Deirdre McCloskey defines classical liberalism as rooted in individual liberty, contrasting it with modern progressivism's focus on group identity. She details her 1995 transition, critiquing authoritarian psychiatry while defending free markets over government regulation. McCloskey argues that voters often support inefficient subsidies despite economic costs, emphasizing the need for bourgeois virtues and ethical change. Ultimately, she and Rubin acknowledge being "stuck in the middle," facing unfriendly fire from both ideological extremes while advocating for engagement over dismissal. [Automatically generated summary]
For the last show of 2016, let's unpack the two words that everything circled back to for me this past year.
Classical liberalism.
We've had many conversations on the Rubin Report focusing on classical liberalism and how this political philosophy is different than both progressivism and libertarianism for subtle but important reasons.
For those of you who are a little late to the party, classical liberalism can be defined as a political ideology that values the freedom of individuals, including the freedom of religion, speech, press, assembly, and markets, as well as limited government.
It developed in 18th century Europe and drew on the economic writings of Adam Smith and the growing notion of social progress.
So as you can see, freedom is right at the top of the pyramid of importance to a classical liberal.
You have freedom to practice any religion you want or none at all.
Freedom of the press to hold the government accountable.
Freedom of assembly to protest those in power.
And freedom for the markets to move the economy.
All of these are vital in the eyes of a classical liberal.
These ideas are rooted in the liberty of the individual and a limited government.
Of course, when you say things like liberty and individual and limited government, these words are usually thought of as libertarian or conservative ideas.
This is why some of my critics say I'm actually a right winger.
I'm not bothered by this charge because it doesn't even make sense if you understand the original meaning of liberalism as I just laid out.
When people say to me, you're not a liberal, what they're really trying to say is you're not a progressive.
I'll get to more on that in just a second.
A true liberal is for gay marriage because they believe a gay person should have the same rights as a straight person.
A true liberal is pro-choice because they believe it is the right of the woman to do with her body as she sees fit.
A true liberal is for legalization of marijuana because you should be allowed to smoke whatever you want in your own home.
A lot of this sounds like libertarianism, which I know is scary for a lot of card-carrying liberals to hear, but this is exactly where we can start building bridges to a new political center.
So what, then, is the difference between a classical liberal and a libertarian?
And how is a classical liberal not on the right?
There's a couple things at play here.
First off, there's the dirty little truth that classical liberalism is technically more a part of the American right because of the importance it puts on individual freedom.
I know a lot of liberals don't want to hear that or believe that they could be part of the right.
And I also know that the left-right paradigm is rapidly crumbling as the two-party system is becoming more archaic.
The reason liberalism became so identified with the left is because of social liberalism, which took over in the mid-19th century.
For a while, this brand of liberalism worked and helped tremendously, causing huge social change like equality for black people and for women.
At some point though, social liberalism changed from judging people on the content of their character, as Martin Luther King Jr.
professed, to instead judging people on immutable characteristics, like skin color or sexuality.
This was the shift that liberalism made to progressivism, which places the group over the individual, and ultimately, in my opinion, isn't very progressive or liberal at all.
By judging people as groups instead of as individuals, the minorities within a minority will always be thrown under the bus.
This is where the social justice ideology came from, a liberalism which was rooted in the amorphous term social instead of the clearly defined word liberty.
That's why being liberal these days, in the classical sense, has very little to do with being on the left anymore.
Silencing dissent, deplatforming speakers, hurling unfair charges of racism and bigotry aren't liberal ideas at all, although sadly they've become part and parcel of today's left.
As I often say, the road to hell is paved with good intentions, and I have no doubt that most progressives believe they are correct in their thinking.
So it's our job as liberals to show them where they've gone awry.
Then, and only then, can true liberalism be part of the left again.
As I've mentioned before, I love the convergence of classical liberal and libertarian ideas because it shows that two different ideologies can come to the same conclusions if they're based in individualism and liberty.
So if you're a liberal who's for gay marriage because you want gay people to be treated under the law, that's just as good as a libertarian who wants the government out of your personal life altogether.
There's many other places where you can apply this line of thinking which begs the question, what's the difference actually between a classical liberal and a libertarian?
