Classical liberalism was a revolutionary movement challenging the status quo of the day. It was not as consistent in application of its principles as libertarians would prefer, but it was a dramatic step forward in the history of liberty. Classical liberals opposed the alliance between church and state; they wanted to end the property system of the day, where might alone transferred property into hands of privileged, landed elites who grew wealthy out of monopoly privileges bestowed by the Crown.

Later, when modern socialism was born in the mid-19th century, classical liberalism occupied the middle ground between conservatives and socialists. Over time, as capitalism became more and more established, conservatives began to see that as the tradition they wanted to conserve, and gradually moved in that direction.

As socialist and communist governments took power across the world in the 20th century, classical liberals started to ally with conservatives more than the left. The Old Order, while unpleasant, was less lethal than Stalin or Mao’s wrath. But socialism is dead now, and the left has much more common ground with classical liberals than in the bad old days. Still, the two sides still rarely talk. This is a problem for both sides.

Many on the left are innocent of economic knowledge, and could stand to learn some. Libertarians, on the other hand, are often economics-obsessesed. That’s not good, either. Regularly engaging the left can help. Economists who are only economists are boring creatures with little to offer intellectually. That’s why they need to study other disciplines, and other philosophies. Not convert to them, but engage them. Learn from them. Incorporate the good, reject the bad.

If classical liberals want to talk to progressives, they need to realize that, while efficiency and utility are important concepts, classical liberals also need to emphasize their rebellious heritage and how they, too, stand up for the little guy.

Point out how markets help the poor. Nowadays, even people in poverty usually have cell phones, flat-screen tvs, air conditioning, and cars. This is not to be dismissed as “Duh, what’s your point?” The point is that this level of prosperity is unheard of in human history, and it only happened when societies dropped their traditional hostility to commerce and markets. It’s what Deirdre McCloskey calls the Great Fact.

There is still so much progress yet to be made — most of the world’s wealth hasn’t been created yet. Liberalization has been, and will continue to be, the world’s greatest anti-poverty program. Yes, markets are efficient, too, and that’s great. But their unparalleled poverty reduction power (and we have tried many unsuccessful parallels) is what is important, and why the left should be more open to them.

Classical liberals have things they need to learn from the left. The abolition of slavery and monarchy were massive achievements. But there is still progress to be made on gay rights, racial equality, women’s rights, and other issues. Remember, one of classical liberalism’s basic tenets is that everyone has equal rights. Things are a lot better than they used to be, but we’re not there yet. And just because those issues aren’t terribly relevant to nerdy middle-aged white males doesn’t mean those issues are unimportant. They matter. Those are libertarian issues every bit as much as they are progressive issues.

Another topic the left and classical liberals need to broach is public choice theory. This is a fancy way of saying that if a corporation can use government to hobble its competitors, then it probably will. Lessons abound for how to effectively use government. Mark Pennington writes:

Having listened to me speak for an hour on the power of incumbent firms to ‘capture’ regulatory agencies an attending student who was an activist in the Socialist Workers Party asked me, ‘when did you become a Marxist?’ Needless to say, for someone who considers himself a radical ‘anti-Marxist’ I was taken aback by this approach! What the question exemplifies though is an attitude that is widespread in academic circles – the assumption that an interest in power imbalances that favour business interests must equate with one having leftist or socialist sympathies. The idea that there might be a classical liberal/free market understanding of ‘power relations’ as exemplified by public choice theory is a possibility that simply hasn’t occurred to this particular species of left-winger.

That’s precisely why classical liberals and progressives need to communicate more. Talk to each other, not at each other. They are different philosophies, but each can learn much from the other. And they could make a lot of progress on their common issues.

Similar arguments can be made for why classical liberals should work with the right, too. Again, they’re very different philosophies. But why have enemies when you can have friends?

(via Tim Cavanaugh)

Neal McCluskey also offers a valuable insight on why college tuition has skyrocketed — massive federal subsidies. If someone else is paying most of the bill, students and parents don’t have as much incentive to be thrifty. That allows colleges to raise prices with impunity, which they certainly have.

Clicke here if the embedded video below doesn’t work.

