Monthly Archives: September 2008

Liberalism and the role of government

I spent a good part of yesterday just trying to wrap my head around everything that’s occurring in the financial world. I haven’t finished that yet, but I hope to tease out some conclusions on what this says for liberalism vs. conservatism.

The conservative part is easy. “Free” markets? Ain’t no such thing, or at least there shouldn’t be completely free markets. Not even stalwart conservatives just want to let all of these chips fall where they may. Perhaps a few free market radicals or fundamentalists want to, but do we really need to take them seriously at an economic moment like this one? If we have the tools to reduce some of the suffering – via the government that’s so often maligned by conservative ideologues – then we should use them.

But on what basis does this government intervention fit into the liberal worldview? And how do we express what this liberal alternative is?

Let’s start with the language.

“Fair markets” is the phrase often used is liberal circles, but I don’t think “fair” captures what’s going on right now. We’re talking simple survival. (As this shakes out, I think we need to ensure that the geniuses that got us into this mess pay their fair share, but that’s a different topic.)

My first crack at this would be “secure” markets. We could even add on fair.

Liberals and progressives believe in fair and secure markets.

Why?

First, it’s our moral responsibility as individuals to look out for one another, otherwise we’d just have a world of selfish savagery. A great deal of suffering has already occurred from this economic collapse, but even more suffering can be averted if we take the necessary steps. We owe it to one another to take the steps that we can to reduce that suffering.

Second, the federal government is the appropriate agent to take these steps. Government is one of the ways we come together to fulfill our individual responsibility to look out for one another, so it’s legitimate. Also, the federal government, in cooperation with governments across the world, has the scale necessary to take on this job. Clearly no private agencies were up to the job. They specifically backed out of helping AIG. If not the government, who?

Third, and somewhat disconnected from the two, let’s thank the tradition of liberalism for pursuing evidence-based technical expertise and knowledge. It’s a good thing that there has been a tradition of empirical inquiry into the field of economics that tells what is likely to work and not work in a situation like this. And let’s be thankful that we have some brilliant – dare I say, elite – people trying to figure out how to resolve this crisis and prevent one in the future. I’d hate to see some untrained, uneducated, faith-based folks trying to pray and “gut” our way out of this one.

Now, back to the language for a second. I have to say that I don’t think “fair and secure” markets has the emotional and historical American resonance of “free.” So, that’s a definite drawback to what I’ve come up with so far. We could add on “free,” of course. Liberals believe in free, fair, and secure markets. Three items always rolls of the tongue better than two, in my opinion. I’ll continue to think about this.

Any ideas?

Moments in Morton

I live in Morton, Ill. – a village of roughly 16-thousand people that’s ten miles east of Peoria. We moved here almost a year ago from a western Chicago suburb. It’s a nice town. I have no complaints.

It is a very religious place. There are many churches, and people here often drop religious language into their everyday conversation.

I am not a religious man. But I don’t mind religious expression, or beliefs for that matter. As long as they respect me, I’ll respect them. And as long as we all behave like decent human beings, I think we can get along. I consider that kind of tolerance and mutual understanding a proud American tradition.

But sometimes I just don’t get religious folks.

Yesterday I had occasion to be away from my desk. I went to a local coffee house – Eli’s – to get a mug and do some work. I walked into a side room where a woman was sitting quietly with her eyes closed, resting. We were the only two in the small room. I set up my laptop and started working.

Her cellphone rang. She answered. I didn’t set out to overhear her conversation. But it was quiet, and she spoke in a normal tone of voice to whomever was on the other end.

She mentioned she had walked down to Eli’s while waiting for something. Then she mentioned that some people were evaluating something and that it might need a “flush” and some other work. Ah, I think I got it – car repair. She was getting her car serviced, and it needed a coolant or transmission fluid flush. The way she spoke it seemed like the other person on the end of the line agreed that it might indeed need a flush. She expressed some concern about it, and a little later in the conversation said something like, “Well, it’s in God’s hands now.”

God’s hands?

This is likely a deeply religious woman – quite sincere in her beliefs. Many such people believe in a personal lord and savior – a supernatural entity that’s looking out for them at all times and giving them strength.

But does she really think that the almighty creator and monitor of the universe is supervising her car repair?

Does God have time to think about a coolant flush?

She hung up and left a short time later. I hope her car is running smoothly.

Now, to be fair, it could be that the person on the other end quickly changed subjects and mentioned that a close friend or relative was sick or had some other such personal calamity.

Maybe. But from the flow of the conversation, it sure didn’t sound that way.

And I like to think I’m right.

Fairness

Something else other than economics…

This is a great short post from Matthew Yglesias:

The Conservative Creed»

James Robertson offered up this comment non-ironically this morning and I think it’s an excellent distillation of the conservative creed:

Yet another thing Matt is unclear on:

“Life isn’t Fair”

For Matt in particular, we need to add this:

“Attempts to make it fair result in making things worse”

It’s a statement that rings as true today as it did when coming from the mouths of slavery proponents 1860 or opponents of guaranteed retirement incomes in the 1930s or critics of the Civil Rights Movement in the 1950s and 60s or when Ronald Reagan said that Medicare would put us on a slippery slope to Communism.

