Now More than Ever, Americans Should Defend Liberalism

David Boaz

Liberalism, the most successful political and economic system in history, is under sustained assault on all sides.


As historically understood, liberalism is a political philosophy based on a commitment to individual liberty, constitutional government, the rule of law, toleration, civil liberties, private property, and a market economy. Any movement that is not a cult has its disagreements, and some people who call themselves liberals may emphasize some items on that list over others. But liberalism is defined by general acceptance of those principles.

Those principles are so fundamental to the United States and most of the Western world that we may not think of them as a particular political philosophy. But, in fact, liberalism represented a break from the pre‐​liberal world. Liberal thinking and movements challenged the world of absolute monarchs and privileged aristocrats, established religions, persecution, colonialism, empire, mercantilism, and war. In the name of liberty and dignity, liberalism supported “careers open to talent,” the rule of law, free exchange, and peace.

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Liberalism changed the world. We’re all so much richer than our grandparents, even if we had rich grandparents. The economic historian Deirdre McCloskey describes the process as “technological and institutional betterment at a frenetic pace, tested by unforced exchange among the parties involved.” Otherwise known as “market‐​tested betterment,” it set in motion something previously unknown: sustained and compounding economic growth. We live longer, better, healthier and more comfortable lives than our ancestors. 

McCloskey estimates people in the West are at least 30 times richer than their ancestors in 1800—or, considering quality improvements, as much as 100 times richer. Standards of living rose faster in countries that adopted liberal policies than in those that didn’t. But everywhere — in China, India, Africa, Europe and the Americas — globalization and freer markets are raising real incomes and making poor people better off. 

Thanks to markets and globalization, the share of the world’s population living in extreme poverty fell from 36 percent in 1990 to 12 percent in 2015 — less than 1 percent in China. Child mortality plummeted; education, literacy, and vaccination soared. As Max Roser of Our World in Datapoints out, newspapers could have run the headline NUMBER OF PEOPLE IN EXTREME POVERTY FELL BY 137,000 SINCE YESTERDAY every day for 25 years. 

By 2016, Northern Chinese families that were literally living in caves in the 1990s had brick homes with electricity, clean water and children in school. “When countries see sustained economic growth, you also see declining absolute poverty,” said Charles Kenny of the Center for Global Development. “It’s as close to a universal law as we have.”

And perhaps more importantly, liberalism has liberated billions of people from lives of enforced obedience via slavery and serfdom, from the humiliation of caste, segregation, and apartheid, and generally from having to live as others tell you to live. The promises of the Declaration of Independence—life, liberty, and the pursuit of happiness—are being extended, in the U.S. and elsewhere, to people to whom they had long been denied. 

And yet in the face of this overwhelming, though still imperfect, progress, liberalism is under sustained attack from many sides. Ruthless dictators, such as Xi Jinping, Vladimir Putin, Mohammed bin Salman, and the Supreme Leader of Iran forcibly crush dissident voices. They’re also waging well‐​funded information warfare on liberal societies. And some wobbly democracies have seen strongmen consolidate power. Recep Tayyip Erdoğan in Turkey, Hugo Chavez and his follower Nicolas Maduro in Venezuela, Narendra Modi in India, and Viktor Orban in Hungary are very actively developing new models of political dominance and eternal reelection. 

While elements of the American left have always had a soft spot for every new socialist country—the Soviet Union, Mao Zedong’s China, Fidel Castro’s Cuba, Venezuela, Nicaragua, and even Zimbabwe—we now see American conservatives looking abroad for their versions of paradise, with many flocking to Hungary to admire and learn from Orban’s “illiberal democracy.” 

In our own country we see self‐​described conservatives in the Trump era embracing new policies of lavish spending, government control of trade and investment through protectionism, and “industrial policy,” which will subsidize favored companies. We have further seen a toxic culture war against transgender people and LGBTQ representation. 

Conservatives have jettisoned Reagan‐​era talk about freedom. Now they’re focused on power: how to get it and how to wield it to help their friends and to hurt their enemies. Meanwhile, on the left of the Democratic Party, we find growing attempts to censor dissident thoughts — or any discussion — on subjects from COVID-19 to navigating complex gender issues in sports. And there’s increasing talk about socialism. 

Despite all the slings and arrows, the momentum of liberal reforms is still generating positive results, especially in the nation founded on the aspiration to protect the rights to life, liberty, and the pursuit of happiness. As The Economist noted in April, “Income per person in America was 24% higher than in western Europe in 1990 in [purchasing power parity] terms; today it is about 30% higher. It was 17% higher than in Japan in 1990; today it is 54% higher.” 