I've discussed this with a few guests in my partnership with Learn Liberty and would recommend that you check out my interviews with Steve Davies of the London School of Economics and Randy Barnett from Georgetown University for more on that.
Long story short, classical liberals do see some valid role for government to the ends that it enhances human freedom.
Libertarians, for as much as you can define them, are a bit harder to pin down on this notion.
Speaking of Learn Liberty, we're continuing our partnership with them this week and joining me is author of 17 books, economist and former professor of English history, economics, and communications at the University of Illinois at Chicago, Deirdre McCloskey.
Deirdre also happens to be transgender, transitioning to female over 20 years ago.
We'll talk about her journey, both personally and professionally, and how individualism, liberty, and freedom are the keys to a prosperous economy and a rewarding life.
As we look towards 2017, let's refocus on freedom, liberty, and the rights of the individual.
The voices trying to tear us apart have made it very clear that they're only going to get louder and angrier.
Russia and fake news are not the problem.
We are.
Only when we look in the mirror and are willing to challenge ourselves to be more tolerant of other opinions can we find real answers.
The only way that we can drown out the extremists on both sides of the political spectrum is by finding allies where we used to find enemies.
I've said it before and I'll say it again, if you're an old school liberal, your enemy is no longer the old school conservative.
Defending liberal principles has become a conservative position.
"As we enter a new year, let's all take the liberal position
"of extending the olive branch "instead of extending the middle finger."
So before we get going here, I thought the best way to start would be to read a quote from you.
I've never done this before in the year plus that I've been doing this show, but I thought this was so perfect and it It sort of captures everything about you, and I think you know what I'm going to read already, but I want to get this right.
Quote, I'm a literary, quantitative, postmodern, free market, progressive, Episcopalian, Midwestern woman from Boston who was once a man, not conservative, I'm a Christian libertarian.
All right, well, let's start, because I don't think we have to spend a tremendous amount of time on it, unless you want to, but let's just start with the trans stuff.
About two months or so before I realized that I could do it and should do it, which was August of 1995, I actually did a cost-benefit study of changing gender.
It was kind of funny because the economists tended to, you know, all economists, even if they're not free market economists, tend to think the choice is desirable and we should There's no controversy about it.
So they would say, oh well, it's okay if he, I mean, she wants to do it.
I mean, whereas my historian- So that would be the libertarian view of it.
That's the kind of libertarian view, but most economists, even if they weren't libertarians, seem to have this attitude.
And then my historian colleagues and my colleagues in anthropology and so on, they were less, it was less easy for them to- Really?
Because they think in terms of identities.
Once you have an identity, you're supposed to keep it.
If you're Chicana, you're Chicana, period.
I think that was their problem.
Very few people turned away from me, and the women especially, of all descriptions, were wonderful.
In my book called Crossing, I have a memoir published in 1999.
I have an opening section where I thank all the women who helped me a bit, you know, in sending a nice letter or inviting me for lunch and so on.
And it was 240 names in the three years of my transition.
You know, it's funny, I only went to a psychiatrist once because I wanted to get Xanax, because I used to have anxiety related, just to fly.
But I was on a plane, and that was it.
That was the only reason I wanted it.
The psychiatrist would not let me leave without telling me that I had time shift disorder, which sounds like an absurdly made up thing, and gave me a prescription for something else, which I proceeded to throw out when I walked out of the building.
But that sort of idea, we can prescribe everything.
It's the I'm from the government and I'm here to help you mentality.
It's the nudge mentality.
It's the socialist mentality.
It's the conservative mentality.
It's everything except true liberalism, which is, if people are not doing something to hurt you, leave them alone.
And so there's a deep libertarian argument here.
The famous psychiatrist Thomas Shaws used my case in his last book as an instance of The overreaching of the profession of psychiatry.
Look, you get put in a mental hospital.
You may not ever get out because they're in charge.
If you're put in jail for, I don't know, armed robbery, you pretty much know your chances of getting out and so on, because it's on TV all the time, or at least in the movies.
So you have some conception from your friends, but you don't know with psychiatry.
It's very scary.
So I was very frightened by this episode.
My sister was a psychologist, academic psychologist.
I'm trying to drive it down into, I don't know, Yeah, well look, you gave me a lot of good other buzzwords here, so we're gonna get to those in just a sec.
