Friday, May 1, 2009

Obama is not the problem... underfunded government and a heath care crisis are... part deux


I think my Obama is not the problem... underfunded government and a heath care crisis are... was a little off the mark on one point--

Pragmatic conservatives, who are serious about their philosophy--rather than ivory tower types, who focus on utopia--would point to government spending that should be cut and their scenario of how such cuts would pass the congress.  Just cause they "oppose government spending" as an ideology doesn't mean the rest of us agree with them--or need to.  Government spending, higher taxes--these things don't in of themsevles hurt our quality of life.  Underfunding our government does.

Here's the quandary.  One can argue that the Democrats won't raise taxes enough to fund health care.  So we are at an impass.  The crux of the conservative argument as I see it is that (1) government spending/higher taxes hurt the economy  The key principle is (2)small government that doesn't intrude on the private sector.  Point 1 is off the mark.  But more importantly we've never had, nor ever will have (2).

As Sam Tanenhaus noted is his TNR piece, Conservatism is Dead

Some argue that the administration wasn't conservative at all, at least not in the "small government" sense. This is true, but then no president in modern times has seriously attempted to reduce the size of government, and for good reason: Voters don't want it reduced. What they want is government that's "big" for them--whether it's Democrats who call for job-training programs and universal health care or Republicans eager to see billions funneled into "much-needed and underfunded defense procurement," as William Kristol recommended shortly after Obama's victory.

The problem is then democracy, the will of the people, and the economic realities of a modern global economy. Tanenhaus goes on to note that "small government" as a "conservative" in the Burkean sense of the word is fabrication. In fact its not a conservative position at all....

What passes for conservatism today would have been incomprehensible to its originator, Edmund Burke, who, in the late eighteenth century, set forth the principles by which governments might nurture the "organic" unity that bound a people together even in times of revolutionary upheaval. Burke's conservatism was based not on a particular set of ideological principles but rather on distrust of all ideologies. In his most celebrated writings, his denunciation of the French Revolution and its English champions, Burke did not seek to justify the ancien regime and its many inequities. Nor did he propose a counter-ideology. Instead he warned against the destabilizing perils of revolutionary politics, beginning with its totalizing nostrums. Robespierre and Danton, the movement ideologues of their day, were inflamed with the Enlightenment vision of the ideal civilization and sacrificed to its abstractions the established traditions and institutions of what Burke called "civil society." They placed an idea of the perfect society over and above the need to improve society as it really existed.

At the same time, Burke recognized that governments were obligated to use their powers to meliorate intolerable conditions. He had, for example, supported the American Revolution because its architects, unlike the French rebels, had not sought to destroy the English government; on the contrary, they petitioned for just representation within it. Had King George III complied, he would have strengthened, not weakened, the Crown and Parliament. Instead, he had inflexibly clung to the hard line and so shared responsibility for the Americans' revolt. "A state without the means of some change is without the means of its conservation," Burke warned. The task of the statesman was to maintain equilibrium between "[t]he two principles of conservation and correction." Governance was a perpetual act of compromise--"sometimes between good and evil, and sometimes between evil and evil." In such a scheme there is no useful place for the either/or of ideological purism.

The story of postwar American conservatism is best understood as a continual replay of a single long-standing debate. On one side are those who have upheld the Burkean ideal of replenishing civil society by adjusting to changing conditions. On the other are those committed to a revanchist counterrevolution, the restoration of America's pre-welfare state ancien regime.

he then goes on to talk about Whitiker chambers as a prime example of what I'd call a pragmatic conservative, at least what I meant by the term:

Whittaker Chambers, a repentant ex-communist, had passed through a brief counterrevolutionary phase but then, in his last years, had gravitated toward a genuinely classic conservatism. He distilled his thinking in a remarkable sequence of letters written from the self-imposed exile of his Maryland farm, and sent to a young admirer, William F. Buckley Jr. When their relationship began, Buckley--a self-described "radical conservative"--was assembling the group of thinkers and writers who would form the core of National Review, a journal conceived to contest the "liberal monopolists of 'public opinion.'" Buckley was especially keen to recruit Chambers. But Chambers turned him down. He sympathized with the magazine's opposition to increasingly centralized government, but, in practical terms, he believed challenging it was futile. It was evident that New Deal economics had become the basis for governing in postwar America, and the right had no plausible choice but to accept this fact--not because liberals were all-powerful (as some on the right believed) but rather because what the right called "statism" looked very much like a Burkean "correction."

