Mathias Hasselmann posted a blog entry called ‘on populism’ commenting on the earlier blog post by Josselin Mouette called ‘A message to liberals’.
First of all the first entry was using the term liberals, which I would suggest avoiding, because while in Europe it tends to mean people who are on the right wing of the political spectrum, because they are liberals in terms of economic policies, in North America a liberal is someone on the left side of the political spectrum as they tend to liberals in terms of social policies like gay marriage, abortion etc. Due to this I tend to try to refer to these groups as either social liberals, economic liberals (or libertarians if they are both for a free market and have socially liberal views.)
Anyway, I think the original article by Josselin was quite silly in its tone. There are a lot of reasons we have the current set of problems in the world economy, and economic liberal policies have only a small part of the blame. First of all the problems in Europe is, as Mathias says in his rebuttal, that you have mostly left leaning governments budgeting year after year after year with huge deficits, covering the deficits by pulling their countries deeper and deeper into debt. So when a crisis hits and it always will under any system, they have nothing to fall back on as they are already debted to the neck. Personally I think Keynesian policies is probably what is needed in a situation like this, but that is based on an assumption that they governments have made sure to have reserves or have low debt before a crisis hits, so they can use these reserves to help pull the economy through. In Europe the problem was that the governments where already so deep in debt that when they tried to stimulate their economies they just make it clear how much money they actually owed and how unable they would be in ever getting back on track again.
The US did something even more silly, they cut taxes and increased expenses at the same time. This idiot policy was called Reaganomics. And while it was definitively right wing in origin, I am not sure it can be easily placed in a libertarian versus socialist context. No matter if you are left wing or right wing, the most basic rule is that you keep your books in order. That means that if you want to increase spending you need to also increase your income, and if you want to decrease taxes and thus your income, you need to decrease your spending. The left wing governments of Europe only increased spending, but not income, and the right wing governments of the US only cut income, but not spending.
As for the depressed wages around the western world they are caused by a lot of different things, but the biggest of them all is that new technology combined with free trade agreements have undermined our ability to keep the rest of the world down in poverty and unable to develop their own industries. I assume we all accept this as a good thing in principle, but yes it does cause transitional pains and wage pressures here while we wait for the cost levels in the BRIC countries to catch up with us.
As for deregulation of the banking sector, which can be said to be a economically liberal policy, to be part of what caused the recent upheaval, yes it probably did play a part. But it does strike me as quite hypocritical that when the political drive to get people into the housing market, which was supported everywhere by people on both the left and the right, ends up getting banks in trouble due to the so called sub-prime loans collapsing, it is all about the banks and not about the politicians who supported such lending habits to support their own social policies. Subprime loans is not something impossible to understand, it is basically loans to poorer people. And politicians on both side of the aisle felt that encouraging house ownership was a great way to help raise such people into the middle class. And it worked quite well for a while in regard to improving the standard of life for a lot of people, but as we all know now, it was a bubble that had to burst at some point. Anyway, lending money to poorer people who might not be able to afford it, in order for them to buy their own house, doesn’t seem to be a clear fit under the headline ‘liberal economic policies’ to me.
I think most people agree that a ideologically pure system of any type is not likely to work or be deployable. In my view, the problem these days is that the system has moved from being one leaning towards being a free market economy, supporting entrepreneurship and healthy competition, to one of protecting established players. So we have policies through things like the tax system, government aid and the patent system, in most western countries, functioning in a way that protects established companies and disadvantages small companies who try to compete with them. I would rather define that as government lead capitalism and not free market liberalism.
So it doesn’t matter if we are talking about North America or Europe here, most times when politicians talk about new policies to help the economy or stimulate job growth, it is policies to support big established companies or groups. So every year these companies and industries grows more bureaucratic and less efficient, while more innovative and nimble startups faces an uphill struggle against the establishment.
