everyone shares my political views. (And, I might add, unlike Weisberg, I don’t want to convert my political views into increased state power over fellow citizens who don’t happen to agree with me.)

No, I just think that, all things being equal, capitalism is vastly superior to socialism, government is by definition inefficient, and would be much better off focused on essential tasks, rather than, say, nationalizing hundred-billion-dollar chunks of the mortgage industry, or trying to guarantee that asset prices never depreciate. In my world, at least, not all regulation is automatically evil, just ripe for being gamed by the very interests being regulated, and so better when pruned back.

Notes:

(1) Game 5 of the ALCS — Boston over California in eleven innings

(2) Weisberg’s book on big government is apparently out of print, but available through used booksellers on Amazon starting at $.01.

Over at Cato@Liberty, David Boaz posts “Gods That Fail,” in response to Harold Meyerson’s Washington Post column, “Gods that Failed.” Boaz defends capitalism against Meyerson’s contention that “Today, conservative intellectuals might want to consider writing a tome on the failure of their own beloved deity, unregulated capitalism. ”

(The titles of the columns are plays on 1949’s The God That Failed, a critique of Communism.)

Boaz concludes:

But let’s think about the comparison that Meyerson is making. Some intellectuals once supported communism, and that failed. Some intellectuals, we’ll concede for the moment, were just as enraptured with capitalism; and that system, too, in Meyerson’s view, has failed. Are these equivalent failures?

Communism’s failure involved Stalin’s terror-famine in Ukraine, the Gulag, the deportation of the Kulaks, the Katyn Forest massacre, Mao’s Cultural Revolution, Che Guevara’s executions in Havana, the flight of the boat people from Vietnam, Pol Pot’s mass slaughter — a total death toll of 94 million people, according to the Black Book of Communism. Prominent American leftists — from Lillian Hellman and Dalton Trumbo and lots of other writers to Alger Hiss of the State Department and FDR speechwriter Michael Straight, who became the publisher of The New Republic – were members of the party that did these things. And that party had total control in the countries that it ruled. There were no opposition parties, no filibusters, no election-related maneuverings that prevented the party in power from getting what it wanted.

What the Communist Party wanted, it got. Communism in practice was communist theory made real.

In the United States, on the other hand, economic and political outcomes are always the result of jockeying between parties and interest groups. So even if Ronald Reagan and his advisers wanted to give Americans “unregulated capitalism,” they had to deal with Tip O’Neill and the Democrats, and with critics in the media, and with many other players….

And what is the ”failure,” as Meyerson puts it, of this semi-deregulated capitalism? Does it involve mass starvation? Does it involve terror-famines? Does it involve millions of deaths? No, so far it involves a sharp decline in the stock market from record levels….It’s had some dips, but it still reflects vast wealth creation, and vast increases in the assets of our IRAs and 401(k)s.

The “failure” of capitalism and the failure of communism are not morally equivalent, and Meyerson should be embarrassed to even imply such a comparison.