Saturday, March 5, 2011

Socialism - Si!

We live in a socialist country and have for a long time.

One of the many scarewords of the right is "socialism". Obama is a socialist, Nancy Pelosi is socialist, Government reform of health care is socialism, except for Medicare, which is OK. However what we should really be worried about is totalitarianism, not socialism. The banks didn't mind a bit of socialism over the last few years, nor does the miltary get dinged for its entirely socialistic structure and practices. No, the danger is the health of our political system, which the right has done far more to damage in recent decades than anyone else.

The "socialism" debate is really about more or fewer public goods. Socialism is all about public goods provided on the basis of citizenship or other merits like educational potential. In contrast, Laissez faire is all about private goods sold to those willing and able to pay... the highest bidder. There is no question that laissez faire is a great way to distribute many goods- those that are exclusive, privately enjoyed and consumed, with no further socially redeeming qualities. Like toothpaste.

The right-ward view, most thoughtfully expounded by Friedrich Hayek, maintains that private goods are the most important, and every attempt to provide goods in non-laissez faire fashion ultimately fails because "government is the problem" ... it is inefficient, sclerotic, corrupted, etc. Corporations could never exhibit such blemishes. Corporations are always cleansed and policed by Darwinian competition, while the state's ultimate regulation, by its voters, appears to these thinkers to be untrustworthy and ineffective- fundamentally less effective than the discipline of the market.

Such proponents grit their teeth and accept the necessity of a bare minimum of public goods- police, military, maybe a legal system. But they are deeply suspicious of every good that could conceivably be furnished in private fashion. A gold-based currency is only one of the most signal and bizarre examples. There are many others- oil companies should be private, as should postal services, power companies, educational institutions at all levels, drug testing, and pensions, to name a few.

The US has, however, never taking this view terribly seriously, and painstakingly raised itself out of bare laissez faire conditions by establishing public schools, a social security system, public research institutions, public roads, regulatory bodies, and countless other public goods. The question is not whether we might become socialists, but how much socialism we decide to practice.

Herewith, a few more of the great American public goods:

The fact is that public, common goods are the very foundation of our greatness in commercial, not to mention other, spheres. There is no question that US worker productivty, which all sides recognize as the fountain of future prosperity, depends in very large measure on public goods devised or supplied by the government- education, roads, legal structures, the internet, academic research, military security, sound money, ... the list is endless. Even an economic safety net is essential to maintain individual social and work potential, according to some!

To take a concrete example, the inefficient redundancy of the US cell phone industry is traceable to the ideological abdication of rational regulation and public provision. Due to a laissez faire approach to cell phone infrastructure, we now have four or more providers building totally independent national networks on conflicting technical standards, each with poor coverage.

We could have had a common carrier policy where single technical standards were used, common tower systems were installed, by the government directly or by a publicly regulated consortium like electric or other utilities, and different companies allowed to sell service in whatever form they wished. This would have created advantageous competition on an optimal technical and infrastructure basis (upgraded as needed, on a national scale).

Similarly, the TV cable and landline phone industries still labor under monopolistic and overly privatized structures due to the inability (for ideological reasons) of our government to grapple with the common goods and network aspects of these industries. Now we are slipping behind countries with more vigorous governments, mostly in Asia, more willing to provide public goods.

Health care is a similar problem, where purely private markets are simply defective and unworkable- for insurance, for treatment, and for larger social objectives. Obamacare, as the right likes to call it, is not only an important increment to public goods for US citizens, but is going to do more to reduce long-term deficits than any amount of token budget-cutting of parks and PBS by the Republican House.

Now, one asks.. what is the role of safety net, income support and similar redistribution schemes in this conception of government? Aren't they the opposite of proper government infrastructure provision? Well, it depends how you look at it. If happy, secure, and educated workers/citizens are the goal of a prosperous society, then such provisions certainly are part of the infrastructure picture- social, not physical. If cowed, cheap, and deskilled workers are the goal, then they are not. It is our choice.

