On Bottom-Up Liberalism & Pity-Charity Liberalism

I’ve been thinking about bottom-up liberalism and pity-charity liberalism a lot lately, and the whole mess of ideas that swirl around between the two.

Essentially, Mike Konczal thinks that growth plus safety nets is insufficient. Without a government fighting for full employment and increased worker bargaining rights, you get “pity-charity liberal capitalism”. Thus, the next battleground in the liberal project is an examination of working conditions and worker rights. Welfare is not enough. It leaves its recipients with too little agency. Far better to give workers more say in the political process and in bargaining over wages and working conditions than to come in after the fact with state benefits. Those programs are also necessary, but anemic and insufficient without also working toward the dignity and self-determination afforded by employment.

Bottom-up liberalism, or liberaltarianism, takes numerous forms. On the one hand you have libertarians like Tim Lee and Will Wilkinson; on the other you have liberals like Matt Yglesias. Wilkinson summarizes at least a major feature of the project:

It’s best to just maximize growth rates, pre-tax distribution be damned, and then fund wicked-good social insurance with huge revenues from an optimal tax scheme.

Konczal wants the government to push for full employment. For him, growth is secondary, or at least growth seems to benefit the rich far more than the working class. Increasing worker rights and pushing full employment are the best ways to increase prosperity.

Wilkinson, on the other hand, thinks maximizing growth – equality be damned – will lead to the most jobs and the most prosperity for all involved.

Konczal argues that the outcome of Wilkinson’s project will be a large underclass dependent on the largesse of the super wealthy. Wilkinson thinks that a rising tide will lift all ships, leading to fewer and fewer people falling through the cracks to begin with. A “wickedyly-funded” social welfare state will ensure that everyone lives with dignity regardless of the bad luck of birth and circumstance.

I think that, to some degree, both these arguments are true. Simply maximizing growth is not enough. If you maximize growth in a banana republic, all the rewards flow to the top. But government is ill-suited to effectively implement full employment policies. Furthermore, increasing the power of labor unions runs the risk of creating labor cartels which could have negative effects on growth rates. Without strong growth, no union in the world can make workers more prosperous.

I think the missing piece in all of this is an examination of how growth plays out in the real world, and why it tilts so much in favor of the very rich. I mean, to some degree that’s going to be inevitable. But on a deeper level, our economic system is simply rife with corporate welfare and special corporate protections. Whereas many labor protections have ultimately been watered down or compromised, corporate welfare and cronyism are still alive and well. Indeed, the entire edifice of “free trade” agreements and globalism as it currently exists is really a vast system of state-corporatism designed to benefit first and foremost the very wealthy.

Obviously globalism and the free-ish trade we have in place are also good for many ordinary people, but much of the growth we’ve seen in the global age has benefited the rich and the big multinational corporations the most, sometimes at the expense of ordinary people in both the developed and developing world.

Organizations like the IMF pave the way into the third world, helping to build the infrastructure necessary for corporations to expand their reach. Governments subsidize oil exploration. Intellectual property laws and other legal barriers to markets entrench and protect incumbent players against start-ups.

In other words, we have a system artificially tilted toward corporate rent-seekers. No amount of government pity-charity and no amount of pro-labor laws are going to change this fact. Organized labor and corporations seek to stymie innovation, competition, and growth if it comes at the expense of their bottom line. In a market, they have to compete in order to survive. Once government protections enter the picture, they simply have to lobby.

Ending  corporate welfare, protectionism, agriculture subsidies, decades-long drug patents, etc. etc. etc. would do more to empower workers and balance the scales than simply stacking a mess of labor laws and full employment policies on top of the thicket of corporate welfare we have already.

And growth would be more widely distributed, making social welfare programs less necessary to begin with.

Pity-charity liberalism cannot be cured by government, because in the end it’s the same beast whether we’re talking about government welfare or government jobs or government policies that give workers more agency. What is given can be taken away. If pity-charity liberalism is essentially a remedial effort to fix the imbalances created by all this corporate favoritism, why should we assume that labor protections will be any better?

The trick is to stop tilting the scales in favor of management and corporations. We should tear down as many barriers as possible. Building new ones is ultimately an exercise in futility.

Of course, attempting to untangle the mess we’re in now may be an exercise in futility as well. If that’s the case, we’ll just have to keep working around the margins, doing our best to keep the playing field as level as possible and ensure that the least fortunate among us have some opportunity to pursue happiness as well.