red tories, competitive federalism, etc.

I’d like to follow up a bit on my post from yesterday which was pretty critical of Phillip Blond and his latest piece on liberalism.  First off, let me just say that I do have a soft spot for the Red Tories.  I think they represent an important ethical voice within conservatism, much as many paleos or crunchies do in America.

It’s true, the free market is a system sans morality, a system of personal choices and determinations, and our political leaders should do their utmost to make sure that all the players within it are playing by the rules.  But the notion that markets are “amoral” and thus not to be trusted is nonsense.  Blond’s distrust of markets is entirely misplaced, and would be better served by a distrust of the state’s distortion of those markets.

Blond’s critique of the free market is born out of its failures, and namely the failure of competition and the rise of monopoly.  This may be a true assessment of some markets (and certainly has its place when thinking about financial firms classified as ‘too-big-to-fail’), but I think Blond let’s his personal preference for all things local color his assessment a little too much.  And he almost entirely ignores the state’s role in creating or sustaining monopolies (let alone the state monopolies themselves, like the UK’s health system)  He laments the rise of multi-national grocery stores and Wal*Mart:

In Britain, four supermarkets control more than 70 per cent of food retailing, while in the US, Wal-Mart has eviscerated competition. Local businesses from pubs to post offices are eroded by conglomerates that benefit from hidden subsidies and whose costs to society are not priced in. They out-compete everything else on economies of scale.

But as the apparently uncredited writer at the IEA blog points out:

Blond seems to want local provision to replace multinational monopolies (he cites Wal-Mart frequently). This really is bizarre. Wal-Mart is a product of competition and it would disappear as quickly as it has grown if it started to exploit consumers. In fact, Blond misses an elementary point. Wal-Mart is a multi-national company that does not have a monopoly. If we have local provision we may have millions of firms throughout the world but each could be a local monopoly. Some of us remember going shopping with our parents in the early 1970s, trudging from one over-priced, inefficient, unimaginative local monopoly to another over-priced, inefficient, unimaginative local monopoly. Indeed, before I went to school, I have the impression that this tedious activity took up almost every morning.

Now I will say that when it comes to subsidies, Blond is spot-on.  We should not be subsidizing Wal*Mart.  However, Blond would replace subsidies for big multinational firms with subsidies for small local firms, and he’d do his best to use protectionism to bust up economies of scale.  Indeed, the Red Tory movement seems hell bent on institutionalizing all sorts of protections in its quest to rid Great Britain of all things Thatcher.  As anther post at IEA mockingly points out:

So why not state the case like this: “Most people’s willingness to pay a mark-up at a store with a specific ‘local’ image is not high enough to offset Tesco’s price advantage. Therefore, Tesco’s prices must be artificially raised by depriving the company of economies of scale, to push consumers back on the high street, and bring their buying behaviour in line with Phillip Blond’s personal preferences.”

Blond’s Progressive Conservative Project states its goals as follows:

• Democracy, Community, Neighbourhoods & Power; arguing that the best way to kick start democracy is to drive control down to town halls, neighbourhoods, and individuals.

• Family, Childhood, & Society; recognising the importance of the quality of relationships, not family structure. We are driven by the conviction that only by intervening early, intelligently, and decisively can we give everyone a fair chance in life.

• Markets, Ownership, Poverty, Opportunity, and Wages; developing bold approaches to tackling poverty and inequality in all its forms: poverty of income, assets, aspiration, and networks.

• Austerity, Innovation, Bureaucracy, and the Shape of the State; investigating progressive and conservative new models of government for a period of austerity.
  

These are noble, if vague, goals.  And I think in political terms, the notion of drawing down power to the local level makes a great deal of sense.  Some would call this subsidiarity, and for a really interesting and effective look at subsidiarity in politics (and a possible alternative to Blond’s idealized “localism”) check out the Swiss “competitive federalism” model.  In this model the federal government has very little taxation power, and Swiss cantons compete for citizens by offering various tax rates, public services, etc.  Mark has written about the Swiss “libertopia” at his old blog.

It’s worth pointing out that often where localists see libertarianism as anathema to their vision of limits and place, it is actually the more competitive models of politics and economics that create the most robust and vital communities.

Chris has an interesting follow-up to my post as well.  He’s absolutely correct that Blond takes his case too far, and that other more moderate visions of what Blond is over-stating may have more merit.  I’ve already printed Millbank’s “Politics of Paradox” to read this evening.  I also think that the link between faux-individualism and statism is important and needs more fleshing out.

One thing Chris writes confuses me, though:

Market economics and liberalism are both the greatest political and economic achievement in human history to date and simultaneously the very thing that is preventing the further evolution of human social and political relations.  And worse is taking us careening towards some very dark and potentially catastrophic futures.

This is often a claim made by environmentalists or others who predict some certain impending doom based on our over-consumption, our use of the world’s natural resources for our own good and so forth.  I suppose in this regard I’m more of an optimist.  I see diminishing resources leading to higher prices, and the self-limiting constraints of those prices forcing innovation or re-imagination of our current systems.  High transportation costs may lead us toward more localized production of goods, toward micro-manufacturing, and toward greener transportation options like electric cars and light rail.  I have no problem with anticipating some of these futures by laying the rails earlier than needed, or by investing in green technology research, or by working to rewrite zoning restrictions so that the supply of dense, walkable neighborhoods can be increased.

Still, I think the free market is the best vessel for our creativity.  The green revolution will require free markets – something I hope to write about more in the near future.  Likewise, capitalization of the poor has occurred under the dread neoliberal regime.  Income inequality has increased, but overall standard of living has increased as well, along with a general decrease in cost of goods and services.  This is real progress.  Breaking up Wal*Mart and relegating its customers back to the aisles of local monopolies is not the answer – certainly not for the poor.   Things aren’t perfect, and we need to work to create more sustainable, efficient safety nets, but we are not living in some capitalistic dystopia either.

Blond and the Red Tories should focus more on competitive government and political subsidiarity and let markets take care of themselves.

(For a more comprehensive look at competitive federalism see this paper [pdf] by Richard E. Wagner.  For more on the Swiss system, see this article at The American.)