My last thought on it would be 2016.
I mean, this was the year that trans really became mainstream, you know, from Caitlyn Jenner to Orange is the New Black, and just this feeling of there are, you know, trans actors, now there's a visibility.
I had a lot of years to work on validation, but it, but it, it's another freedom.
Look, all men are created equal and endowed by their A slave owner wrote that, yet it's been the kind of marker, laying down a marker for American politics.
And we keep pushing it.
First, we got rid of slavery, eventually.
Then we had votes for women.
Then we had, finally, civil rights in the South.
Then we had feminism.
Then we had gay rights.
Then we had handicapped rights.
And all the ones that happened during my lifetime, I had the correct opinions about.
I was in favor of the Civil Rights Movement, I was against Vietnam, I was in favor of gay rights, I was in favor of women's rights, blah blah blah.
But I didn't do anything about it.
I didn't burn my draft card, I was still Donald.
I just said, oh gee, that's good.
Then God in 1995 tapped me on the shoulder and she said, she's my Anglican God, she said, okay dearie, now you can testify.
If you don't do this, if you don't allow yourself to be a public exponent for trans people, then you're just a jerk.
And so I did.
And so I've been giving talks.
I'm not a professional gender crosser.
I'm a scholar.
I'm a teacher.
I'm a writer.
Yeah.
But I think I should, a tenured professor should be the one who stands up, because she can't be fired.
Yeah, that's a little bit, it reminds me sort of, of when Jason Collins, the NBA basketball player, came out.
He was really sort of at the end of his career, wasn't, so it allowed him to do it in a way that where they knew the Nets could sign him, and then at the same time, he wasn't gonna play much, he would sort of go under the radar, but something good would have come out of it.
Even though you took risks, obviously, you put your butt on the line.
Well, I thought I was going to lose my job, but actually it turns out that the University of Iowa, where I was teaching at the time, was very progressive in these matters.
Way, way, way more progressive than my alma mater, which is Harvard, in the 90s.
Harvard, you know, the eastern privates took a long time to get on this particular train.
It didn't happen, but it shows in such a career-driven person as me, such a person who wants to publish books and so on, it shows how much I wanted it when I realized I could do it, that I was willing to lose my job.
Now let's shift to some of those other issues because you said something in the midst of all that that I think is a sort of beautiful thing about what real liberalism is.
And one of the things that I've really been making the focus of this show is to show people what real, true, classical liberalism is because I think it's been conflated with a lot of leftist ideas in America,
but really all over the West.
And to also show that it doesn't mean you're purely a libertarian,
'cause I think there's some problems with that.
What would be your best, do you consider yourself a classical liberal?
In the late 19th century, it was terribly paternalistic and in the form of American progressivism.
Wilson and Roosevelt, first Roosevelt and all that, it was highly paternalistic, nasty even, racist.
One of the things that my friends on the left think is just grand is the minimum wage.
And a hundred years ago the minimum wage came into being in the United States, state by state, and it's declared purpose was to keep immigrants, women, He blacks his Chicanos out of the labor force.
To drive them out entirely.
Newspaper editorials, economics profession, they all said, oh boy, this is good for the Anglo-Saxon race.
They were going to, they literally said they're going to die out.
Now how, How women are going to die out, I don't quite understand.
These were people in favor of immigration, closing immigration, in favor of segregation.
Woodrow Wilson, famously, would not have a great black scientist to the White House.
And so it went.
I mean, modern liberalism was conceived right from the beginning in this authoritarian way.
And it's still, even though my friends, the liberals, liberals in the American sense, I have this assumption that people who are not progressive are just bad people.
Why would you listen to Hitler?
So they don't listen to arguments that you or I make, and so they don't get that what they're actually about is authoritarian control over other people's lives.
You know, I've mentioned this many times over the last couple of years, but as I've sort of had my awakening to this, and I mentioned to you before, I basically was a progressive for a while, I was, too.
Right, they sort of hate religion, like progressives sort of hate religion, and yet they love the purity, the purity test of religion.
They love that.
But I want to back up to something you said about minimum wage, because just in the last week, I've been seeing, you know, there were these marches for $15 minimum wage here in the States.
So we can unpack that a little bit.
