More on neoliberalism

A while ago, I wrote a post in response to a) the widespread use of the word “neoliberal” to describe urban policies among my youngish leftish social set, and b) the ambiguity of what that word was actually supposed to mean.

I thought of this again when I saw this tweet:

The background here is that early champions of UBI include such neoliberal luminaries as Milton Friedman and Friedrich Hayek. They found it attractive because it replaced a massive, complex bureaucracy tasked with implementing a thousand different programs that each attempted to guide recipients towards some paternalistic end (food for food stamps, homeownership for the mortgage interest tax deduction, etc.) with just one office, staffed by however many people are required to simply mail checks, no strings attached. A universal basic income maximizes utility because it is far more efficient than current transfer programs, in terms of both reducing bureaucratic overhead per dollar of assistance, and reducing the deadweight loss from people who would like to buy a new shirt, but can’t, because food stamps don’t cover shirts.*

I think this is a particularly interesting example because it is both neoliberal and progressively redistributionist. That is, UBI was invented to optimize a government program according to market logic, but would also (probably) result in a transfer of resources from relatively wealthier people to relatively poorer people. The baggier definitions of “neoliberal,” which treat it as a synonym of “laissez faire,” or “bad from my perspective as a leftist,” don’t really have any room for such a thing—and yet, here it is.

But I think shifting to an understanding of neoliberalism that gives it some overlap with “progressive redistribution” actually allows for a much more useful analysis that goes beyond the standard left criticism of right-wing—that is, actually laissez-faire—economic policy. Obviously I’m not about to write a treatise on all of whatever neoliberalism is, but I will focus on one piece that I think is particularly consequential: The idea that giving people more choices cannot make them, or society in general, worse off.

This is pretty much a rule of the kind of utilitarianism you might call “market logic.”** If everyone’s utility is based on their ability to satisfy a set of preferences, then adding more choices to their environment—whether it’s another kind of cereal, or another health plan, or another school—almost by definition can’t reduce their utility. If they like the new cereal more than any of the cereals they currently have access to, then they can buy it, and hurray! More utility. If they like one of the current options more than the new one, then they can stick with what they have, and no harm done.

But I think most people, if prodded, would recognize that more choice is not always better. Sometimes, that’s because the process of choosing is costly in time and mental effort. Late last year, for example, I signed up for Obamacare, and was presented with dozens and dozens of possible insurance plans, not a single one of which I completely understood. Compared to the median person, I have gone through a lot of formal education, and have a lot of practice reading and interpreting complex documents, and have no actual medical condition, or children, or overbearing job to hamper my ability to sit down and weigh the various plans available to me—and yet not only was the process time-consuming, exhausting, and frustrating, but the chances that I actually picked the plan that was “best” for me is basically zero. Competition and choice were marketed as great features of Obamacare, but it seemed clear to me that I almost certainly would have been better off with, say, three or four options—or even one basic plan, with optional add-ons—than the overwhelming menu of choices I actually had.

And yet, Obamacare is a progressive, redistributionary policy! And in my amateur opinion, the country is better for having it. Neoliberalism, in this case, both delivered healthcare to millions of people who didn’t have it before, and created a whole new set of problems related to market logic.

Other times—and I think this is more relevant for urban policy—the problem is that adding choices leads other people to do things that end up negatively affecting you, even if your “original choice” is still available. So, for example, WBEZ finds that opening up “school choice,” both in the form of charter schools and opt-in regular public schools besides the neighborhood default, has led to a situation in which high-test-score students (and presumably the socioeconomic advantages and disadvantages that correlate with high test scores) are more segregated than they were previously. And students whose families stayed put in neighborhood schools, for whatever reason, are often finding that those schools are increasingly isolated, under-enrolled, and under-resourced.

You can imagine something like this dynamic applying in almost any sort of geographic sorting problem. So, for example, while I’m obviously a big advocate of what you might traditionally call “open housing” (opposing barriers against people of color or people of modest financial means moving to more privileged neighborhoods), it’s not hard to see that an approach to geographical equity that begins and ends with the mobility—that is, the expansion of choice—of people in under-resourced neighborhoods will likely end up with something like the kind of sorting problem Chicago has experienced in its public schools, exacerbating the disadvantage of the “losing” schools/neighborhoods.

This sort of issue is also in play in urban transportation policy, where in many cases, decisions that expand the choice available to one group of people reduce the choices available to another. So a highway that reduces travel time for people with the ability to drive a car, expanding the number of places they can reach, can reduce mobility for people without a car. It might do that in obvious ways, like erecting a barrier to walking—but perhaps the more far-reaching mechanism is sorting.

The construction of the I-88 employment corridor in DuPage County, for example, represented an expansion of the choice set of people able to drive, in the sense that it allowed people to move farther from the city, and therefore consume more land (ie, have bigger homes and yards), while still commuting to a Chicago region job. But it meaningfully restricted the choice set of people who did not drive, who found that a rapidly declining share of the region’s employment was accessible without a car. The construction of I-88 itself—and just as importantly, the vast network of wide, high-speed arterial streets through DuPage and suburban Cook County—created options that led to sorting that put many Chicagoans at a severe disadvantage.

It seems likely that this sort of dynamic, in which a policy that opens up a new choice leads to sorting that makes some people worse off, is particularly relevant in situations with lots of dense networks and resource-sharing that depends on those networks. In other words, cities. As I argued in the last post on this subject, I think an understanding of neoliberalism that focuses on laissez-faire economics is particularly badly suited to understanding the kinds of urban policies, outcomes, and coalitions that leftists are opposed to. Neoliberalism as market logic—or the “market toolbox,” as I put it last time—seems much more useful.

* Obviously you could also justify UBI on non-neoliberal grounds. Here’s Jacobin trying to parse what an explicitly left UBI would be.

** You can definitely write a model in which that’s not true, but I’m just going to assert that that’s a very common understanding.


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