Amity Shlaes

Scholars seek to reclaim the term “liberal” from governmentalists

laissez-faire

There is a push in libertarian circles to reclaim the term “liberal,” a word that once represented a hands off approach to government, from those who advocate for the “governmentalization of social affairs.”

Through Liberalism Unrelinquished, an effort spearheaded by Kevin Frei, a number of scholars are declaring that they will not surrender use of “liberal” to describe their views. The organizers of the statement hope to attract 500 or more signers.

The statement explains that “liberal” once represented the views of Enlightenment era, perhaps best identified through the work of Adam Smith, an 18th Century moral philosopher and the father of modern economics.

Smith laid the foundation for the moral case for capitalism in The Theory of Moral Sentiments (1759) and The Wealth of Nations (1776). The statement also points to Richard Cobden, William Gladstone, and John Bright — 19th Century British liberals who advanced laissez-faire economic views.

The American founders enshrined the liberal concepts of the Enlightenment era into the Declaration of Independence and, later, the United States Constitution.

“Especially from 1880 there began an undoing of the meaning of the central terms, among them the word liberal,” the statement reads. “The tendency of the trends of the past 130 years has been toward the governmentalization of social affairs. The tendency exploded during the First World War, the Interwar Years, and the Second World War.”

Obama becomes FDR

In a column over at the Washington Post, Amity Shlaes provides us with some historical perspective between Franklin D. Roosevelt and Barack Obama, and sees the same mistakes being made all over again:

By fixating on the debt and stimulus plans, Obama and Congress are overlooking challenges to the economy from taxes, employment and the entrepreneurial environment. President Roosevelt’s great error was to ignore such factors — and the result was that sickening double dip.

Taxation is an obvious area the Obama administration ought to reconsider. Income taxes, the dividend tax and capital gains taxes are all set to rise as the Bush tax cuts expire. The Obama administration portrays these increases as necessary for budgetary and social reasons. A society in which the wealthy pay their share, the message goes, has a stronger economy. The administration and congressional Democrats are also striving to ensure that businesses pony up. The carried-interest provision in the tax extender bill seeks to raise rates on gains by private equity and hedge funds. If that were not enough, a so-called enterprise value tax would be levied on partnerships that sought to elude the new high taxes by selling their companies.

Roosevelt, too, pursued the dual purposes of revenue and social good. In 1935 he signed legislation known as the “soak the rich” law. FDR, more radical than Obama in his class hostility, spoke explicitly of the need for “very high taxes.” Roosevelt’s tax trap was the undistributed-profits tax, which hit businesses that chose not to disgorge their cash as dividends or wages. The idea was to goad companies into action.


The views and opinions expressed by individual authors are not necessarily those of other authors, advertisers, developers or editors at United Liberty.