8:35 Test

8:37 I am glad that my commute to work, unlike the President’s, is not televised.

8:40 Quote from last year’s State of the Union: “We will continue to go through the budget line by line to eliminate programs that we can’t afford and don’t work.” He did propose and enact repeals of a few billion dollars worth of regulations in 2011, and I’m glad he did. Seeing as the total federal regulatory burden is roughly $1.75 trillion, here’s hoping he does more in 2012.

8:44 Here’s Wayne Crews’ take on regulation and the State of the Union over at Forbes – http://www.forbes.com/sites/waynecrews/2012/01/24/president-obamas-state-of-the-union-hyper-regulated/

8:49 Taxes and spending get all the press. And they are important. But I’m more interested in what he has to say about regulation. It’s a neglected issue that is just as important. Moreso, as far as job creation is concerned.

8:55 The choreography sure is elaborate. Glad I went into policy, and not politics.

8:56 Big round of applause for Rep. Gabrielle Giffords. Best wishes for her continued recovery.

9:01 It’s an election year, and that means even more partisanship than usual. This political independent is curious to see how that affects Obama’s rhetoric tonight.

9:04 I’d be curious to see a public choice-influenced analysis of the State of the Union tradition.

9:05 Here comes the Big Guy.

9:06 Much applause, many hellos. It’ll be a few minutes until the speech.

9:11 Here we go.

9:12 CEI takes no foreign policy positions. Any offered are strictly my own.

9:13 That said, I am glad we are winding down Iraq operations. As a fan of Hayek, I’m not a believer in top-down nation-building.

9:14 He is quick to tout Osama bin-Laden’s death. Can’t say I blame him. I would, too.

9:14 Jobs. Energy independence.

9:16 Class rhetoric.

9:17 Uh, manufacturing output is actually near an all-time high.

9:18 American manufacturing is healthy. Fewer jobs, yes. But those few are doing more with less. That’s how prosperity happens.

9:19 As though the president has much to do with employment levels. Bush had terrible economic policies. But Obama’s are largely the same. They differ in degree, but not in kind.

9:20 Bailouts, wealth transfers from taxpayers to corporations, and other Bush-Obama policies hurt the economy. He should abandon them.

9:21 Defending the GM bailouts again. Much more stridently than before.

9:22 If taking money away from taxpayers and giving it to corporations helped the auto industry, why not do that with the rest of the economy?

9:24 “Bring manufacturing back.” Uh, it never left. Domestic output hit an all-time high in 2008. And it’s still very close to that.

9:24 Great. proposing more corporate welfare.

9:25 And proposing higher corporate taxes for multinationals. Seeing as consumers pay all corporate taxes — businesses pass on their costs — consumers should be up in arms over this.

9:25 Tonight’s rhetoric is astoundingly nationalist. Not cool.

9:26 Touting trade agreements passed during last year. Right on! Let’s see more of them.

9:27 Trade Enforcement Unit. Uh-oh.

9:28 If China takes money away from its people to subsidize American consumers, thank them. It isn’t fair to the Chinese people, but it is polite to thank people when they give us free gifts.

9:29 It also frees up American ingenuity for other pursuits.

9:30 Mispronounced “Louisville.” Badly.

9:30 Proposing still more transfers from taxpayers to businesses. Small ones this time.

9:32 Spend more on education. Check out this graph: http://www.cato.org/pub_display.php?pub_id=12775 The problem lies elsewhere.

9:32 Nice! Get rid of bad teachers, localize curricular choices. The NEA must be livid right now.

9:33 All kids must stay in school until they’re 18. Hmm.

9:34 Transfer more money from taxpayers to students.

9:34 Given that most college students end up relatively wealthy, he’s asking poor taxpayers to subsidize wealthy young people. Regressive.

9:35 Nobody likes sky-high tuition. But federal rules are responsible for much of it. More federal rules aren’t the answer.

9:35 Immigration. Sounds like he’s touting the STAPLE Act, which is something I’m very much on board with.

9:36 Uh, fewer illegal crossings have more to do with tough economic times than the fact that Obama happens to be in office.

9:37 Overall, he sounds fairly welcoming to immigrants. If his policies actually reflected that, the economy really would be in better shape.

