Brink Lindsey wonders whether the Democratic party is able to win the Libertarian vote: can the Democratic party and Libertarians form a ‘coalition’? In his opinion, there is at least a foundation, or shared interest, for such a ‘fusion’. Both share a high regard for the individual. Fiscal conservatism seems to be no longer part of the new conservative ideology as preached by the GOP. The GOP seems to be in the hands of Christian conservatives whose only goal it is to legislate their personal beliefs (I am over-simplifying here, I am fully aware of that, but I am only summarizing Lindsey’s view on this, not mine).
There is a foundation he argues, but the Democratic party has to reform itself:
The central challenge in cementing a new fusionist alliance–and, make no mistake, it is a daunting one–is to elaborate a vision of economic policy, and policy reform, that both liberals and libertarians can support. Here, again, both sides seek to promote individual autonomy; but their conceptions differ as to the chief threats to that autonomy. Libertarians worry primarily about constraints imposed by government, while liberals worry most about constraints imposed by birth and the play of economic forces.
The basic outlines of a viable compromise are clear enough. On the one hand, restrictions on competition and burdens on private initiative would be lifted to encourage vigorous economic growth and development. At the same time, some of the resulting wealth-creation would be used to improve safety-net policies that help those at the bottom and ameliorate the hardships inflicted by economic change. Translating such abstractions into workable policy doubtlessly would be contentious. But the most difficult thing here is not working out details–it is agreeing to try. And, as part of that, agreeing on how to make the attempt: namely, by treating economic policy issues as technical, empirical questions about what does and doesn’t work, rather than as tests of ideological commitment.
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Allow me to hazard a few more specific suggestions about what a liberal-libertarian entente on economics might look like. Let’s start with the comparatively easy stuff: farm subsidies and other corporate welfare. Progressive organizations like Oxfam and the Environmental Working Group have already joined with free-market groups in pushing for ag-policy reform. And it’s no wonder, since the current subsidy programs act as a regressive tax on low-income families here at home while depressing prices for exporters in poor countries abroad–and, to top it off, the lion’s share of the loot goes to big agribusiness, not family farmers. Meanwhile, the president of Cato and the executive director of the Sierra Club have come out together in favor of a zero-subsidy energy policy. A nascent fusionism on these issues already exists; it merely needs encouragement and emphasis.Tax reform also offers the possibility of win-win bargains. The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption. Go ahead, tax the rich, but don’t do it when they’re being productive. Tax them instead when they’re splurging–by capping the deductibility of home-mortgage interest and tax incentives for purchasing health insurance. And tax everybody’s energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation–plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill. Here again, fusionism is already in the air. Gore has proposed a straight-up swap of payroll taxes for carbon taxes, while Harvard economist (and former chairman of George W. Bush’s Council of Economic Advisers) Greg Mankiw has been pushing for an increase in the gasoline tax.
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One possible path toward constructive compromise lies in taking the concept of social insurance seriously. Insurance, to be worthy of the name, involves the pooling of funds to protect against risky contingencies; “social” insurance fulfills the same basic function but makes the government the insurer. Unemployment insurance is a species of legitimate social insurance; wage insurance, much talked about, would also qualify. But Social Security and Medicare as currently administered are not social insurance in any meaningful sense, because reaching retirement age and having health care expenses in old age are not risky, insurable events. On the contrary, in our affluent society, they are near certainties.We can have true social insurance while maintaining fiscal soundness and economic vibrancy: We can fund the Earned Income Tax Credit and other programs for the poor; we can fund unemployment insurance and other programs for people dislocated by capitalism’s creative destruction; we can fund public pensions for the indigent elderly; we can fund public health care for the poor and those faced with catastrophic expenses. What we cannot do is continue to fund universal entitlement programs that slosh money from one section of the middle class (people of working age) to another (the elderly)–not when most Americans are fully capable of saving for their own retirement needs. Instead, we need to move from the current pay-as-you-go approach to a system in which private savings would provide primary funding for the costs of old age.
Sebastian Mallaby has some thoughts about this very subject as well.
Would libertarians be more comfortable in the company of Democrats? On moral questions — abortion, gay marriage, stem cell research — clearly they would. But on economic issues, the answer is less obvious. For just as Republicans want government to restore traditional values, so Democrats want government to bring back the economic order that existed before globalization. As Lindsey puts it in his New Republic essay, Republicans want to go home to the United States of the 1950s while Democrats want to work there.
If Democrats can get over this nostalgia, there’s a chance that liberaltarianism could work. For the time has passed when libertarians could seriously hope to cut government: Much of what could be deregulated has been, and the combination of demographics, defense costs and medical inflation leaves no scope for tax cuts. As Lindsey himself says, the ambition of realistic libertarians is not to shrink government but to contain it: to cut senseless spending such as the farm program and oil subsidies to make room for the inevitable expansion in areas such as health.
As it happens, this also describes a plausible agenda for the Democratic Party — at least if it can shed the back-to-the-1950s yearnings of its reactionary left. Precisely because Democrats want government to provide social insurance against the volatility of globalization, the party has an interest in cutting unneeded federal spending. Precisely because entitlements are expanding so expensively, the party needs cost-saving ideas from anyone who has them — including libertarians.
The era of big government is far from over, and liberals and libertarians gain nothing from fighting over its inevitable growth. But precisely because government is on a trajectory of unsustainable expansion, liberals and libertarians have a common interest in reinventing it.
Commenter / reader Mikkel sent me a link to the article from Lindsey which I forwarded to fellow co-blogger Paul. He responded with some notes he made while reading Mallaby’s column about Lindsey’s article (confusing?).
He wrote:
This article suggests that Libertarians may be more welcome in the Democratic party, than being the red haired step children in the GOP.
Red states are disproportionately on the government dole and social conservatives want to intrude in our lives far more than is acceptable to libertarians.
The obvious impasse seems to be that Democrats tend to want to expand the size of government while Libertarians want the opposite.
But I increasingly believe that this conflict can, and should, be reconciled.While liberals tend to want social services and safety nets, the way we go about providing these could be with a wiser balance of market forces.
We could approach much more Universal Health insurance by reducing obstacles to competition and management efficiency.
We could make education a bit more cost effective by experimenting with Vouchers in the most under-performing school districts.
We could improve energy efficiency and independence by reducing the tax and regulatory advantages to the non-renewable energy industry.
We could better use our tax dollars by not using expensive prisons for victimless crimes.
We could liberate more productivity with a more simplified tax system.
I think that Democrats and Libertarians could be “the beginning of a beautiful friendship.”
All three make a strong case. There could be a lot to it. As, again all three, pointed out, there are a lot of common interests, or shared principles from which to work from. So, one could argue, it will not be easy but it is not impossible either and if the Democratic party is willing to ‘reinvent’ itself, it could, actually, become a (for both sides) fruitful coalition.
However, it seems to me that it is much easier for the GOP to reform itself in order to satisfy traditional conservatives and libertarians, than it is for the Democratic party to reinvent itself. All the GOP needs to do, to make libertarians feel at home in the party once again, is to go back to its roots, whereas the Democratic party has to become a new creature altogether.
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