A neoliberal agenda for the 2020s

Libertarianism in the UK has had a pretty bad epidemic. Many of the most prominent self-declared libertarians and classical liberals like James Delingpole and Toby Young are now full-time Covid deniers. Even think tanks associated with libertarianism such as the Institute of Economic Affairs seem to have gone full “lockdown skeptic”. So has the American Institute for Economic Research in the US, so it may not be an exclusively British problem.

I think these positions are deeply misguided. They cannot even be justified on the grounds of individual liberty because they largely ignore both the externalities that a healthy person carrying Covid imposes on other people and the benefits of collective action during an epidemic, where a concerted effort by everyone can reduce prevalence to very low levels. If Sweden is their model, with one of the worst death rates in the world, Taiwan, with 7 deaths this year so far, is mine.

On the other hand, most self-described “neoliberals” have been fairly supportive of government measures to control the spread, while being critical of measures imposed that seem to have little basis in what we know about the disease: the 10pm curfew, shutting down beaches and parks, etc. Suppress the virus while we improve testing, tracing and treatment, and eventually eliminate it altogether with a vaccine.

The underlying difference between libertarians and neoliberals here reflects a key political division of the internet age: extreme, at times pathological, skepticism of authority information sources on the fringes of both the left and right. This kind of extreme skepticism is often useful—authority information sources are often basically just making things up, as we saw with early public health advice against wearing masks and, in the US, we continue to see with advice against vaping. But when you only apply skepticism to authority information sources and allow conspiracy theories and quacks to pass through your filter without any scrutiny, you’re in trouble.

It’s four years since I wrote a post called “I’m a Neoliberal, Maybe You Are Too” where I sketched out a picture of the sort of person I considered to be a “neoliberal”. At the time I focused on the combination of “free markets and redistribution”, which I continue to believe is the core economic policy mix of a significant group of people who can most clearly be described as “neoliberals”. 

But I also perceived libertarianism to be coming apart internally, as more and more libertarians seemed to be drifting towards nationalist, conspiratorial ways of thinking. More and more seemed to be utterly disgusted with the status quo in the developed world which, to my eyes, looked pretty good: a global liberal order that allowed for quite a lot of migration and free trade, and whose political disputes were usually managerial rather than revolutionary.

It was the reaction against that status quo, involving things like Brexit and Trump’s election victory (I wrote my piece in August 2016, in between the two), and the embrace by many libertarians of those two things, that made me want to differentiate myself and like-minded people from those people. If libertarianism meant right-wing Jacobinism in practice, I didn’t want to be part of it.

Since then, other people have done amazing work in their own right to give the concept more of an identity and profile, most notably the excellent and tireless Colin Mortimer, now at the Progressive Policy Institute. 

Inevitably, because the word ‘neoliberal’ has different connotations in the US to the UK, it has meant different things to different people. In the US, most people seem to think of the word “neoliberal” as a New Democrat, Bill Clintonite term, whereas in the UK it connotes a sort of globalist Thatcherism. Sometimes that can lead to confusion, but I’ve always thought of neoliberalism as straddling left and right and aiming to preserve or restore the old pre-2016 order.

If Milton Friedman, Tony Blair, Emmanuel Macron, Bill Clinton and 1990s-era Paul Krugman aren’t all neoliberals the word doesn’t really make sense. And if Corbynites, Bernie Bros, Trumpites and Brexiteers were the Jacobins of the modern left and right, neoliberals are the liberal anti-Jacobins opposing them. Don’t think of this as centrism, but as liberalism trying to hold on to what it won in the 20th Century.

But defense of the status quo is not enough, since there is a reason that enough people objected to the status quo to try to overhaul it. Neoliberalism can’t just be an aesthetic. But an attempt to define an expansive party-like policy platform (“this is what Neoliberalism stands for”) is a waste of time and guaranteed to alienate more people than it attracts, especially if it ends up being too much on the left or the right or too specific to one country. And the most important policy priorities for neoliberals also happen to be the ones on which there is the most agreement between neoliberals of all stripes.

So the three policies I propose to define the “neoliberal agenda” for the 2020s are YIMBYism, support for more immigration, and support for a carbon tax:

1. YIMBYism – “Yes In My Back Yard”-ism – is the belief that nearly all Western countries need much more housing supply in places where housing costs are high, and the main barriers to this are zoning and land-use planning laws. In the US and UK this is places like the Bay Area, New York and London. This does not mean supporting a free for all, which would be politically counterproductive and potentially inefficient, since new developments can often impose some negative externalities on existing residents. My favourite proposal is letting individual streets vote on their own density and design rules, so bargaining can take place between existing residents and would-be new residents to “internalize the externalities” – the ones who create the costs have to bear them.

This is probably the most important policy priority of all because high housing costs cause so many other problems the West is suffering from: low productivity growth, low rates of entrepreneurship, inequality, low fertility, poor health including during Covid, low social capital (maybe), and above all, a feeling of economic despair: the fear that you are no better off than your parents and that your children may be no better off than you. Fix housing and you begin to solve loads of other problems too.

2. Support for immigration because migration is simultaneously the best tool we have for allowing talented people to make the most of their abilities and the best tool we have for reducing extreme poverty in the short- and medium-run. Liberal democracies are extremely good at absorbing and integrating immigrants, and most people’s objection to immigration is on the mistaken belief that immigrants lower native wages or job opportunities.

Since it is remarkably difficult to raise the trend growth rate – the rate at which we are coming up with new inventions and business ideas – immigration that attracts highly skilled people is particularly good for global growth if the alternative is those people being stuck in countries where they cannot come up with and disseminate good new ideas as easily as they could in somewhere like Sydney or Paris. How many Sergey Brins, Shantanu Narayens, and Tobias Lütkes have the world missed out on because they could not move to a country where they could combine their talents with the right other people? (Note that I don’t say “open borders” or anything like that – this is about moving the dial in a more liberal direction. The biggest trap you can fall into is letting someone who wants more restrictions on immigration frame the debate as restrictions vs open borders – it’s a common tactic and an easy trap to fall into.)

3. A carbon tax because man-made global warming is real, important and potentially extremely costly, and is ultimately a problem of uncaptured externalities. A carbon tax is extremely desirable for four reasons: one, it allows markets to figure out what the best ways of curbing carbon emissions are; two, it can be made politically durable by using the revenues it raises to fund a progressive cash payment to a country’s residents, which may create a political constituency that stops it from being reversed; three, it can be border-adjusted, so countries that adopt it can impose it on imports from countries that do not, reducing the free rider problem that many carbon reducing polities have; and four, it is a permanent solution to climate change that avoids the massive expansion of the state in ways unrelated to carbon emissions that proposals like the Green New Deal involve. The biggest problem here is correctly pricing carbon, but this – adequately estimating the expected long-run costs of global warming – is a fundamental problem that any policy here has, including inaction, since inaction involves the judgement that the costs are tolerable and mitigable.

A “neoliberal agenda” focused on these things would be a club, not a party: you can be a neoliberal Republican, a neoliberal Labourite, a neoliberal priest, a neoliberal Green, or whatever. There are loads of other issues that I think are incredibly important that don’t fit here, but these three policy priorities would get you a huge amount of the potential economic and social progress we can make with public policy besides those. Not only are these, in my view, the core of what modern neoliberals really do care about, they are some of the most powerful of all possible policies we could enact to improve the lives of people around the world. First we beat Covid, and then we get on to the real work.