9:38 “Take money from taxpayers and give it to small businesses.” This is zero-sum at best. Given the usual politicking, likely much worse.

9:39 ‘Take money from taxpayers and give it to energy companies.”

9:40 Energy independence is a sham.

9:40 Gearing up for renewable rhetoric.

9:40 If it’s viable, it doesn’t need a subsidy. If it’s economically viable, it sure doesn’t need a subsidy.

9:41 Hey, energy companies, drill for more gas. Also, here are more regulations to comply with.

9:43 “I will not walk away from the promise of clean energy.” Nor will I. But it will come from entrepreneurs, not Washington. Witness the ethanol and Solyndra debacles, among others.

9:44 He will flight climate change, apparently.

9:45 “Let’s give more taxpayer dollars to energy corporations.”

9:46 Uh, America’s infrastructure spending is the highest it’s been since the Interstate highway system buildup, as a percent of GDP.

9:47 The money we’re no longer spending at war, eh? Afghanistan? Libya? Also, over $1 trillion in debt?

9:48 He wants to set mortgage rates now? The housing crisis will never end until the bubble is allowed to finally, mercifully, and painfully, pop. But that’s bad politics. So it goes.

9:49 Smart regulations to prevent irresponsible behavior. I’m interested. Go on…

9:49 They make the free market work better…

9:50 ‘I’ve approved fewer regulations in my first three years than Bush did.” Mainly because the first year was slow. He’s exactly the same as Bush on this issue, frankly.

9:50 Touting the EPA milk spill = oil spill rule being repealed. Rightly so, though the laughter was awkward.

9:50 Nice segue to the Gulf oil spill.

9:51 I hope that wasn’t a defense of the EPA’s methylmercury rule. That is the most expensive regulation of all time.

9:51 Wall Street never did play by its own rules. There’s a reason they have all those DC offices.

9:53 Touting Corday. Sounds like fewer people who need them will be able to get loans. So it goes.

9:54 Oh boy, lending really will go down. This is bad for investment, and for job creation.

9:54 Extend the payroll tax cut.

9:55 Some of my colleagues disagree with me, but a tax cut now is a tax increase later — with interest.

9:55 The deficit.

9:55 OK. Extend the payroll tax cut, but increase income taxes?

9:56 Uh, capital gains income is double taxed. People pay income tax, invest some of what’s left, then pay capital gains tax.

9:58 Obama has actively proposed subsidizing millionaires several times tonight. Now he wants to tax them more. Pick one, please.

9:59 Again, Buffett’s capital gains income was subject to the income tax before he invested it and than paid capital gains tx on the investment income. He pays more than his secretary, not less.

9:59 Pardon the typos.

10:01 “Nothing will get done in Washington this year. Or next year.” The problem isn’t the man, or the party. It’s the system. Unless he enacts systematic changes at the institutional level, this will continue.

10:01 Ban insider trading by Congress. Fair enough.

10:01 Then again, prices reflect conditions on the ground. The faster those prices reflect the truth, the better.

10:02 Then again, Congress’ Buffett-like investment acumen is surely not due to chance. That colors their decisionmaking.

10:02 Congress; give me more power.

10:03 Sounds just like his predecessor.

10:04 Of all people to bad-mouth the perpetual campaign…

10:04 Way to call out big-government Republicans! Nice.

10:05 When Congress and the President act together, there is nothing America cannot achieve. He is clearly unfamiliar with public choice theory.

10:06 More foreign policy hornblowing in his closing flourish.

10:06 Comment From FMY
Buffet doesn’t have income, only cap gains which he reinvests to make more cap gains

10:07 Comment From bisek
more trade impediments. good!

10:08 Everyone wants a free and prosperous Middle East. But it can’t happen top-down. It has to come from the bottom up. (My opinion, not CEI’s)

10:08 Comment From Guest
And the $3000 per year that Obama just saved homeowners will be gone in 2-3 weeks when lenders pass the increased fee onto borrowers.

10:09 I am not liking this saber-rattling towards Iran.

10:10 America is a pacific power — uh, we’re at war in multiple countries.

10:11 Amurrica!!!

