On Safety Nets

“By treating any and all social safety nets as irreversible steps on the Road to Serfdom, we allow liberals and progressives to shape those policies in ways that are inefficient, ineffective, and overbroad – even though Adam Smith, Hayek himself, and Friedman each advocated for a form of social safety net, demonstrating that social safety nets can be consistent with libertarianism.” ~ Mark Thompson

“I actually think a certain fusion of the best of 20th Century classical/market liberalism and welfare liberalism is the best political philosophy.  I also think it may be possible to persuade many other people of this, and that they will find it attractive.”  ~ Will Wilkinson

In many discussions I have with liberals there is this common refrain – if there are safety nets, then it isn’t libertarianism. Or it isn’t conservatism – or whatever.  The perception of libertarian economic thought (or modern conservative or classical liberal economics in general) is that it is simply against any implementation of the welfare state.  I know for a long time I was very critical of libertarian economic ideas because I felt that they were:

• A) too impractical or too difficult to implement in our particular system of governance (required purity, etc.) or
• B) did not pay enough heed to the importance of safety nets, or
• C) that they ignored moral and ethical implications leveled by anti-consumerist, protectionists, and others skeptical of free trade and capitalism.

I have been largely disabused of these notions through various debates here at the League, though I still think that the political process we face makes limiting government very difficult and that too much cultural emphasis on profits, consumption, and so forth is socially detrimental.  There is still a need to apply cultural pressure to help Americans see themselves as citizens and neighbors (and fathers and friends, etc.) rather than as merely “consumers.”

I think government can work, but it is naturally inclined to not work very well, and seems to stop functioning by degrees the fewer its limitations and the greater its scope.  This is why, in theory at least, a local government completely corrupt with unlimited power within its small sphere is far worse than a big federal government well-restricted by a savvy constitution and responsible lawmakers.  “Big” and “small” are irrelevant terms compared to “limited” and “unlimited.”  Then again, this is also why local governments are generally more adept at running such things as schools and libraries.

Markets, we must remember, are merely the manifestations of many individuals and communities making choices about what they purchase (the demand) and those other individuals and companies who provide said goods and services (the supply).  Markets are not merely the consumers or the producers or the merchants or the laborers, but the process of interactions between all these various groups.  It is important to distinguish, then, between pro-market arguments (which takes into account all the afore-mentioned parties) and pro-business arguments (which focus on the supply-side).  Now add to this mix of freely associating parties, the government.

Government intervention into the markets is by necessity going to effect how we as individuals or communities make decisions – either by propping up specific suppliers over others (possibly creating monopolization) or by preventing us from choosing to purchase something we want or require (war on drugs) or by removing from the market a good or service and providing it instead (possibly health care).  A local government deciding to fund a school or a library has far less of an effect on the market than a federal government attempting to draft a national health care program, or subsidizing big agriculture vis-a-vis ethanol laws.

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Now, to distinguish there are welfare liberals and classical liberals (often called libertarians or fiscal conservatives, though all of this gets rather muddied up when you start weaving together various strains of conservatism, etc).  Welfare liberals score points on the safety net questions, but then take that as a signal to move into other realms – heavy regulations on economic activity, for instance, and over-reach in environmental protection laws, which not only put a strain on the economy, but also severely limit personal freedoms based on bureaucratic decision-making, or create corporate welfare subsidies at the expense of individuals and taxpayers.

This is hardly the vision of a classically liberal nation.  And the reason that welfare liberals have been so successful in pushing their agenda so far is that they have taken ownership of the safety net issue, and have effectively argued that the only way to go about implementing these nets is through welfare-liberal policies – Big Government, in other words.  Throw not just money at the problem, but bureaucracy as well, and lots of it.  Let the “experts” handle the problems, rather than leaving it up to individuals or communities.  Experts know best….

The fact is, there is no reason safety nets should only be provided by central planners, or that the subject of safety nets must remain the providence of welfare liberals and the progressive movement.  Often as not, central planning is inefficient, and barely takes into account the individuals these plans are intended to help.  Similarly, such programs – like many centrally planned regulations – are inherently vulnerable to strong lobbying efforts, capture, etc.

I think one area that most welfare liberals and classical liberals share more than they realize in common with one another is their distaste for large, monolithic corporations who tend to spend far too much time in bed with politicians.  Ironically, it is often the very systems put in place by central planners that result in some of the worst abuses of private/public collusion.  This is what happens when government subsidizes supply – either through creating public health plans that favor certain industry players over others, or by including hefty tax subsidies to insurance companies in the current health care system.

Subsidizing the demand rather than the supply is essential to providing a more classically liberal version of safety nets.  This avoids many of the traps and pitfalls of central planning, and provides competition rather than monopolization.  Health care vouchers not only provide a viable safety net and a real alternative to whatever public option is created, they also keep the playing field more level than it is now or would be under the currently proposed health care reform.

Like Wilkinson, “I actually think a certain fusion of the best of 20th Century classical/market liberalism and welfare liberalism is the best political philosophy.”  Maybe the market can’t work out every kink in health care.  Sick people who need the care the most will be effectively pushed out of an affordable solution and their cost of care will fall on their own head in the form of bankruptcy or upon the hospitals and doctors who treat them, driving up the cost for everyone else.  There is room in this messy mix of inevitability for government to get involved and provide vouchers, catastrophic insurance, and so forth, but there is also room for private companies, cooperatives, and non-profits to provide their insurance plans as well.  And to avoid monopoly, exorbitant costs, and inefficiencies, we should avoid any avenue that subsidizes supply more than it does demand.  Vouchers can help to achieve this, while at the same time moving the country toward universal coverage and a better vision of safety nets for America.

Safety nets are an essential part of the public good.  The more they can be achieved at the local level the better.  The more private charities can care for our sick and elderly, the better.  The more we can rid ourselves of our own selfishness and care for each other and for our parents as they age and for our children as they grow, the better.  But short of that – short of the idealism that such a culture of selflessness requires – we should admit to the need for some government involvement.  And then we need to make sure its limited, effective, and honest to whatever degree possible.