So while I readily admit that there are a million other factors also playing in and that the root cause of issues wary from country to country somewhat, lets avoid silly name calling and pretend that populist policies is what is needed to improve the situation. Because if there is one ‘ism that is to blame for where we are at, it is not liberalism or socialism, it is populism. The populism supporting 5 minute news cycle which means politics is about 10 second long snazzy slogans and handsome faces, and not in-depth discussion or detailed review.
Great post, very balanced ideologically. One very small thing I’ll disagree with you:
“the right wing governments of the US only cut income, but not spending.”
On the contrary, the Bush regime was even more misguided. They cut income AND increased spending.
+1
Populism and 30 second atention span is a great part of the problem….
Populism kiled ideology.
Rock on. Couldn’t agree more.
You hit a very nice tone in your posting, though I have a significant disagreement on the economics part of it.
The main problem is that you do not recognize the role that sovereign debt and government deficits play in a monetary system. A Sectoral Balances approach like the one taken by MMT – see e.g. the primer by Randall Wray on http://neweconomicperspectives.blogspot.com/p/modern-money-primer.html – makes it very obvious that governments *must* run deficits in the long run for the economy to develop well. Yes, this means an increasing accumulation of government liabilities, but there are no fundamental problems with that. The only potential problems are ones of *distribution* of wealth, which can be tackled by a combination of using monetary policy to not pay interest (to avoid the redistribution towards the rich) and progressive taxes on wealth. So deficits are not inherently good or bad, they’re simply necessary most of the time.
The debt crisis in the Eurozone is a result of bad design. Well functioning monetary system have a centralized, monetary sovereign authority that issues risk free net financial assets. The Eurozone has no such thing, and it was therefore only a matter of time until the shit hit the fan. Note that a Greek exit, for example, would not fix that problem. Once the next major demand shock hits, whichever country happens to be the worst-off Euro country at that point in time will necessarily be the next to exit, and so on. This problem can really only be solved in a way that is in line with public welfare by creating a monetary sovereign government for the Euro.
As for depressed wages, you are forgetting the elephant in the room: Unemployment. For the last 40 years or so, unemployment has been used as a policy tool (note *tool*, not *target*) to avoid wage rises in the fight against inflation. You can see this very nicely with the fundamental shift of income away from wages and towards profits.
Deregulation of banking sector: I don’t have a problem with the financial system collapsing, but (a) you must wipe out shareholders and management when that happens, and (b) the government must use fiscal policy to limit the impact that the financial collapse has on the real economy. Neither of these things happened, which just encourages the players to repeat the same reckless behavior again and again.
There are more details obviously, and if you are interested in an honest discussion (either here – I’m following the RSS – or via my blog where I regularly write on those things), I am all for it. But for now I’ll leave it that, because after all you may or may not be interested.
Thanks for taking the time to write the comment Nicolai, it’s a bit disturbing when people use their “common sense” to understand broad economic and political issues (like pretending that the economy of a nation is isomorphic to the economy of your household).
Thanks for the link Nicolai, always interesting to read new perspectives on the economy. Not sure how one can argue that perpetual deficits is not a problem, as at some point your debt has grown to a level where your national budget is mostly spent on paying interest on that debt, which is a strategy that doesn’t seem to have worked to well for 3rd world countries over the years.
As for financial system collapse and moral risk for owners. I do agree in principle. But there are a few issues that needs to be solved in order for having banks go down being acceptable, one of them is the strong interdependency of the banking system, which seems to trigger a domino effect. And while having one or two banks get wiped is not a problem, having almost all go down at the same time is a huge problem. As for owners learning, I think another problem of modern capitalism is that real owners have almost become marginal in the system, the stock markets are dominated by pension funds and investment funds who I don’t really believe are capable of functioning as a owner in a traditional sense. So instead most companies in the world are run by a management team who don’t really have any owners to worry about as long as the share price seems to go well, and even if the shareholders do get unhappy they will still be able to leave with golden parachutes.