10:12 Keep an eye out for more power grabs at the Internet, under the guise of national security. I expect CEI analysts will have a lot to say about this.

10:13 More tax credits to corporations.

10:13 Simplify the tax code, please. It’s already 70,000 pages. It should be under 100.

10:14 Comment From FMY
VA spending up because of large war casualties

10:14 Good point, FMY.

10:16 65 minute speech. Wow.

10:17 Here are some more reader comments:

10:17 Comment From Mancur Olson
Small distributional coalitions tend to form over time in countries. Groups like cotton-farmers, steel-producers, and labor unions will have the incentives to form lobby groups and influence policies in their favor. These policies will tend to be protectionist and anti-technology, and will therefore hurt economic growth; but since the benefits of these policies are selective incentives concentrated amongst the few coalitions members, while the costs are diffused throughout the whole population, the logic of collective action dictates that there will be little public resistance to them. Hence as time goes on, and these distributional coalitions accumulate in greater and greater numbers, the nation burdened by them will fall into economic decline.

10:17 Comment From Bruce Arians
Could he bring my job back as offensive coordinator of the Pittsburgh Steelers?

10:17 Comment From Freddy Hayek
The results of the individual’s efforts are necessarily unpredictable, and the question as to whether the resulting distribution of incomes is just has no meaning. There is no point in calling the outcome just or unjust. The principle of distributive justice, once introduced, would not be fulfilled until the whole of society was organized in accordance with it. This would produce a kind of society which in all essential respects would be the opposite of a free society.

10:17 Comment From Paul Krugman
“If there were an Economist’s Creed, it would surely contain the affirmations ‘I understand the Principle of Comparative Advantage’ and ‘I advocate Free Trade’.”

10:18 Comment From Freddy Bastiat
Whence we arrive at this unexpected conclusion: “Society loses the value of things which are uselessly destroyed;” and we must assent to a maxim which will make the hair of protectionists stand on end—To break, to spoil, to waste, is not to encourage national labour; or, more briefly, “destruction is not profit.”

10:18 Comment From Thomas Jefferson
I just sent in a letter describing State of the Union..

10:18 Comment From Guest
Awesome… loosen the underwriting guidelines that are in place to prevent another crisis.

10:22 I’m honored that so many distinguished economists, many of them deceased, are commenting tonight. Keep ‘em coming!

10:22 Mitch Daniels’ GOP response coming up.

10:25 Three big themes from tonight are jobs, jobs, and jobs. It is an election year, after all.

10:26 There are also the conflicting themes of giving more to businesses and taking more away.

10:27 Can’t say I care for his isolationism on manufacturing and trade, though he did say good things about the FTAs with Panama, Colombia, and South Korea.

10:28 He didn’t say nearly as much as I would have liked about regulation. He mentioned his minor rollbacks, but the net effect over the last three years has been a Bush-level massive increase.

10:29 Here’s Daniels.

10:29 “I am the loyal opposition.”

10:29 Praise for his education policy rhetoric.

10:30 The State of the Union is grave. Obama has made it even worse. Also, jobs.

10:30 The debt problem is getting worse. Duh.

10:31 Predictable middle class rhetoric.

10:32 I like the line about “haves and soon-to-haves.”

10:32 2012 is emphatically not our last year of opportunity. Too many entrepreneurs are seeing to that.

10:33 Proposals to cut that deficit? Waiting…

10:34 Shot across the bow on the Keystone XL pipeline. Nice.

10:35 Also decries over-regulation. But no specific reform proposals.

10:35 CEI has plenty, by the way.

10:35 Means-test Social Security?

10:36 Timid. Personal accounts would be better. And IRA for everyone.

10:36 *An* IRA for everyone.

10:37 “The other party tends to reject my party’s legislation.” Cuts both ways sir.

10:37 The problem is at the institutional level.

10:38 Here are some institution-level solutions – http://www.amazon.com/Better-Congress-Proposal-Citizens-Legislative/dp/1587332337

10:39 Nice lightbulb-ban reference.

10:40 Comment From FMY
Like the personal responsibility message.

10:40 Ugh. Reagan reference.