But at the same time that I was seeing this, I was also seeing in the news that Amazon is now opening stores that are gonna have no employees.
You're just gonna walk in and your phone will recognize something over Wi-Fi and you'll be able to take whatever you want.
And I thought, what a disconnect in an idea and the actual world.
Amazon is saying, we don't need humans to do any of this anymore, and blah, blah, blah.
Of course, their intentions are pure and it's sort of like Immanuel Kant.
They think that all that matters is intentions and I wish they'd get over that.
Look, they'll say, my friends on the left, and I do have a lot of friends on the left, they'll say, we ought to put a tax on soft drinks because boy, it's making poor people obese.
This is part of the paternalism.
And then I say, well, Isn't labor the same way?
If you make the price of labor higher, won't people consume less labor?
And then the same people who are out there protesting for the $15 minimum wage are the same people that are buying a lot of stuff on Amazon privately at home.
So we all sort of live in this strange place between our actions and our... I know, it's like being against Chinese trade, yet then buying a $5 hammer.
Made in China, or like Donald Trump, the against Chinese trade and those ties that he wears four inches too low are all made in China.
Right, so in Trump's case, when I saw people tweeting about that, I actually argued he was making logical sense because he was saying, look, our deals are bad, so me as a businessman makes them in China or in Mexico, but I want the deals to be better.
So what do you make of Trump when it comes to economics then?
Because on one hand, I think there's a sense, you know, a lot of people like the fact that it was buy America, we're going to fix these trade deals.
We're gonna do that, but that's also, that's not really a conservative position because it is gonna take more government interference to do those things.
So he's sort of, what does this say really about the conservative movement?
But okay, but I want what's best for the American people.
I don't care whether it's thought to be progressive or conservative or liberal, real liberal, classical liberal.
And his policies are just not going to help the ordinary person.
In fact, what I kind of hope, actually I don't hope it exactly, but I think what is going to happen is it'll be so plain that his policies don't help those 80,000 people who got him in the White House.
Maybe they'll wake up, I hope they do, and see that, look, manufacturing jobs in the United States peaked in 1977.
They've been going down ever since.
Why?
Is it because of China and Mexico?
Not much.
That's maybe 10% of the lost jobs.
A lot of jobs are being lost either to other Americans moving to California or Texas, especially to Texas, or to automation.
Just as you said, the store, the bricks and mortar store for Amazon has no people in it.
So would a classical liberal What would be the difference in an economic sense from your argument as a classical liberal to someone like Paul Ryan, who I think is probably more of a libertarian, but at the same time, he's stuck in it with the Republicans, so then it blurs the line.
Well, some of the proposals that he and especially Trump are gonna make, and I hope they pass, make sense to me, like cutting the corporate income tax.
Corporate income tax Most economists, left and right, agree, is a kind of a silly tax.
It's double taxation to start with, but it's also... Can we just explain why that is?
All the people involved, the human beings involved, the workers, people employed by the suppliers to the corporation, The owners of the various corporations that supply them, the customers, the owners of the stock and the corporation you're talking about, all of them get taxed on their income.
I wish not, I wish there was other ways of taxing like consumption taxes, but set that aside.
Income tax, we know who pays it very much.
When I get taxed, I get taxed.
And there it is, Deirdre McCluskey pays about a third of her income to the government.
Okay.
At least the marginal income.
But we don't know who pays the corporate income tax.
We've been working on it for about 70 years, trying to figure out with econometrics and fancy math and we do studies and we don't know who pays it.
It may be the workers for the corporation, it may be the managers, it may be the owners.
That's what people think, that it's these rich owners, and for one thing they're not rich, and for another thing we don't know they pay it.
Large cotton farmers are the main, I mean large, rich people.
20 of the top billionaires in the United States, billionaires, get agricultural subsidies from the United States government.
I don't mean that's the main source of their income because agriculture is quite a small industry in the United States, but you can tell, you know, it's big, massive cotton fields in Alabama are being financed by the United States government.
It's puzzling because look, the system is democracy.
And I'm in favor of democracy.
I'm a Democrat, small d. H.L.
Mencken, the great libertarian journalist of a hundred years ago, said, democracy is the theory that the ordinary people know what they want and deserve it good and hard.
And that's, I'm afraid, what's happening with Trump.