Not going to comment on everything in your post, but I am not sure I fully agree with your comment about unemployment. I agree that yes unemployment has been used as a tool in the sense that it has been used as an argument for keeping wages low, but I am not sure you can disconnect the unemployment rate from the international changes happening in terms of international trade and technology. I can’t really think of a lot of cases where it seems like a government has implemented policies to try to keep unemployments levels high.
Thanks for the nice reply. I’ll try to present my point of view of these issues.
The thing about the total size of the debt is that it is very important to distinguish between monetary sovereigns and non-sovereign governments. For example, when you look at the fairly recent famous case of Argentina around 2000, you’ll notice that Argentina tried to fix the Peso to the US$, and that it had large amounts of debt that were denominated in US$. So they were not sovereign, and that’s what broke their neck.
On the other extreme you have Japan, which has had public debt far above 100% (even reaching 200%) of GDP without having any debt problems at all. They pay extremely low interest rates, inflation is low, and so on. Contrast this with the Reinhart-Rogoff bound that says that once debt increases beyond 80% or 90% of GDP, a government will likely face insolvency and/or other problems like inflation.
You are right to mention interest payments, but here again, the issue should be seen in a different light. People tend to say things like “but taxpayers will have to pay for the interest on the debt”. The truth is that ultimately, taxpayers end up “paying to themselves”, at least when you consider taxpayers as a whole (modulo bond holdings of the external sector; the US is in a special situation here). In practice, interest payments usually constitute a transfer of wealth from the poor towards the rich.
There are two ways to reply to that. One is that, if wealth is so unevenly distributed to turn this into a problem, the proper answer is to either tax the wealth of the rich or change the laws to be more favorable towards the poor, so that the wealth of the poor starts growing more quickly than the wealth of the rich (that would involve e.g. making the “labor market” more favorable towards employees). Then inequality is reduced and interest payments stop being a fairness issue. It is a bit silly for taxpayers to make payments in the form of taxes and at the same time get payments in the form of interest on their bond holdings, but there are far sillier things going on already, so… *shrugs*
The other way to reply to it is that, for a sovereign government, interest payments are entirely voluntary. A sovereign government doesn’t have to issue bonds in the first place. The only effect from such a change in policy would be that the interbank interest rate in the economy would fall to whichever interest rate the central bank pays on reserves (yes, this is a technical point, but it’s kind of central to understanding the money system; entry 19 of the Modern Money Primer has something to say on the topic). I would actually personally favor this, because by forcing the central bank to pay the interest itself, we would finally clearly see the “costs” that are associated with maintaining monetary policy, i.e. the setting of the interest rate by bureaucrats whose democratic legitimation is rather indirect and therefore thin.
The ultimate point is that interest payments don’t have to be a problem, no matter how large the amount of debt is, and if they are a problem, it is not their *size*, but their *distribution* that should be the focus of discussion.
I totally agree about owners becoming marginal in the system. Yep, that’s a problem. It’s one of the reasons why I’m against a capital-based pension system and instead favor one that’s based on direct payments without capital backing. If you put so much money and therefore power into the hands of anonymous money managers at pension funds, that’s not going to end very well.
As far as banks collapse, I think we actually largely agree. Banks play an important role, it’s just that I would rather nationalize a failing bank completely for a time-span of perhaps three years and wipe out shareholders completely. This buys enough time to exchange the management and to better assess the true damage the bank has caused. This allows one to accurately assess conditions that are favorable to society for the time when the bank is re-privatized by issuing new shares. In the meantime, the functions of the bank that are important for society, such as maintaining deposits and lending to individuals and firms in the real economy, can still be maintained. The kind of half-baked activism as is seen again now in the case of Dexia – where shareholders are protected, and “toxic assets” are moved outside the bank without really knowing how bad their losses are going to get – is really terrible in my view.
