Fiscal Crisis and the Fate of Liberalism

According to a recently published survey by the Pew Research Center, Americans are more politically polarized today than ever before. The percentage of voters who express consistently conservative or consistently liberal positions has doubled over the last two decades, and partisan antipathy is clearly on the rise.

Although the Pew poll put some interesting numbers on the growing percentage of voters with strong ideological convictions who have become politically engaged and on the parallel decline of what might be called the “moderate center,” it nevertheless failed to address the most intriguing question of all, which is “Why now?” 

Since the end of World War II there has, in fact, been a remarkable convergence of Left-wing and Right-wing economic thinking. Whereas a century ago those who believed in government programs to advance the poor and disadvantaged typically saw the private sector as the chief obstacle, their modern counterparts have largely embraced the wisdom of allowing the private sector to prosper while diverting a percentage of its profits to fund social programs. China’s remarkable growth post-communism and the collapse of the old Soviet Union have persuaded many a dispositional collectivist to settle for taxing the means of production, not owning them.

Similarly the Right, which in earlier times would have opposed almost any taxpayer-funded welfare program, has long conceded the need for some kind of government intervention when it comes to democratizing opportunity -- even if it is just to distribute vouchers so people can make their own educational, health care, and job retraining choices. The preconditions for success in the modern economy have made it clear to conservatives that many underprivileged do not have a real shot at the American dream without some kind of policy support.

The contemporary differences between Left and Right are hardly trivial, as we shall see, but the fundamental political tension in the West for nearly seven decades has not been whether a market economy can be jiggered to spread prosperity, but how best to go about it. Since the early 1950s the Left has favored bigger government and regulation, while the Right has preferred tax incentives and directly empowering the beneficiaries of public programs.

So why the big fight now? 

One thing that has clearly changed since the 1950s is voter awareness of the fact that the United States has allowed its spending problems at all levels -- federal, state, and local -- to spin wildly out of control, creating massive obligations that at some point will have to be met. Voters on both sides of the aisle know that the problems commonly referred to as “Detroit,” “Illinois,” and “Medicare fraud” are but the most visible tips of a gigantic fiscal iceberg.

In such an economic environment, the logical priority for any interest group is to insure that it suffers as little pain as possible from the inevitable financial reckoning. Should underfunded public employee pensions be fixed by switching workers from defined benefits plans to 401-K’s or by increasing taxes? Is Social Security to be bailed out by raising the retirement age or means-testing affluent recipients? Should the federal government’s discretionary budget be dramatically cut or subsidized through the reduction of corporate and individual tax deductions? The right answer depends on who you are.

And in lobbying to resolve such conflicts to one’s own financial advantage, it is always easier to argue from a position of moral superiority rather than from simple self-interest. The claim to virtue not only helps persuade those voters with relatively little at stake on a particular economic issue, but it also motivates economic allies to hold out for the best possible deal. Therefore, the paradox is that at a time in history when the ideological differences separating Left and Right are relatively small, the intensity of debate is remarkably high.

Compounding this polarization is the fact that many political institutions built on liberalism’s post-war faith in the competence of a benevolent bureaucracy have clearly begun to falter. Recent news stories about VA hospital employees doctoring patient waiting lists so that they could earn bonuses is only the most recent example of visible government dysfunction.

Voter faith in public education has clearly declined in recent years. The consistently poor U.S. performance in international comparisons of student achievement, the low graduation rates of urban schools, and union work rules that benefit teachers and administrators at the expense of students have inspired increasing public support for charter schools, voucher programs for the private education of learning disabled students, and even home schooling. Before she became the darling of progressive Democrats, Massachusetts Sen. Elizabeth Warren wrote an excellent book on bankruptcy, in which she showed that the single greatest cause of family insolvency was not frivolous spending but parents desperately trying to afford housing in those few districts with decent schools.

Confidence in government as a whole has declined to the point where a December, 2013, survey of 1141 adults by the AP and the NORC Center for Public Affairs Research found that just one in twenty Americans believe it works well. A more recent Gallup poll revealed that only 19 percent of respondents trusted government to do the right thing all or most of the time.

At the same time that people’s faith in public institutions has declined to an all-time low, technology has evolved to the point where the conservative ideal of empowering citizens to make their own choices seems more feasible than ever. Florida, Idaho, Indiana, Michigan, Minnesota, and Utah already fund high school students to take courses online, at nearby colleges, or at some other alternative facility.

For years, studies by the Bureau of Economics at the Federal Trade Commission have shown that occupational licensing by state legislatures actually reduces competition while increasing the price of services, all in the mistaken belief that bureaucratic regulation can elevate professional standards. On the other hand, consumers using Internet sites such as Yelp and Angie’s List have no trouble finding dependable providers who charge reasonable fees.

Back in the 1950s American liberals, like their social democratic cousins in Europe, promised to protect voters from dysfunctional government by using social science to identify and correct any failing in a federal, state, or local program. But as citizens have become increasingly skeptical of bureaucratic regulation, many on the Left have seemed less interested in reforming public institutions -- and their employees, whose union dues fund the Democrat Party – than in inflaming popular dissatisfaction over a variety of social grievances, real or imagined.

Hence liberalism’s increasingly histrionic demands to end a supposed war on women, redistribute wealth, outlaw voter identification laws, and protect the environment from the slightest trace of carbon. On liberal campuses, speakers with contrary opinions are shouted down, variously intimated, or simply denied a forum.

