Decision ‘08

Broad Support For Governing From The Center…

…but where is the center? David Ignatius has a column that starts out well enough…

The Democrats now have the opportunity the Republicans spurned, which is to build a broad coalition in the center and become once again the nation’s governing party. But to achieve that, the Democrats must stand for values that connect with those of most Americans. The center is meaningless, after all, except as a platform for enacting legislation the public wants.

Some Democratic initiatives are obvious after the November election: The public wants changes in Iraq policy that reduce the costs and dangers for America; reform of an arrogant and corrupt congressional leadership; and an end to partisan political bickering. The new House speaker, Rep. Nancy Pelosi, had a disastrous post-election week in which her first priority seemed to be settling scores, rather than solving these big problems. Shame on her! But let’s assume for the moment that the new Democratic majority won’t commit instant suicide with a continuation of Pelosi’s payback politics, and will get serious about governing.

…then gets a little dicier:

What are the issues where the Democrats should plant their flag and try to create a new majority? Two are no-brainers that should have broad bipartisan support next year: reviving the Clinton administration’s push for national heath-care policies that can save costs and improve care; and getting serious about alternative energy policies that can reduce demand for foreign oil. Sen. Hillary Clinton has already staked out these issues, which will enhance her stature as a 2008 presidential candidate.

Okay, so we’ve solved the health-care crisis and the energy crisis - wow, that was easy. What’s next? Inevitably, perhaps, ‘fair trade’:

A third big Democratic idea was advanced this week by Jim Webb, the senator-elect from Virginia who promises to be one of the most interesting voices in the new Congress. He argued in The Wall Street Journal that the Democrats should focus on economic justice. “America’s top tier has grown infinitely richer and more removed over the past 25 years,” he wrote. “It should be the first order of business for the new Congress to begin addressing these divisions, and to work to bring true fairness back to economic life.” Former Sen. John Edwards, another leading Democratic contender for 2008, has put his stamp on this same issue through his new Center on Poverty, Work and Opportunity at the University of North Carolina.

How disappointing to see someone as smart as Ignatius jump on the ‘fair trade’ bandwagon. Even more disappointing is that Larry Summers is capable of uttering something as inane as this:

Lawrence Summers, a former treasury secretary and Harvard economist, suggested the right balance in a column in the Financial Times last month: “The best parts of the progressive tradition do not oppose the market system; they improve on the outcomes it naturally produces. That is what we need today.”

Progressive traditions that ‘improve’ on the natural outcomes of the market system? Ummm…oh, boy….we’re in serious trouble here, my fellow Republicans, on the economy for the next couple of years. It might be time for me to take off my centrist hat and start getting partisan again…

6 Responses to “Broad Support For Governing From The Center…”

1 Anonymous Liberal Says:
November 17th, 2006 at 11:51 am
Progressive traditions that ‘improve’ on the natural outcomes of the market system?

Don’t act so incredulous, Mark. This is an entirely unremarkable statement by Summers about how a good system of government operates. The free market is a great thing, but every reputable economist will tell you that good regulation can enhance the market. That’s why we have anti-trust and anti-monopoly laws. Left to its own tendencies, the market often leads to anti-competitive behavior, to consolidation and monopoly. Regulation helps prevent this from happening and preserve competition, thereby enhancing the market. The same is true of tort and consumer protection laws which protect people from being deceived and ripped off. These enhance the market. Or how about temporary unemployment insurance which allows people who have been laid off to feed their families while trying to find a new job. I could go on and on, but all of these things are accepted by everyone at this point. They are part of the progressive tradition and they unquestionably “improve the natural outcomes of the market system.”
2 Mark Says:
November 17th, 2006 at 12:08 pm
In general, Anonymous, the rule for free-market types such as myself is the less regulation, the better. Are there exceptions? Sure…but, the day after the death of Milton Friedman, it’s good to remember Friedman’s insight that it was the government’s actions to relieve the pressures of the Great Depression (i.e., by interfering with the market) that exacerbated an incredibly painful correction and turned it into a decade-long disaster…

I accept the fact that not everyone is as gung-ho on markets as I am…but that doesn’t mean I believe they are right…
3 Mark Says:
November 17th, 2006 at 12:18 pm
Further, here’s the complete Summers quote Ignatius refers to:

In the US, the political pendulum is swinging left. The best parts of the progressive tradition do not oppose the market system; they improve on the outcomes it naturally produces. That is what we need today.