About unemployment, I am not an expert on this. However, there apparently has been a time when it was rather openly discussed by conservatives that unemployment needs to be increased, and action was taken, mostly in the form of Thatcher. At least this guy wrote a PhD thesis on it: http://bilbo.economicoutlook.net/blog/?p=11941
Another point is that such action is of course not taken openly. However, think about e.g. raising the interest rate prematurely by the central bank (such as happened in Germany after reunification, and could be argued has happened twice now in the GFC by the European Central Bank), maintaining overall contractionary budget stances – there is a lot of literature that claims budget deficits have been systematically too small in most countries over the last few decades. I don’t think there’s a huge conspiracy behind it, but just looking at basic facts like the decision to have the ECB not target unemployment as a policy goal all point vaguely into that direction. It’s just the general sentiment in society, fueled by economists and a few interests. I often wonder how much of that is incompetence and how much is malice, but here’s not really the right place to discuss it.
This is a great discussion. What I take out from it all tbh is that it’s very, very hard to make simple assertions about these kinds of things. You can’t just assume that debt is bad per se, that the level of the debt is bad per se, but you can’t assume that any kind of debt is ok either.
Brazil has gone through many of these same problems in the last 20 years (I grew up following and suffering them). One of our issues was indeed that a significant part of our debt wasn’t sovereign, but a ton of other factors played a role, including the fact that the government wasn’t trusted to maintain stability on the rules.
After 4 “plans” to lower the crazy inflation were imposed on the country overnight with radical measures such as congealing prices and a “mandatory loan” that effectively took away from everyone in the country anything they had above ~200USD in the banks it was hard to trust that the government would actually keep its word on anything.
It took us almost a decade to, first, make regulations that sanitized the banking system, close the crazy money drain that were the stadual banks, renegotiate the debts of the states with the federal union.
An interesting aspect of how that happened is that the government made a plan called PROER that regulated a lot of things about how banks work, and also how they could be saved – since the government already predicted that some banks were not really solid and were surfing on the inflation craziness.
One of the crucial aspects of that law to me is that banks could not simply be saved by public money. If the bank went down, the owners of the bank had all their assets executed to plug the hole, and the bank was estatized, split in good/bad parts, the good part was sold and the bad one was executed (kinda like is happening now with Dexia). It’s never a bad idea to also remind that the kind of subprime lending that happened in the US is a crime in Brazil – reckless administration can get you in jail.
The cherry on top of the cake was the Fiscal Responsibility Law that essentially imposes more or less what Christian is saying: it has a number of obligations that presidents and governors have to follow regarding the management of the finances. It’s not simply “you can’t have debt”, but it does limit in which ways and how much. That may be something that the European Union needs. Imposing some fiscal responsibility on the member states, keeping in mind the points Nicolai made of course, may help keep Europe out of this exact situation in the future.
Now, I’m not trying to lecture Europe on economics. Brazil itself, although it does have a rather solid banking system and a fairly stable economy these days still has tons of miles to go to be considered a sane country with sane regulation and taxation policies. But there might be some stuff for Europe to learn from our recent experiences.
Another interesting aspect is the relationship of the debt with the “official” interest rates btw. In Brazil we still have very large interest rates, around 12% (they used to be much larger, though, going over 40%). That is used as a tool for controlling inflation in theory, and lowering it has been apparently the main focus of our more recent agenda. It might be ok to have a large debt/pib ratio if you have low interest rates, but 40% rates might make you cry if you have a large debt.
Great post. Thank you.
To me, European Liberals and North American Liberals are still quite close minded people.
Please you need to read this summary article:
http://www.bcg.com/documents/file87307.pdf
“you have mostly left leaning governments budgeting year after year after year with huge deficits, covering the deficits by pulling their countries deeper and deeper into debt.”
Sorry, but that’s just plain wrong! There are only very few social-democrat/socialist/leftist governments in Europe currently, and it’s been that way for several years.