Chambers witnessed the popular demand for the New Deal firsthand. He raised milch cattle, and his neighbors were farmers. Most were archconservative, even reactionary. They had sent the segregationist Democrat Millard Tydings to the Senate, and then, when Tydings had opposed McCarthy's Red-hunting investigations, they had voted him out of office. They were also sworn enemies of programs like FDR's Agricultural Adjustment Act, which tried to offset the volatility of markets by controlling crop yields and fixing prices. Some had even been indicted for refusing to allow farm officials to inspect their crops. Nonetheless, Chambers observed, his typical neighbor happily accepted federal subsidies. In other words, the farmers wanted it both ways. They wanted the freedom to grow as much as they could, even though it was against their best interests. But they also expected the government to bail them out in difficult times. In sum, "the farmers are signing for a socialist agriculture with their feet."

To Chambers, an avid student of history, this trend toward government reliance was a function of the unstoppable rise of industrial capitalism and the new technology it had brought forth. Chambers put the matter bluntly: "The machine has made the economy socialistic." And the right had better adjust. "A conservatism that will not accept this situation, he wrote, "is not a political force, or even a twitch: it has become a literary whimsy." It might well be "the duty of intellectuals ... to preach reaction," but only "from an absolute, an ideal standpoint. It is for books and posterity. It does not bear on tactics or daily life. ... Those who remain in the world, if they will not surrender on its terms, must maneuver within its terms. That is what conservatives must decide: how much to give in order to survive at all; how much to give in order not to give up the basic principles."

The terms we must maneuver within are those of industrial capitalism.  We must accept the facts about what capitalism is and what it isn't.  Capitalism has and always will be intertwined in government intervention in the economy.  As Edmund Phelps recently noted in the Financial Times:

In countries operating a largely capitalist system, there does not appear to be a wide understanding among its actors and overseers of either its advantages or its hazards. Ignorance of what it can contribute has in the past led some countries to throw out the system or clip its wings. Ignor­ance of the hazards has made imprudence in markets and policy neglect all the more likely. Regaining a well-functioning capitalism will require re-education and deep reform.

Capitalism is not the “free market” or laisser faire – a system of zero government “plus the constable”. Capitalist systems function less well without state protection of investors, lenders and companies against monopoly, deception and fraud. These systems may lack the requisite political support and cause social stresses without subsidies to stimulate inclusion of the less advantaged in society’s formal business economy. Last, a huge social insurance system, with resulting high taxes, low take-home pay and low wealth, may not hurt capitalism.

In essence, capitalist systems are a mechanism by which economies may generate growth in knowledge – with much uncertainty in the process, owing to the incompleteness of knowledge. Growth in knowledge leads to income growth and job satisfaction; uncertainty makes the economy prone to sudden swings – all phenomena noted by Marx in 1848.

This isn't coming out of some left-wing rag.  Its coming out of  what might be considered the most prominent global financial newspaper in the world. 

I get the theory, in some weird abstract world you could make a case that "free market theory" works.  But it has never happened and never will.  Is free-er trade good, sometimes.  Sometimes not.  Capitalism's biggest fault is that it fails to do the one thing it claims to pride itself on, which is find true price of a good.  Markets are terribly inefficient in the sense that they under-price socials costs.

Look at the under-regulated financial markets--which we've now been forced to bailout, via nationalization (without using the term, or putting any legitimate public accountability/decision making influence).  This has a huge social cost... the risk that private sector was taking we're severely under-priced when the question is the true risk involved (which is the financial industry at large when banks don't trust other banks and simply sit out).

As I mentioned before another under-pricing that goes on is in costs to the environment in the form of externalities that the price doesn't accurately account for.

Basicly this all gets mixed up in language and thoery... conservative, free market, and then revisionist histories that don't accurately reflect how this nation became an industrial power (hint there is a reason we don't still focus on our comparative advantage in the fur trade that we had as a forming nation, its starts with the word "Government" and ends with the phrase "intervention in the economy")

So you have folks over at CATO bemoaning the corporatism of Bush and Obama:

As the Nobel laureate Edmund Phelps wrote: "The fundamental corporatist idea was to retain the private income, private wealth and private ownership of firms that (were) so central to capitalism (and found in avant-garde examples of market socialism too) but to remove the brain of capitalism — to curtail and to modify the mechanism of experiments and discoveries undertaken by unorganized entrepreneurs and financiers on which capitalism relied. . . . Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector."

The real choice Americans face is whether we want a free market or a corporate state.

We've always had some elements of the corporate state in America — subsidies, tariffs, monopoly privileges, regulatory cartels — but we've prospered because of the freewheeling entrepreneurship and creative destruction that characterizes most of our economy.

Longing for the days of freewheeling entrepreneurship that never existed.

So i've successfully created even less clarity than I started with... i'm still working on undoing the knots on this whole Ivory Tower Intellectual vs. politically reality meme i've created. (I keep saying meme a lot today!?!?!?!)

Posted via web from jimnichols's posterous

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