It’s a habit that’s hard to break

Following up on my last post about Libertarians, at least the Wall Street Journal has weighed in on the financial meltdown on Wall Street.

Let me say up front, I like the Wall Street Journal. I subscribe and find it some of the best business reporting out there.

But man, their opinion pages just don’t know when to leave well enough alone.

In an editorial today, they lay out the case that we shouldn’t panic (yet), that (maybe) it was the Federal Reserve’s policy of easy credit in recent years that led to the real estate bubble, and that we should have a Resolution Trust Corporation created to try to deflate this mess.

But they they drop this graph in – out of nowhere, in my opinion:

What the economy really needs is a big pro-growth tax cut, the kind that will restore confidence and risk-taking. This is an opportunity for both candidates, but especially for Mr. McCain. Instead of focusing on an extension of the Bush tax cuts, the Arizonan should offer his own tax cut to revive capital markets and prevent a recession. Democrats will claim he’s helping “the rich,” but our guess is that every American who owns a 401(k) will figure he’s one of those “rich.”

It’s the same old “tax cuts will solve everything” approach. Sheesh.

When times are good – tax cuts. When times are bad – tax cuts. When we’re not at war – tax cuts. When we do go to war, like in Iraq, tax cuts.

And now is known that a tax cut would necessarily be “pro-growth?” Maybe if everyone is in such dire shape, they’ll just use it to shore up their own personal finances, instead of investing.

And tax cuts restoring confidence? In what? The current financial meltdown didn’t occur because of income taxes. They say so themselves.

Risk-taking? Isn’t the problem? That there’s been too much risk created and hidden?

I know I shouldn’t expect any different from the WSJ, but enough already.

Where are the Libertarians?

With everything that’s going on with the meltdown of Wall Street financial companies, I’ve seen several liberal blogs ask the obvious question: Where are all of the free market fundamentalists now? Shouldn’t all of these firms – and by extension, the U.S. and global economies – be sacrificed on the alter of creative destruction? By my way of thinking, you measure your dogmatic dedication to an idea when the chips are really down.

Among the most dogmatic of the free market fundamentalists are the Libertarians. I see a lot to admire in the Libertarian camp (dedication to individual rights and civil liberties), but they often go over the top with their free market rhetoric.

But there’s not much rhetoric now.

I’ve been checking two primary Libertarian web sites – Cato@Liberty and Reason magazine – and I have yet to see a strong post commenting directly on the federal government’s latest actions to fix the problems on Wall Street. There is this, but it’s pretty weak tea. We do have this post criticizing John McCain for wanting to investigate what happened. Otherwise they’re talking about the threat posed by light rail, happy hours, and – oh, yes – the drop in economic freedom in the U.S. Sticking to their guns, I guess. But where’s the post along the line that it was a great thing that Lehman went down in order to reduce “moral hazard” and bolster free market economics? Maybe I’m missing it.

Back from the…

Well, I wouldn’t say “dead,” but certainly my blog has been asleep for quite some time. But that’s over. So, time to get re-started. And with so much going on, it’s difficult to know where to start.

Let’s start with the big news of the day – the meltdown of all things economic in America. It’s amazing to see the collapse of Lehman Brothers and other major firms on Wall Street. But keeping with the point of this blog, I want to point to a post by Matthew Yglesias on what this mess and the federal government’s response to it tells us about liberalism:

And here we see a fundamental difference between the progressive worldview and the conservative worldview. Progressives believe in a robust safety net for everyone. It’s very possible, as we’re seeing, that you’ll experience financial hard times for reasons that have nothing to do with you. A lot of the people doing unskilled service work in the Lehman Brothers office may lose their jobs as a result of this unwinding even though they didn’t do anything wrong. And that sort of thing happens all the time — people get laid off because adverse things happen to the companies they work for. Or people are struck by other kinds of misfortune — they get hit by buses, hurricanes destroy their houses, all kinds of stuff. Misfortune strikes ordinary people, and not just billionaires. And in the case of ordinary people, just as in the case of billionaires, you can offer improve social welfare by helping people out when they wind up in trouble.

But conservatives don’t believe in that kind of safety net for regular people — just for the billionaires. Guaranteed health care? Forget it. Guaranteed retirement income? No way. Just let the market work, and when it stops working the executives will be okay and the rest of us will, oh, something or other.

Now let me say that I’m not suggesting that the federal government should be doing nothing to stop this financial meltdown. It can get bad enough where it starts having a huge impact on the real economy. Some firms are just too big to fail in a free-market-fundamentalist, all-hell-breaks-loose kind of way. However, if government is the final backer of firms that have achieved these proportions, then government gets a say in how these firms are run so that the worst outcomes are avoided.