In France, the Socialist Party has stopped governing ten years ago, and the debt has grown faster since the right governs than ever before. In Spain, the Socialist Workers Party is ruling since 2004, and they had almost no debt and no deficit until 2008: they experience a financial disaster that comes from not enough market/bank regulation, not from expenses.
So that’s just a terrible cliché…
In France it doesn’t matter much what colour the government claims to have as any attempts at fixing the structural problems of France gets striked to death :)
> In France it doesn’t matter much what colour the government claims
> to have as any attempts at fixing the structural problems of France
> gets striked to death :)
Another cliche
The French government has so little regard for strikers it proposed its expertise in demonstration repression to Ben Ali when Tunisia started to get hot.
Not true. Why do you splash together free trade agreements with new technology? There’s quite a lot of people that disagree free trade is a good thing, all you have to do is see the protests that happen at each and every summit such as the G20. Free trade agreements can be used in combination with subsidies to wipe out the industry in a poorer country and make it dependent, and that’s how they have been used.
That was not the problem, the problem was trying to device “financial innovations” to delude these toxic assets and sell them as AAA, and more than that, to ensure these wouldn’t fail with CDO’s. If there were proper laws, knowingly labeling toxic assets as AAA would be illegal, and there would be provisions to avoid that. But there wasn’t, nor is, anything like that in place.
That is not the problem, your “populism” is only a tool to get things done by the politicians, but at the end of the day what they do is what their true constituents (big corporations) want. True populism would be to implement popular policies, such as ending the wars, closing Guantanamo Bay, you know, exactly the things that Obama promised, but never delivered.
Noam Chomsky calls the economic system that we have state-based capitalism, because true innovation is done by institutions such as universities, but they don’t profit from them, it’s corporations that take those innovations and make money out of them. Relying on bailouts is just another logical step is socializing the risk, and privatizing the profits.
Needless to say, this model is not sustainable, because sooner or later, the people will be fed up with rick leaches taking advantage of the poor. We can see this with the OWS protests.
> Needless to say, this model is not sustainable, because
> sooner or later, the people will be fed up with rick leaches
> taking advantage of the poor.
Ah yes, and capitalism contains the seeds of its own destruction, right? (h/t Marx) How did that work out again? ;-)
This post falls into the trap of labelling anyone who does not push the agenda of the economic elites as ‘populism’. It is only populism if you think it is a law of nature that rich become richer and poor become poorer, that supporting rich people and big corporations is realism and any other option is doomed and a lie to appeal to more people (ie populism).
Indeed in the past decades, in Europe, what people call here ‘liberals’ have been in power in most countries and engaged in populist policies: pretend they care a little about employment, welfare, etc to win polls and then deliberately under-provision the associated budgets (by slashing the contributions of the richer parts of the population). It was bound to fail sooner or later (and astute observers have pointed out for years the second stage would be to blame ‘populism’ and ‘leftists’ for the planned failure ; and then kill those policies and pursue the same aims without needing to pretend to care for people).
Unfortunately liberals have been over-successful, and in their greed managed to pull down the banks with them. And, wonder of wonder, when the financial elite started being endangered, the resources that were supposed to be unavailable (and work harder for less or you job will move to China) materialized at once.
That is why the king is naked now. Even the people who have been blinded by free-market ideology and lofty liberal slogans like “rising tide raises all”, realise now it raises the revenues of the richer by 40% or a lot more and the revenues of the poorer by 1-2% at most. And that ‘liberals’ work a lot harder at making rich richer than anyone else. And lastly that the money can be found when there is will enough.
