Alan Blinder had another one in The Wall Street Journal the other day. This time he’s bellyachingtalking about the Romney/Ryan ticket and averring that it’s from too deep in right field. He supports this with three main points grounded in an FDR-ian…consensus:
- a modest social safety net to protect vulnerable Americans from some of the downsides of unfettered markets,
- Keynesian-style policies to shorten recessions, and
- a progressive tax-transfer system to mitigate income inequality
It continues to amaze me that he can say those things with a straight face. He didn’t make deep right field this time, either. He fanned. Struck out in three pitches.
There’s nothing modest about today’s “safety net.” Far from FDR’s original supplemental income design for social security, with retirees expected to look to their own families for any needed additional support, today’s social security is intended to be replacement income, funded not by themselves and their own families, but solely by direct transfer payments from strangers—at immediate cost to those strangers’ ability to see to their own and their own parents’ financial futures.
Those highly touted, wholly unsuccessful Keynesian policies didn’t shorten the Great Depression, they prolonged it. By putting floors under food and labor prices, Keynesianism made it far more difficult for companies to resume hiring and for the out-of-work (among too many others) to buy their food (and so were created food stamps). On top of that, FDR’s Keynesian spending crowded out of the economy that already straitened private sector. FDR’s own Treasury Secretary confessed the utter failure of these policies. Henry Morgenthau confided to his diary:
We have tried spending money. We are spending more than we have ever spent before and it does not work. I want to see this country prosper. I want to see people get a job. I want to see people get enough to eat. We have never made good on our promises. I say after eight years of this administration, we have just as much unemployment as when we started. And enormous debt to boot.
Obama’s Keynesian stimulus spending has been a similarly dismal failure. Unemployment remains above 8% (and underemployment above 14.5%) nearly four years after he began his spending spree. Fewer people are working today than at the end of the Panic of 2008, even with the 4 million “new” jobs that the economy has created despite his policies. Obama today has spent “more than we have ever spent before,” it still “does not work,” and he has “never made good on [his] promises.”
To see what does work, review the actions taken by President Ronald Reagan in response to the Carter Recession. Then go back to the FDR era—just a decade prior to FDR himself—and review the actions taken by President Warren Harding in response to the Depression of 1920-1921, still in progress when he took office (and begun from the policies of another Progressive President).
Mitigate income inequality? This is the wrong goal, and separately, it’s immoral. It’s the wrong goal because everyone’s economic prosperity flows from supporting opportunity equality, not income equality, so that every man can show the best that there is in him, so that every man can seek to the fullest of his ability (in John Adams’ terms) his own happiness. This also allows—and actively facilitates—every man to maximize his ability to satisfy his duties to himself, his family, and those less well off than he by maximizing his ability to accumulate the resources with which to achieve that satisfaction. Working toward income equality necessarily caps the ability of a man to maximize the outcomes of his own potential, and it disincentivizes both the man redistributed from and the recipient. Here, then, is the immorality of forced income equality: it denies every man his opportunity to honor his own obligations.
There are a couple of lesser points in Blinder’s piece.
Any piece of legislation running 2,319 pages will have flaws.
There’s a hint there. And
For people now under age 55, the Republicans would like to replace Medicare by vouchers that will almost certainly fall short of covering future insurance costs.
There are two small things about this. First, it’s a carefully static analysis that ignores free market responses to the competition that flows from letting people exercise responsibility for their own medical costs. But, then, how free would our market be after four more years of Progressive central planning? The other thing is that this is of a piece with the Progressives’ general refusal to allow any part of today’s Social Security to be privatized. Americans, you see, are just too grindingly stupid to be able to manage our own fiscal affairs. We need our Progressive Betters in government to “guide” us.