But what to do?
Well, maybe Trump will be able to stop some of the regulations, but there's a clumsiness about it.
He's put this oil man forward as his Secretary of State, and he's handed over the Department of the Interior to another oil man.
Yeah, we know that Trump... The Secretary of the Interior is not a problem.
Is it a he or a she?
I can't remember.
But in any case, oil Corporations, big corporations, are going to do very well, probably, in the Trump administration.
And you notice that, by the way, in the stock market.
Oil stocks, in particular, have gone up.
They said, oh, well, maybe this guy, we can work with this guy.
And that's exactly the problem that you mentioned.
It's crony capitalism, not the kind of capitalism that you and I admire.
Which is not cronies, it's letting people do what they want and depending on the tremendous amount of cooperation that goes on in a free market system and the competition that goes on to protect consumers as it does.
So, I don't know.
I'm a little bit pessimistic that we can untangle it.
Here's why I mentioned democracy.
Because the reason we have big government is that about a hundred years ago, the people, now fully enfranchised in countries like Britain and France and the United States, demanded it.
They demanded protection from the government.
And so people keep voting for socialism, essentially.
I mean, the size of governments, the United States and Japan are among the smallest, but still they're very big in the rich countries.
The people keep voting for subsidies and blah, blah, blah.
Extreme cases, Argentina, where everyone subsidizes everyone else.
And so there is this conflict between the democracy of politics and the democracy of the marketplace.
And I'm in favor of both of them.
But I recognize that there's a dilemma, there's a conflict here, and that the democracy of politics tends to want to kill off the democracy of the market.
So when somebody would say, and I think this is most of the criticism that I hear when I've brought on classical liberals or libertarians, and they say, free market, free market.
We don't like crony capitalism, but we want the free market.
I'm for one government that has the monopoly of violence.
But then we've really got to watch it very closely because it's easy to misuse it.
And the underlying threat of a government is violence, physical violence.
And the trouble is that they They can use it whereas New Balance can't force you to buy, can't put a 38 to your head and force you to buy its shoes.
So Nike and New Balance and all the others are competing with each other and that's by far a better protection for the interests of ordinary people than are the so-called protections that the government offers because let's take food quality.
Why aren't, why isn't there very frequent cases of people being killed by restaurants?
Poisoned?
I mean, why not?
What's stopping it?
And they'll say, oh yes, food inspection.
This is crazy.
Any person who owns a restaurant knows that the food inspectors come once or twice a year, max.
And often they're corrupt, and you can pay them $20 to overlook the rat feces in the kitchen.
Whereas, look, put it this way, if Coca-Cola Yeah.
if they found one mouse in one can of Coca-Cola anywhere in the world,
So that, to me, is the best argument for a free market, that your own interest, if you own a restaurant, it's not that the inspector is going to force you to do it, or that the government comes in, or as you said, you can pay them off and all this stuff, but the best is that your reputation, the caring of your work, which is a great segue to, I want to talk about virtue.
That's why these movements in Russia and now in Turkey, in imitation of Russia, to close down the newspapers is a complete disaster for the ordinary people.
Yeah, so it just happened, no matter what they say beforehand, like when he said, you know, Obamacare, we're gonna air the hearings on CNN, or on C-SPAN, right?
Of course that didn't happen.
He's jailed whistleblowers.
Look at Snowden and all that stuff.
And yet the left lets him off the hook on that, because we've all been just sort of relegated to our teams, right?
So people get these identities of left and right, and then they don't ever listen to any more evidence.
Another hero of my youth, John Maynard Keynes, Someone complained that Keynes had changed his views on free trade, to which Keynes said, when I get new information, I change my mind, what do you do?
Look, the assumption on the left in the United States among progressives is that if you make a free market argument, it's because you're a bad person who hates poor people.
I think the image of being off the table is correct.
It's just not for discussion.
So it's maddening.
We on the free market side, You know, we laboriously argue against this stupid regulation and that stupid regulation.
We offer facts and we have comparisons of one country to another and we're very earnest and we expect our friends on the left to say, oh yeah, you're right.
No, they don't.
They don't listen.
So they don't understand the arguments.
A spectacular example of this is the bottom of page 6 in the English translation of Thomas Piketty's book on Capital in the 21st Century, where he screws up supply and demand curves.