There is no need to blame ideology for dissent now. Liberal policies have been implemented for a decade at least in Europe. They’ve been given pretty much ‘carte blanche’ to do whatever they wanted. They can be evaluated with hard economic fact today. And the hard economic facts are:
1. they only benefited to a few
2. helping rich people get richer does not make them work harder at improving the economy, only at getting their part of the cake bigger
3. greed is a great motivator, however
4. there is more easy money to be made in a free market globalized economy in organising the move of jobs to third world countries or swindling first world countries populations via subprimes and other schemes than in creating new industries at home
So it’s all been a huge failure except for a few, and it’s time to call the experiment to an end.
I am not against stronger taxation of the rich, in fact I am in favour of it. That said I think for most countries in the west the extra amount of money such schemes would bring in is limited.
I strongly believe that the wealth of a nation can be measured by the wealth of its average citizen as opposed to the average wealth of it citizens. Which for instance is the biggest challenge facing the US, where they are very rich on average, but the average person is getting poorer.
I work myself for a company who faces a lot of competition from low prices countries like India and China, but I also do not believe that going back to the old pre-free trade system of keeping the 3rd world down by refusing to buy anything but raw materials from them is either fair or a viable long term strategy.
So I think westerm governments needs to device policies to try to alleviate the pain caused by jobs moving to the third world, yet at the same time be honest enough and say that until the global imbalances is reduced things will be hard.
> I work myself for a company who faces a lot of competition
> from low prices countries like India and China, but I also do
> not believe that going back to the old pre-free trade system of
> keeping the 3rd world down by refusing to buy anything but
> raw materials from them is either fair or a viable long term
> strategy.
I agree it is unfair, but it is complete madness to try to undo the inequalities of centuries of western domination in decades. Chock therapy only works for people with liquid assets, not for the average mortaged man (and more madness yet to think moving all factories to China is going to work long-term, this is just moving the unbalance from one part of the planet to another)
All the liberal deregulating policies have done is create a world where parasites deliberately organize unbalances and instability, and then get rich by diverting some of the money that flows from high to low potentials. It’s the same basic principle for people that profit by organising the delocalization of their country’s assets, or traders that speculate on microsecond market value changes, or banks that mix bad assets with good ones in the hope of being able to pull out before others notice. None of those are productive activities, and they only benefit to people that react faster than others (especially the others distracted by actual productive work)
We dearly need a lot more market barriers and regulations to slow down economic changes, to the point it’s not possible to initiate such changes and cash on short-term benefits before longer-term effects manifest themselves. Faster is not better. Faster means changes can be decorrelated from economic reality, and actors specializing in change can skin pretty much everyone else.
All economy theories try to solve some problems and create others and we can theorize for hours about this and that without going anywhere. Two things come to my mind:
First, it is impossible to keep continuous economic growth because of two matters, you need infinite resources in a planet, which is not going to happen (afaik Germany needs 5 times the resources it has to keep consuming at that rate and The Netherlands 18 times). Without continuous economic growth is impossible to have the capitalist system running.
Second: machines make things, we need to make the salaries lower to make companies more competitive (or dislocate them to somewhere else), workers do not earn so much money so they cannot buy and companies need to be more competitive in order to sell. Do you see the circle here?
Third: given the first and second points, bubbles are the only way to have that growth, but as they are artificial, they are gonna burst sonner or later and this is consistent with the currency credit system based on debt.
Summing up, it is impossible to fix a system with such design problems.
As I said in my reply above, I am aware of the conundrum caused by having a a huge collection of poor low cost 3rd world countries that we have artificially contributed to keeping down for the last 100 years now being able to compete with us. And I don’t have a magic solution on how we can let that happen and let them catch up to us, which I think is only fair that they do, and at the same time minimize the pain on our own societies in the meantime.
Even though with every take on this topic, post get better (from total garbage to insightful) none of them should have been posted on planet gnome.
Josselins post didnt belong on planet gnome. I was hoping for it to be simply ignored. Sadly, Mathias didnt, and now you. Please move your discussion somewhere else.
