Starting from the status quo at any given time, tax cuts, spending cuts, deregulation, free trade agreements, and privatization (group 1) are policy changes. That means that they must go through the same policy process, legislative and administrative, that tax increases, spending increases, regulation, trade barriers, and nationalization (group 2) do.
It’s methodologically illegitimate to use public choice-inflected scepticism about the policy process to the policy changes in group 2 but not to those in group 1. One can’t criticize a proposal from group 2 on the grounds that really existing legislative and administrative processes will lead to a more-regressive, more market-incumbent-protecting, more corporatist outcome than its advocates imagine, and then advocate proposals from group 1 as if they’ll be enacted in just the form that some economist imagines as the best policy. The sausage factory remains the sausage factory and politics remains politics. Those who are sympathetic to markets are often far too willing to pretend that a free market is the baseline, and so only group 2 policies require political action. They imagine that it takes active effort to hold up a state intervention, and that all that is required to restore the market is to relax that effort– let the ball drop.
In fact, the status quo is the baseline, and departures from it in either direction are vulnerable to the same procedural pathologies. Group 1 and Group 2 both require active departures from the status quo; neither is a passive relaxation.
The belief that ideally free markets are offer the best hope for sustained poverty relief and improvement in the well-being of the materially worst-off does not imply that one is morally entitled to just say “freer markets and smaller government” in lieu of attention to the actual distributive consequences of actual policy changes. The tax cuts, spending cuts, deregulation, free trade agreements, and privatization that we actually get in the world are vulnerable to all the pathologies diagnosed by public choice theory, which are often pathologies of capture by the already-wealthy, by market incumbents, by the already-powerful. Group 1 policies might well not have the virtues that the ideal market would have; indeed, they predictably will not. Without active attention to their effects on the less-advantaged, without an active insistence on “smaller and more progressive” rather than just “smaller” government, those who support markets are easily taken in by Group 1 policies that lack the moral virtues they want to claim for markets generally.
In other words, methodologically consistent application of the diagnosis of political pathologies pushes in the direction of something like BHL. (This is, as always, me calling for consistent non-ideal theory, rather than offering a supposedly ideal-theoretic position.)
FN: I think there’s been some recognition of these points in libertarian circles with respect to free trade agreements, which at this point are often devices for exporting incumbent-protecting and regressive US intellectual property rules to other countries. I’m suggesting that we learn to expect and be wary of that kind of thing more generally.