Restore Laissez-Faire Capitalism
When I first saw Daniel Henninger’s 2020 op ed “Restore Laissez-Faire Capitalism.” (Wall Street Journal; p. A13, April 16) I said to myself “Whoop di do.” No. I lied. Actually, I said: “Double Whoop di do.” This is a title that a Ludwig von Mises or a Murray Rothbard could easily have chosen for many of their sterling contributions.
But a careful perusal of this short essay greatly moderated my enthusiasm for it. I now give it an A-, not the A++++ I was ready to award it based on the title alone.
Why my less than rabid appreciation for this really excellent column? (The economist was asked “How is your wife? Came the answer: “Compared to what?” Compared to most op eds in the major media, “really excellent column” is a highly accurate assessment of this one). However, there are flaws in Henninger’s support for free enterprise. They are as follows:
* His version of economic liberty would include: “Basic worker protections, built over a century by law and practice, (they) won’t go away.” Whatever could this mean? One has to fill in the blanks here, but, presumably, Mr. Henninger is herein supporting such aspects of “the moral underpinnings of the social contract” as minimum wage laws, union legislation, hours restrictions, Social Security, unemployment insurance, Medicare, etc.
Only a supporter of Laissez-Faire Capitalism such as Friedrich Hayek (e.g., his Road to Serfdom) could come anywhere near agreeing with Henninger in these matters. Some might think that the former is pretty good company for the latter, but market fundamentalists such as the present author would demur. See below on this.
*Also problematic is Henninger’s statement “Laissez-faire capitalism, with an upgrade
for the 21st-century economy, is an idea for our time.” This author then asks “What might that mean?” Unhappily, once again he fails to specify, other than to aver that it would not have anything to do with “millionaires in top hats and spats.” So, once again we shall have to fill in the blanks. I presume Henninger wishes to distance himself from the “robber barons.” But there is an entire literature demonstrating that Andrew Carnegie, Henry Ford, John D. Rockefeller, and their ilk played important positive roles in the development of our economy. They were attacked by the so called “muckraking” novelists such as Upton Sinclair, Lincoln Steffens, and Ida Tarbell. For an excellent defense of Rockefeller against his many critics, see McGee, John S. 1958. “Predatory Price Cutting: The Standard Oil (New Jersey) Case,” The Journal of Law and Economics, October, pp. 137-169. There is nothing wrong with “millionaires in top hats and spats.” They were amongst the most important contributors to our society of their day. They should be defended, not kicked under the bus.
*Henninger also supports the Paycheck Protection Program as “a political impulse to do good.” Maybe so. Ok, probably, that was indeed the motive of some. But that hardly makes it compatible with laissez-faire capitalism. He also opines these funds “should maximize creator’s share of the revenue flow produced by their single minded 16 hour days.” A more pure advocate of free enterprise would have attacked this governmental redistribution program no matter what were the motivations behind it.
*What are we to make of this program?
“Startups less than five years old with fewer than say 50 employees should be exempt from labor rules, including the federal minimum wage and, in nonmanufacturing situations, OSHA compliance. States should cover the costs of workers’ compensation, unemployment benefits and catastrophic health coverage for young companies.”
Not a bad start. But why only exempt small and new companies from onerous regulations? I perceive, here, shades of the infant industries argument. Why, not, also, safeguard the manufacturing industry from these onerous regulations? Why only rid ourselves of federal minimum wage laws? State laws to this effect are surely not acceptable either. This entire step in the right direction is marred by the fact that all of suggestions are only to apply temporarily, for the duration of the pandemic plight. He wants a “regulatory holiday now.” Why not end these pernicious interferences with economic freedom permanently?
Well, beggars can’t be choosers. Despite its flaws, this op ed constitutes a clarion call in the direction of free enterprise. The title alone is worth the entire price of admission. You don’t see much of that around nowadays. I have focused, here, only on the flaws of the Henninger article. There are many and important contributions, too, regarding the importance of reducing the burden of needless regulations.
Henninger, Daniel. 2020. “Restore Laissez Faire Capitalism.” Wall Street Journal; p. A13, April 16; https://www.wsj.com/articles/bring-back-laissez-faire-capitalism-11586988064
Block, Walter E. and Milton Friedman. 2006. “Fanatical, Not Reasonable: A Short Correspondence Between Walter Block and Milton Friedman (on Friedrich Hayek’s Road to Serfdom).” Journal of Libertarian Studies, Vol. 20, No. 3, Summer, pp. 61-80; http://www.mises.org/journals/jls/20_3/20_3_4.pdf; https://mises.org/system/tdf/20_3_4.pdf?file=1&type=document
Walter E. Block is the Harold E. Wirth Eminent Scholar Endowed Chair and Professor of Economics at Loyola University New Orleans.