Nobody ‘posts’ anything onto planet GNOME, planet GNOME is simply a blog aggregator and the reason most posts on there end up being GNOME related is because it is what the people syndicated on planet GNOME for the most part blog about. That said the planet could be updated to only pick up stories tagged with GNOME, but that is a question for the GNOME foundation and/or sysadmin and not for me.
Read as: “populism bad”
Uh huh – so no to universal suffrage, eh? Let’s have the banker oligarchs tells us what to do – it’s in our own interests.
Also, I don’t think poor people tanked the economy.
Just shut the hell up and read http://www.nakedcapitalism.com :)
On universal suffrage I think Winston Churchill said it best ‘Many forms of Government have been tried, and will be tried in this world of sin and woe. No one pretends that democracy is perfect or all-wise. Indeed, it has been said that democracy is the worst form of government except all those other forms that have been tried from time to time.’
And nobody said poor people tanked the economy, what tanked the economy was bad political decisions taken over a long periods of time of politicians from both sides of the aisle. And they not even made with bad intentions. To continue with my quoting here is a suitable one from Robert A. Heinlein ‘You have attributed conditions to villainy that simply result from stupidity’
If fear you’re suffering from an attack of angelism again.
To take some recent European examples:
1. did Bedlusconi ever pretend not to govern for his own interest as an Italian magnate?
2. Are Blair or Shroeder living of their pensions now or of the emoluments of large companies they’ve helped while in power? Do you really think they realised when they stepped down they’d like to earn a lot of money elsewhere and they didn’t prepare their reconversion many years before?
3. As for Sarkozy, he started his mandate by stating he wanted to be president to get rich, tried to get his student son named president of the Parisian business district (where all the country’s bigcorp headquarters are, with lots of opportunities to help them workaround regulations as a friend wink wink), and much more that’s too long to recount
Really, it’s not only stupidity at work here, but clear and present self-interest and greed, and I fail to see how that is different from villainy, from democratically elected head of states, which are supposed to care about their countries welfare, and not their own wallet.
And it’s a sad period when such naked corruption is displayed and people get so used to it they don’t notice it anymore.
Libertarianism is not necessarily ‘liberal socially + liberal economically’.
The term ‘liberal’ used to mean that you were pro-freedom and tended towards anti establishment. But in the early 1900’s it was essentially taken over by utopia-types that figured that populist social programs with heavy handed democratic governments would yield ideal societies.
They essentially gave up the idea of freedom for the desire to see social justice and felt the best way was through supporting state governments.
Libertarianism really is a doctrine of strict anti-aggression.
It’s a radical philosophy that is based on the concept that any sort of violence directed against individuals who did not initiate violence is completely reprehensible. The second major portion of this philosophy is the concept that self-ownership is inalienable right. Any sort of violation of rules of self-ownership is defined as ‘violence’.
You can be very socially conservative and be a libertarian as long as you don’t think you have the right to use violence to force other people to behave in a certain manner.
Government is the very definition of violence. It reserves the right to kill anybody who violates it’s decisions. At the base of every law and every prohibition that the government creates is the threat of imprisonment and death if you resist strong enough and hard enough.
Or, more accurately ‘State Government’. There are other ‘non-traditional’ forms of government that can be acceptable.
But state government is the modern ‘do what I say or else’ government that is the most common government in the modern world.
Oh, by the way. To answer the question “What kind of economic system do we have?” we have what can be, alternatively called:
“Crony Capitalism”
“Corporative State”
or
“Mild Fascist State”
It’s were you have central government controlled banks and a system of economic controls that is used by the power elite to gain and control political power. They use the power of the government and manipulation of money to ensure the profitability of large and politically connected banks and corporations. Often at the expense of their own economies.
People confuse this often with ‘capitalism’, but it’s really not a free market.
In the USA Republicans often call for protections of the ‘free market’ and use the term ‘capitalism’ to defend their economic schemes and profiteering at the tax payers expense, but it’s really nothing of the sort. It’s just using labels that indicate good things to cover up bad behavior.