I mean, he really does.
He doesn't understand supply response to a higher price.
So what do you do, then, if... Well, first off, I know a certain amount of people are gonna watch this and say, well, wait a minute, then Deirdre must be right, because you focused on the left here.
Now look, there are some things, always, it's so tedious, I always get people, my progressive friends will say, oh, don't you think there should be a role for government?
And I say, yeah, yeah, there should be a role for government.
Preventing force and fraud, and a few other things.
You know, and I've been studying China for the last 10 years, a bit.
For a long time I tried not to because I knew I would become fascinated and I needed to know more about Europe and the United States.
I was afraid I would drift off into China studies.
But the interesting thing about the Confucian attitudes that start in the 6th century BCE is that it claims that the main protection of the citizens is the virtue of the governors.
And that's correct to the extent that they're being treated by the government.
And the Confucians were not particularly, didn't have a lot to say about regulation of the economy.
So, you know, they have the economy off to one side and indeed it was heavily regulated
in China as everywhere else.
But let's talk about the relationship between the government, the emperor and the citizens.
And the Confucian idea is not the balance of power of the founding fathers, where we're trying to make a machinery That will keep the governors from hurting their citizens.
They easily do it, particularly if the ethical mentality of Italians is the government is a band of robbers into whose clutches we've fallen, to quote a famous anarchist writer.
And so we've got to evade every law we can.
And as long as you do that, as long as the people are not being virtuous sensibly, following the sensible laws, and the government is not being virtuous, it's stealing from everybody, you know, passing another thing through Parliament is not going to have any effect at all.
So there has to be an ethical change.
And I claim, this is my big claim in this trilogy of mine, called the bourgeois era, Which I, praise the Lord, I just finished last spring.
That it's a change in attitudes towards the virtues of the bourgeoisie that made the modern world.
That up until liberalism, the coming of liberalism in people's heads in the 18th century, and then in actual policies in the 19th century, until that happened, People were extremely suspicious and hostile towards merchants, manufacturers, inventors.
Innovation.
The word innovation in English, you can look it up in the Oxford English Dictionary, was until the 19th century a bad word.
These are high quality cameras that do as good a job as an enormous TV camera, much better job than a TV camera, and even better than a great big film camera in the 1930s.
And there they are.
And that's the first person to think of this made a ton of money.
But actually, in the end, the inventors don't make that much.
They make about 2% of the social gain, which, you know, if you're Steve Jobs, there's a lot of money.
And bringing this around to Apple, they make a lot of the stuff.
The ideas come from Cupertino, as they always tell us, but a lot of it's made in China, and don't they do everything they can to avoid corporate taxes?
Marxist, I think people have no idea what they're talking about.
Like socialism, they don't know what they're talking about.
Most of these words, most people don't know what they're talking about, but Marxist I find to be the one that people really just have no concept of what they're talking about.
So first, can you just define what a Marxist is, and then just tell me a little bit about your journey?
Well, a Marxist, really in the simplest terms, is someone who follows Marx.
Just as I'm a Christian, I follow Christ.
Marx was here's where I get my right-wing friends.
Just they go nuts I say Marx was the greatest social scientist in the 19th century without compare and all my friends at the at the Hoover Institution go And then I say but he got everything wrong and then my friends on the left go Which is why I haven't got any friends and The life of a classical liberal, it ain't easy.
Now, the basic idea of Marxism, of course, is that history has a particular pattern, and that ideas come from that pattern, from that material pattern, that the class struggle is central.
The history of all hitherto existing societies, to quote the Communist Manifesto, is the history of class struggle.
And if you believe that, and you believe that ideas are just epiphenomenal, that they just come from your class position, which is what Marxists are supposed to think, then you'll be a follower of Marx.
And oddly, from about 1890 to about 1980, nice symmetry there, most intellectuals in the West were some kind of Marxist.
Even the conservatives were.
Even the conservatives believed that material interests were what determined ideas.
Whereas my claim and the claim of a growing number of historians and especially historians
is that no, no, ideas themselves have an influence, an independent influence.
The idea that all men and women are created equal is a terrifically powerful idea.
So it's that egalitarianism of 18th century liberalism that I'm trying to reinvigorate.