(Page 3 of 3)
3. Whether or not libertarian populism can win elections, it can win a lot of day-to-day fights. This is important to understand, because there are libertarians who have an aversion to populist arguments, apparently fearing that they inevitably end up growing rather than shrinking the state. Think back to early 2009, when the bailed-out insurer AIG prepared to dip into its tax-funded coffers to hand out $165 million in bonuses. As a loud populist outrage ensued, I criticized some prominent Republicans for rushing to AIG's defense. I was surprised to get negative feedback from a number of Reason readers, who didn't like the AIG bailout and weren't particularly happy about the bonuses but thought the uproar would likely serve as a wedge to increase the government's interference in the economy.
The scandal turned out to have a rather different effect. According to Ron Suskind's Confidence Men, an expensive proposal for a government-led bank restructuring failed to gain traction in part because of the anti-bonus backlash. "With all the money that already went to TARP, no one is getting that kind of money through Congress, especially with this AIG bonus disaster," White House Chief of Staff Rahm Emanuel reportedly said at the time. Rahm Emanuel is in no way a libertarian and in no way a populist, and he had his own shady motives for blocking the plan. But he had a point about which way public opinion was tilting, and his argument carried the day.
If an inchoate outpouring of political disgust can scuttle that much, imagine what a more self-conscious LibPop movement could achieve—one that organizes at the grassroots, doesn't back down from entrenched enemies, and reaches out for left/right alliances as often as possible. The Wall Street bailout itself had a stumble when the House refused to vote for it, and that was before the Tea Party and Occupy movements were in place to be drawn on for reinforcements. I don't expect libertarian populism to take over one of the major parties. But it just might strike down some of the worst ideas the non-libertarian, non-populist elements of those parties try to sell us.