10:41 Overall, a timid response to a timid SOTU.

10:45 Light on specifics. Then again, he only had a few minutes. And politicians are generally reluctant to propose reducing their job description.

10:46 He also probably wants to leave platform ideas up to whoever the GOP nominee will be. Since most of them want a bigger federal government, they probably wouldn’t take kindly to Daniels favoring a smaller one.

10:47 And that wraps it up. Thanks for reading, and keep an eye out for more CEI coverage tomorrow!

That’s why, if I were a partisan Democrat, I would be upset with my party over the recall elections in Wisconsin. Millions of dollars are being taken away from close races around the country to go towards unseating a governor who will be up for re-election in two years anyway.

The recall may well succeed; one measure of enthusiasm is the roughly one million signatures on the recall petition, twice what was needed. But the most this expensive campaign would buy is two years in the governor’s mansion.

And this campaign will be spectacularly expensive. Labor interests view their livelihood as being at stake. That’s hyperbole in my opinion, but people do feel that way. And they will be pouring millions into the race. Tempers are running high, and strategists for the blue team have to be disappointed that so many on their side have lost theirs.

Activists are so passionate about unseating Walker that they fired before they aimed. There is no Democratic candidate to unify behind, giving Republicans a built-in advantage. Not only will there be a bruising (and expensive) primary, but many Democratic voters will be on the wrong side of the enthusiasm gap if their preferred candidate loses the primary or the nominee has low name recognition.

No one knows how it will play out yet. But even if it succeeds, this particular temper tantrum could well cost Democrats a few Congressional seats. Maybe even the White House, if it takes enough resources away from the ground game in swing states.

Political markets are different than economic ones, but duopolies still have many of the same qualities — particularly regarding customer abuse. That’s why I was pleased to see a writeup in this morning’s Politico that the percentage of political independents is at an all-time high in a long-running Gallup poll. A full 40 percent of Americans have now opted out of the Republican-Democrat duopoly.

Back in 2007, when Barack Obama was running for president, a mildly surprising bit of news emerged: He and Dick Cheney were eighth cousins. Today, though, it appears that report was wrong. Judging from Obama’s record in office, the two are practically brothers.

As a candidate, Obama criticized the last administration for holding Americans as enemy combatants without trial. He faulted it for wiretapping citizens without a warrant. He rejected the Republican claim that the president has the “inherent power” to go to war without congressional consent. He depicted George W. Bush and his vice president as a menace to constitutional limits and personal freedom.

But look at him now. Last week, Obama signed a bill letting him detain U.S. citizens in military custody without convicting them of anything — not for a month or a year, but potentially forever.

Read the whole thing.

Associate Director of Technology Policy Studies and Iowa native Ryan Radia takes a look at how the different strains of Republican voters are deciding on their party’s presidential nominee. In the years to come, Radia believes that the GOP will need to reinvent itself ideologically if it is to remain politically relevant.

Politicians usually love infrastructure projects. But politics has delayed the privately owned Keystone XL pipeline’s construction for three years now. Research Associate David Bier explains the reasons behind the delay, and points out that the pipeline’s real benefit isn’t the jobs it would create; it’s the wealth and value it would create.

Modeling your re-election strategy on an obnoxious authoritarian’s failed third-party run for the presidency a hundred years ago is an interesting choice, but not necessarily a wise one. It’s a move of desperation, unlikely to work.

GOP front-runner Newt Gingrich calls himself “a Theodore Roosevelt Republican.” Despite (or because of?) T.R.’s many flaws, politicians from both parties have long found something irresistible about our pulpit-pounding 26th president.

But T.R.’s enduring appeal is an enduring mystery. What’s so attractive about Roosevelt’s political philosophy? A loudmouthed cult of manliness? A warped belief that war is a good tonic for whatever ails the national spirit? A contemptuous attitude toward limits on presidential power?

John McCain, the 2008 GOP nominee, also suffers from a Teddy Roosevelt complex, as Matt Welch details in his book McCain: The Myth of a Maverick. If there’s any lesson to be learned from presidential candidates’ shared T.R. fetish, it’s that only those truly in love with power can endure the the hell of the campaign trail to acquire it.