Yet the new critics on right and left want us to be more like one or another European state, whether France or Hungary.

The U.S. is outpacing other economies, but we could certainly do better, starting with respecting the principles of supply and demand. Soaring housing prices are caused by restraints on supply and unemployment and labor shortages are caused by restrictions on wages and immigration. Restricting imports at the same time restricts exports (known as the Lerner Symmetry theorem), which means restricting wage growth. 

Under both Republican and Democratic control of government, we need to constrain exploding government spending, address the growing national debt, and tackle the even bigger “unfunded liabilities” of Social Security and Medicare. We need to stop punishing work and creation through our complicated and punitive tax system. But economic reality doesn’t generally appeal to either left or right these days. 

The lesson of the last three centuries is that liberalism works — it gives more people freedom and autonomy and opportunity, it dramatically increases standards of living, and it reduces both domestic and international conflicts. 

And yet there are people who want to make the U.S. more like what Hungarian strongman Viktor Orbán calls his “illiberal democracy,” in which government controls society in the name of national greatness. In such an environment, liberals of all sorts — including Reaganite conservatives, free‐​speech liberals, people who are fiscally conservative and socially liberal, and libertarians — need to see each other as allies in a broad liberal center and push back against organized attacks from those who would tear up and discard the principles of the Declaration of Independence.

Posted on July 20, 2023  Posted to Cato@Liberty

Another Athlete Chooses a Low‐​Tax State

David Boaz

I’ve written before about whether athletes take state taxes into account when they weigh competing offers. Here’s another example: Grant Williams left the Boston Celtics for the Dallas Mavericks, at least partly because of Massachusetts’ Millionaire’s Tax:

Testing the market worked out for Williams, who will now make more money while living in Texas, which does not have state income tax. Williams reportedly turned down a four‐​year, $48 million over offer from the Celtics last season.

Williams mentioned Massachusetts’ Millionaire’s Tax as one of the factors he was mindful of when considering the Celtics’ offers. The Millionaire’s Tax is a four percent tax on top of Massachusetts’ five percent income tax, which raises the tax rate to nine percent for millionaires.

“I was thankful just because I feel like the way my agent and everybody talked about it was that this was our floor,” Williams said. “In Boston, it’s really like $48 million with the millionaire’s tax, so $54 million in Dallas is really like $58 million in Boston and $63 million in L.A.”

Here’s what I wrote in 2019 when Bryce Harper chose Philadelphia over San Francisco:

Has California lost another centi‐​millionaire because of its high tax rates? Washington Nationals superstar Bryce Harper just signed a 13‐​year, $330 million contract with the Philadelphia Phillies, the largest contract in the history of major North American sports. (Though not the largest when adjusted for inflation.) Some reports say that the San Francisco Giants came very close in the competition but lost out because of California’s taxes. Alex Pavlovic of NBC tweeted:

“I’m told Giants made a 12‐​year, $310 million offer to Bryce Harper. They were willing to go higher but would have had to go well over $330 million to get it done because of California taxes.”

If taxes did keep Harper on the East Coast, he wouldn’t be the first sports star to make such a decision. Trevor Ariza, a member of the Los Angeles Lakers’ 2009 NBA championship team and by 2014 “a key part of the Wizards’ playoff run,” decided to leave Washington and join the Houston Rockets. Why?

“Washington was disappointed but hardly shaken when Ariza chose to accept the same four‐​year, $32 million contract offer in Houston, where the 29‐​year‐​old could pocket more money because the state doesn’t tax income.”

As I wrote then, yes, a $32 million salary – or indeed a $32,000 salary – goes further in Texas than in the District of Columbia. What economists call the “tax wedge” is the gap between what an employer pays for an employee’s services and what the employee receives after taxes. It causes some jobs to disappear entirely, as employees and employers may not be able to agree on a wage once taxes are taken out of the paycheck. It causes some employees to flee to lower‐​tax countries, states, or cities. The Beatles, the Rolling Stones, Bono, and Gerard Depardieu are some of the better‐​known “tax exiles.”

It isn’t just entertainers and athletes, of course. A 2018 study found that 138 millionaires left California after a 2012 tax increase. Millionaires have also been seen leaving Connecticut, New York, and New Jersey. Last fall Chris Edwards wrote about the impact of taxes on interstate moves.

As taxes rise in many states, no‐​income‐​tax states like Texas, Florida, Washington, Tennessee, and Nevada may become increasingly attractive to athletes, entertainers, and other high‐​income producers.

Posted on July 10, 2023  Posted to Cato@Liberty

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