Great Antidote Extras: Steven Teles on Liberaltarianism

public policy regulatory capture special interests kludgeocracy

May 10, 2024

Lavery explains and questions Teles' views on bringing Democratic party liberals and libertarians together over shared values in the broader liberal tradition. 
Steven Teles joins The Great Antidote host Juliette Sellgren to discuss the common veins of the broader liberal tradition that Democratic party liberals and libertarians share, the‘kludgeocracy’ of American public policy, and how diversifying sources of information for legislators can help slow the growth of government.

Listen to the podcast here: Steven Teles on Liberaltarianism

What is ‘liberaltarianism’? Teles’ colleague at the Niskanen Center, Brink Lindsey coined the term in an article for The New Republic. Liberaltarianism synthesizes progressive concerns for social justice and economic equality with libertarian appreciation for markets and personal freedoms. Teles views it less as a distinct ideology, and more as a partnership between the two worldviews to achieve mutual goals.
What Brink said in that article was actually that libertarians should think about themselves as having much more in common with the left… certainly on foreign policy libertarians have a lot more in common with the left than they do with neoconservatives, but he also said that they have much more in common on matters of personal freedom… liberaltarianism I think initially for Brink was more of the idea that libertarians should continue to be as libertarian as they always were, but should think about their future coalition partners as being more on the left than on the right.
Teles acknowledges that to some, particularly bleeding-heart libertarians, this may seem odd. However, Teles argues that this combination has a long history within liberal tradition, particularly within Adam Smith’s work. This commonality is what can bring progressives, libertarians, and conservatives together to work towards similar projects. One of these projects, surprisingly, is deregulation. Teles and Lindsey argue in their book, The Captured Economy that excessive government involvement in the economy plays a large part in producing economic inequality, and therefore both the libertarian ambition to cut regulation, and the liberal/progressive aim to decrease inequality can be accomplished.
I always described this weird conservative paradox. On the one hand, libertarians spend all day talking about how mucked up the government is with regulation, and on the other hand they're out there saying inequality is great. Well, if there is all this government involvement in the economy, it's impossible to imagine that wouldn't show up in inequality. If you really do care about inequality, then government is a particularly important source of that. The book was intended to get the left to think of inequality as not just a spontaneous market phenomenon, and to think about regulation as a cause of inequality, and to get the right to be willing to take inequality seriously.
As Sellgren points out, Teles is quite fond of inventing terms, another one of which is kludgeocracy: the oftentimes inefficient and convoluted process of creating public policy in the United States. Here’s Teles on where kludgeocracy is most obviously present:
In the United States we tend to do public policy in the most complicated and indirect way across a whole bunch of different dimensions. One example is in healthcare. In Britain where my wife is from, they have national health insurance, which is free at the point of care. There's a lot of complexity behind the scenes, but from the standpoint of the person who's getting cared for, they go into a hospital, and they don't pay anything, they just get cared for. In the United States we have Medicare and Medicaid. We have hospitals that provide free or reduced care, we have employer provided health insurance, we have this complicated set of institutions, and we spend the most in the world on health care.
Kludgeocracy is difficult to untangle for a myriad of reasons, but the separation of powers and other “veto points” of the American government are causes Teles identifies. He acknowledges that checks and balances make government hard to grow, but also make it hard to shrink. Teles makes it clear he isn’t arguing against the separation of powers, as he believes the tendency towards regulatory capture is the true root of the issue. This can be seen in issues like economic inequality and slow economic growth being caused by small but concentrated groups influencing government agencies to benefit themselves.
There are lots of veto points in our system and when you're growing government those veto points make it hard to grow. But, when you're trying to go back the other direction and undo stuff, all those veto points can also be used by whoever is benefiting from what government's doing… the path of least resistance at any one time is always to buy in all the existing claimant groups who are connected to what government is already doing.
To Teles, this is caused primarily by imperfect and asymmetric information as the policy information being provided to political leaders and government agencies disproportionately comes from claimant groups. His example of this is education policy often being dictated by teachers’ unions. Teles proposes that simply providing more information from the other side can ameliorate this problem and allow legislators to make decisions that benefit the people as a whole.
If you look at the school choice movement, a lot of what they were doing was helping to subsidize interest and information on the other side… what they did is they went and helped create a network of pro-school reform organizations such as think tanks, magazines, and all the stuff that could provide legislators with different information. I think one solution is creating more diverse sources of information.

While listening to this podcast, I had a few questions.
  1. Teles states that part of the reason inequality is a concern is because it produces populism and decreases faith in markets. Economic inequality in America has increased quite substantially in the 21st century, and the election of Donald Trump in 2016 showed a shift towards populist candidates. What does this potentially show for the future of American markets?

  2. What drawbacks could libertarian coalition building with the left carry? Could this cause similar problems as those that come with partnering with the right?

  3. As Teles points out, incomplete and asymmetric information is a large factor behind collective decision-making producing suboptimal results. How can Teles’ solution of providing more legislators with complete information be extrapolated to citizens’ involvement in public policy decisions such as referendums and elections?

  4. Teles’ solution to asymmetric information is not bulletproof. Could this lead to the same problem with regulatory capture but just emanating from the other side? (i.e. small claimant groups within the other faction, such as those within school choice advocates influencing the government instead of teacher’s unions) How can Teles be sure this information coming from the other side is truly representative of the people and therefore contributing to “the common good,” and wouldn’t just shift the small claimant group who is benefitting?

  5. Since legislators and regulators are self-interested, why would providing more information to legislators solve the problem of government capture? Won’t politicians do what’s in their best interest regardless of the information provided to them? 

  6. Teles mentions that addressing socioeconomic inequality and advocating for social justice are key parts of liberal tradition. What does addressing these issues from a liberaltarian point of view specifically entail from the perspective of policy?

Explore More
Steven Teles on Kludgeocracy an EconTalk podcast
Brink Lindsey and Steven Teles on the Captured Economy an EconTalk podcast
Bryan Caplan's Three Themes of the Niskanen Center at Econlib
Max Molden's FTX and After: Regulation to Protect the Consumers? at Econlib
Dylan DelliSanti's There’s No Such Thing as Deregulation at Adam Smith Works
William Voegeli's 3.5 Trillion Ways to Lose Your Country at Law & Liberty