The Political Economy of Envy

[bobman0330]

I oppose most government interventions in the economy (this will come as a surprise to many, but it is true). Recently, however, I get the sense that the American public is reaching a point where anti-free market policies are beginning to develop troubling amounts of headway. Specific examples include the recent minimum wage hike, the much-discussed windfall profits tax on oil companies, and, most disturbingly, the prospect of an attack on globalization (the Democratic SOTU response contained some really troubling rhetoric in this vein).

The interesting factor is that this anti-market momentum is primarily driven by globalization, and the increase in income inequality that it has wrought. This relationship creates something of a paradox: if your goal is to maximize economic freedom under the current political system, you won't get very far by throwing all the stops and adopting an extreme laissez-faire system. People will get fed up by inequality, and there will be a backlash. (This concept also has interesting implications for the viability of ACism, which I will try to develop in another thread - not here please.) So, there has to be some optimal middle ground, where you support many, but not all, proposals that expand economic freedom.

If that's true, then the question becomes what compromise do you make with anti-market forces? The most important free market reform is, of course, globalization. Unfortunately, it's also the easiest target. I haven't gotten out my calculator and run the numbers, but I to suspect that protecting and expanding free trade is the most worthwhile thing a free-marketeer can do. Even supporting stupid but insignificant policies like a minimum wage hike or a windfall profits tax might be worth it.

Thoughts? Which free-market policies are important and which are not? Which are or are not practical in today's climate? How strong are the opponents of the free market, particularly since the '06 election?