Such social supports are broadly enabling in several ways. First, in giving workers some security that they and their parents are not going to be discarded at the end of their working lives, they enable somewhat more worker mobility and flexibility- a large advantage in an ever-changing economy. By providing income during economic downturns, they provide the automatic stabilizers needed to counteract the business cycle and prevent the kind of long-term unemployment we are looking at right now.

And insofar as they combine with progressive taxation, they also counteract the socially corrosive ratchet of the rich getting richer, which is inevitable in the laissez faire system and happens increasingly the more laissez it is, up to the limit of feudalistic serfdom + aristocracy. There is simply no way that total laissez faire ends up constructing a remotely egalitarian society. Socialism is required.

As an aside, it is notable that state and local taxation systems in the US are broadly and strikingly regressive, averaging twice the taxation relative to income on the bottom 20% as on the top 1%. Not a single state has a truly progressive system. Thus the Federal role needs to be that much more progressive to accomplish these social goals.

At the same time, Hayek had an important point, which is that key motors of private enterprise- the ability to address private needs by capitalizing on novel ideas, founding and growing companies, and meeting freely expressed demand in a stable, impartial legal system- that is all critical to both economic prosperity and personal liberty. But the key point is that markets are only part of the picture- they are by themselves inefficient and not broadly beneficial. They need a vast array of public goods to reach their potential, and beyond markets, we as citizens and humans need yet more public goods to reach our full human potential.

So government is not the problem. It is a solution, very often the only solution, to many of our most important problems.

Here is another public good to possibly add to the list above:
  • A solution to global warming
The biggest challenge of our time is a clear public goods challenge- that of climate change. The long-term harms of CO2 acrue to everyone worldwide, while the present benefits acrue to whoever has the wherewithal to purchase and use fossil fuels (much of which many, like our roads, are themselves public goods). Rational policy would price these harms into our use now, making it gradually prohibitive versus all the private motivations that would lead us down the garden path to an unacceptable future.

One can liken this crisis to that of the US civil war, so ably covered by the historian's series in the New York Times. The civil war was a crisis of greed, in a nation of greed. The South knew that the future was not on its side, neither morally, economically, nor technologically. The slave trade had ended completely. Territories were increasingly resistant to the idea of expanding slavery. Southerners were living in the past- a Roman past, if one wants to be specific, more flagrantly inegalitarian and cruel than even the feudal model of medieval Europe. Out of sheer greed, the leading figures of the South thought it wise to shut their borders, maintain the peculiar institution, and hope that they could continue their barbaric ways, selling cotton to a world that had otherwise turned its back on slavery.

With global warming, we know what needs to be done. We know the stakes. We know that we won't have fossil fuel forever in any case. Yet we (the US political system, and the right in particular) keep our heads in the sand, hoping that it will all blow over somehow.

Well, it won't, and while the earth is heating up, animals are going extinct, and the weather gets worse, we are dithering, as the US did in the decades leading up to the Civil War, extending compromises against fate, engaging in morally dubious alliances to preserve this peculiarly addicting institution. For this too is at base a moral question- whether we leave a world hopelessly compromised and diminished from how we found it. The earthworms won't care. It is our human posterity that will care, and curse us for our profligacy.

"My profession is a total disgrace and our arrogance leaves us blind to reality. The latest survey by the National Association for Business Economics reinforces how far removed from reality my profession is. They think the most pressing problem in the US at the moment is the deficit and the public debt and downplay the importance of the entrenched unemployment. When pressed to explain this crazy set of priorities they invent a fantastic (as in fantasy) narrative about the dangers of deficits (which are?) and emphasise that unemployment is largely a voluntary choice by the individuals involved. The academic members of the profession teach their students this nonsense. They talk about the virtues of efficiency but ignore the huge losses that arise from unemployment.
The problem is that it is the likes of these characters who were incapable of seeing the worst recession in 80 years that was looming up before them but who are now lecturing us from behind the desks of their secure jobs that the deficit is the number one problem."

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