Bernie Sanders, Free Marketeer?

Successful politics requires certain skills.  Two of these are persuasion and building strategic alliances.  Both are going to be essential if we are ever to have any hope of putting down the over-centralized, freedom-sapping, federal behemoth which rules us from the new Rome on the Potomac.  In my book Timely Renewed: Amendments to Restore the American Constitution, I devote two chapters to trying to make what I call "a progressive case for a more Jeffersonian government."  And now, from what is traditionally thought to be the opposite side of the political spectrum, comes Ralph Nader calling for a progressive/Tea Party alliance in the new Congress against "corporatist" interests.

Nader has recently promoted a curious champion for such an alliance, Senator Bernie Sanders of Vermont.  Senator Sanders' nine-hour rant on the Senate floor against maintaining the current tax rates for upper income Americans has attracted considerable notice. However,  there could be broader grounds for such an alliance than customary wisdom would allow, for buried in his torrent of old school socialist calls to class warfare, Senator Sanders made a powerful argument for government deregulation and free markets. 

In his speech, the Senator pointed to disclosures about the beneficiaries of the recent government bailouts.  Almost universally, large firms received government assistance while their smaller equivalents were left to collapse.  Thus, the largest banks were rescued by TARP and near zero-interest loans from the Fed while hundreds of community banks were allowed to fold.  Many major corporations besides GM received massive government cash infusions while smaller companies floundered from lack of financing.  Senator Sanders, a self-described "democratic socialist," called the bailouts "socialism for the rich."

While no one doubts the sincerity of the socialist Senator's outrage, can anyone be really shocked to find deep collusion between big government and big business?  Ever since the Fed's founding in 1913 it has been heavily influenced by Wall Street financial interests.  That year also marks the beginning of a vast expansion of the modern federal regulatory state.  And ever since we have witnessed the phenomenon of "regulatory capture."  This is when an industry or interest group gains effective control of an agency which is supposed to be regulating it, and instead turns the regulatory function to its advantage, often by using regulation to block the rise or entry of new competitors.   The phenomenon is so pervasive that it was formalized in economic theory by the Nobel-prize winning economist George Stigler.  Senator Sanders' tirade provides us with the latest case study proving Professor Stigler's thesis. 

The Senator is hardly alone in objecting to preferential treatment of big business over small business.  The bailouts have been the source of much of the impetus underlying the Tea Party.  Indeed, University of Massachusetts economist Nancy Folbre has noted that "widespread apprehension that government no longer effectively represents the interests of ordinary people has tipped populist rage to the right." She goes on to claim that "Senator Sanders has proved more adept than any of the Democrats in tipping it the other way."

However, Nader is suggesting that it is not an "either/or" choice.  Progressives and free market conservatives both oppose the massive collusion between major corporations and government regulators.  The question is one of means.  Has tinkering with a tax rate here, a new regulatory agency there, done anything to truly reform a federal government profoundly captured by entrenched economic interests?  We now have almost a century of experience with large-scale federal intervention in the markets, and it has proven regulatory capture to be inevitable.  More government regulation just seems to lead to more regulatory capture.  The socialist impulse to regulate has led to "socialism for the rich."   

So what is a social democrat from the Green Mountains to do?  Much of Senator Sanders' information came from disclosures by the Federal Reserve under legislation sponsored by Sanders and Representative Ron Paul, the libertarian Republican from Texas.  The Senator from Vermont might be able to find an answer from his anti-Fed ally from Texas.  Perhaps it is time for the Senator and his many supporters on the left to consider a truly radical solution, a solution which could be built on a deep progressive/free market conservative coalition.

The only sure way to eliminate the regulatory capture which enables corporatist power is to eliminate the current corporate-dominated regulatory behemoth, as advocated by his partner Congressman Paul.   Eliminating government intervention would allow the people to freely allocate society's resources through free markets.   A truly free market disperses power to every participant.  The free market is the ultimate form of populism.   There are no government bailouts in a free market.  Of course, the Senator may reply that there are many abuses in the free market.  However, almost always those abuses stem from legally induced distortions in the market, from regulation.

That does not mean that progressives would longer be progressives.  It is entirely possible to conceptualize a state with very limited government regulation, but where government still provides extensive social services.

If Senator Sanders is not prepared to go so far as to raise the Gadsden flag over Ralph Nader's vision of a permanent Sandrista/Paulista alliance, perhaps he could think of it as a bold, a very bold, experiment.   Indeed, many conservatives do not fully subscribe to Congressman Paul's strict libertarianism.  However, no one is advocating abolishing government altogether.  If it does not work, Congress knows how to enact regulation.  But let's give freedom a try.
If you experience technical problems, please write to