There are no easy answers. The economic logic of free, globalised, technologically sophisticated capitalism may well be to shift more wealth to the very richest and some of the very poorest in the world, while squeezing people in the middle.

Just as the Federal Housing Administration’s effort to make owner-occupied housing more available after the second world war was a crucial part of the policy approach that permitted the Marshall Plan to go forward, so also our success in advancing international integration will depend on what can be done for the great global middle.

Our response will affect not just the livelihoods of millions of our fellow citizens but also the prospects for continuing global integration, with all the prosperity and stability it has the potential to bring.

Housing subsidies in the wake of World War II - that’s it…that’s the only example he offers (look for yourself). And he offers no solutions at all…in fact, he even shows that he knows he’s talking out of both sides of his mouth in the same column:

The twin arguments that globalisation is inevitable and protectionism is counterproductive have the great virtue of being correct, but do not provide much consolation for the losers. Nor can they rally support for policies that maintain, let alone promote, international integration.

Economists rightly emphasise that trade, like other forms of progress, makes everyone richer by enabling them to buy goods at lower prices. But this offers small solace to those who fear their jobs will vanish.

So what’s the argument here? We should interfere with the economy, even though we know it will cause great harm, because it will make the have-nots feel better?

I thought that’s what we had safety nets like Social Security, Medicare, and Medicaid for…is the economy to become the arena for social experimentation, or for growth? I know which side I prefer…
4 Anonymous Liberal Says:
November 17th, 2006 at 3:39 pm
Mark, I guess my point is that if we really adhered to a dogmatic “the free market will take care of itself” philosophy, the resulting society would be one that no one wants to live in. The market is one of the most powerful tools we have for solving problems. All Americans agree on that (which is why we’re not a communist or socialist country).

But the market cannot handle all our problems. Some problems (like health care for the elderly, to take one obvious example) are just entirely ill-suited for market-based solutions. The elderly have lots of health issues, they generally don’t work, and there’s a totally uneven distribution of risk and costs. The only way to effectively deal with that problem is for the government to step in and help distribute the risk. This is why every single government in the First World (and Second and Third to some extent) provides government sponsored health care to the elderly. There just aren’t any other viable solutions.

There are many other problems that are similar. Unemployment insurance, monopolies, environment protection. It’s certainly true that the market has a way of sorting out many problems better than the government ever could. But the converse is also true in many situations.
5 Mark Says:
November 17th, 2006 at 3:50 pm
Yes, well, we have the safety nets; we are, indeed, a modern welfare state. What specific government interference in the market do you suppose will result in a ‘fair’ trade environment where American capital will not seek to employ itself in the most profitable manner, such as hiring equally-skilled but lower-compensated employees in another nation?

What ‘tax’ would be fair to pass on to lower-income workers to subsidize, say, union auto workers in Detroit? Because if you block companies from seeking the cheapest source of labor inputs, you raise prices. Now, Bill Gates is not worried about that - he can afford a $50 shirt from the mall. Not so the lower-skilled, poorer Americans.

You cannot interrupt supply and demand without introducing inefficiencies. Inefficiencies is a fancy way of saying higher costs. And inevitably, it’s the poor Americans who will be holding the bag, while the limousine liberals decry the ‘unfairness’ of it all.

Harsh? Maybe…but it’s the cold, hard truth…
6 Decision ‘08 » Blog Archive » Lawrence Summers (Almost) Makes Amends Says:
November 20th, 2006 at 8:49 am
[…] Anyone can be wrong, of course, even Friedman…but I find it instructive that every time I hear Summers talk about how ‘progressive’ policies can improve on market outcomes, he never offers any good examples (he did offer one lame example that has been irrelevant for 50 years). […]