Economic liberalism and the opportunities for political favours

Today John Quiggin published a post on ‘probity and economic liberalism’, arguments from which have also been appearing in the thread to this post of mine.

In response to the argument that economic liberalism reduces the scope for wrong-doing, Quiggin offers evidence which I think is in itself pretty much irrelevant: that various governments that introduced some liberal policies also had scandals. But as social scientists often point out, correlation is not causation. All governments eventually have scandals of some sort, and by Quiggin’s standard every ideology stands condemned.

The Latham argument I agreed with was that to the extent government either withdraws from activities or sets neutral rules of the game the scope for political favours is reduced. Because classical/neo-liberalism provides no ideological justification for industry policy and advocates cutting taxes over most forms of government spending it seems to me that it must, to the extent it is successful, have a prophylactic effect on political favours.
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