The Right’s reaction to these developments should be no surprise. It is bad enough to have to pay part of the bill for increasingly discredited government programs, but to be cast in the role of villain by an opposition that ignores the empirical standard it once used to justify its own agenda is hard to take calmly.

But in spite of the rising rhetoric from both sides, we are not living through some modern equivalent of the French Revolution or even the fall of the Berlin wall. As I noted at the top, the real economic differences that separate Americans are remarkably small from an historical perspective.

What we are living through is a painful period of contentious fiscal retrenchment, during which credentialed liberal elites are likely to suffer disproportionately. The Left has traditionally argued that public policy should be a function of what works best, and as America resolves its fiscal problems, that is exactly what will happen.

Lewis Andrews is Senior Policy Analyst at the Yankee Institute for Public Policy in Connecticut.

According to a recently published survey by the Pew Research Center, Americans are more politically polarized today than ever before. The percentage of voters who express consistently conservative or consistently liberal positions has doubled over the last two decades, and partisan antipathy is clearly on the rise.

Although the Pew poll put some interesting numbers on the growing percentage of voters with strong ideological convictions who have become politically engaged and on the parallel decline of what might be called the “moderate center,” it nevertheless failed to address the most intriguing question of all, which is “Why now?” 

Since the end of World War II there has, in fact, been a remarkable convergence of Left-wing and Right-wing economic thinking. Whereas a century ago those who believed in government programs to advance the poor and disadvantaged typically saw the private sector as the chief obstacle, their modern counterparts have largely embraced the wisdom of allowing the private sector to prosper while diverting a percentage of its profits to fund social programs. China’s remarkable growth post-communism and the collapse of the old Soviet Union have persuaded many a dispositional collectivist to settle for taxing the means of production, not owning them.

Similarly the Right, which in earlier times would have opposed almost any taxpayer-funded welfare program, has long conceded the need for some kind of government intervention when it comes to democratizing opportunity -- even if it is just to distribute vouchers so people can make their own educational, health care, and job retraining choices. The preconditions for success in the modern economy have made it clear to conservatives that many underprivileged do not have a real shot at the American dream without some kind of policy support.

The contemporary differences between Left and Right are hardly trivial, as we shall see, but the fundamental political tension in the West for nearly seven decades has not been whether a market economy can be jiggered to spread prosperity, but how best to go about it. Since the early 1950s the Left has favored bigger government and regulation, while the Right has preferred tax incentives and directly empowering the beneficiaries of public programs.

So why the big fight now? 

One thing that has clearly changed since the 1950s is voter awareness of the fact that the United States has allowed its spending problems at all levels -- federal, state, and local -- to spin wildly out of control, creating massive obligations that at some point will have to be met. Voters on both sides of the aisle know that the problems commonly referred to as “Detroit,” “Illinois,” and “Medicare fraud” are but the most visible tips of a gigantic fiscal iceberg.

In such an economic environment, the logical priority for any interest group is to insure that it suffers as little pain as possible from the inevitable financial reckoning. Should underfunded public employee pensions be fixed by switching workers from defined benefits plans to 401-K’s or by increasing taxes? Is Social Security to be bailed out by raising the retirement age or means-testing affluent recipients? Should the federal government’s discretionary budget be dramatically cut or subsidized through the reduction of corporate and individual tax deductions? The right answer depends on who you are.

And in lobbying to resolve such conflicts to one’s own financial advantage, it is always easier to argue from a position of moral superiority rather than from simple self-interest. The claim to virtue not only helps persuade those voters with relatively little at stake on a particular economic issue, but it also motivates economic allies to hold out for the best possible deal. Therefore, the paradox is that at a time in history when the ideological differences separating Left and Right are relatively small, the intensity of debate is remarkably high.

Compounding this polarization is the fact that many political institutions built on liberalism’s post-war faith in the competence of a benevolent bureaucracy have clearly begun to falter. Recent news stories about VA hospital employees doctoring patient waiting lists so that they could earn bonuses is only the most recent example of visible government dysfunction.

Voter faith in public education has clearly declined in recent years. The consistently poor U.S. performance in international comparisons of student achievement, the low graduation rates of urban schools, and union work rules that benefit teachers and administrators at the expense of students have inspired increasing public support for charter schools, voucher programs for the private education of learning disabled students, and even home schooling. Before she became the darling of progressive Democrats, Massachusetts Sen. Elizabeth Warren wrote an excellent book on bankruptcy, in which she showed that the single greatest cause of family insolvency was not frivolous spending but parents desperately trying to afford housing in those few districts with decent schools.

Confidence in government as a whole has declined to the point where a December, 2013, survey of 1141 adults by the AP and the NORC Center for Public Affairs Research found that just one in twenty Americans believe it works well. A more recent Gallup poll revealed that only 19 percent of respondents trusted government to do the right thing all or most of the time.

At the same time that people’s faith in public institutions has declined to an all-time low, technology has evolved to the point where the conservative ideal of empowering citizens to make their own choices seems more feasible than ever. Florida, Idaho, Indiana, Michigan, Minnesota, and Utah already fund high school students to take courses online, at nearby colleges, or at some other alternative facility.

For years, studies by the Bureau of Economics at the Federal Trade Commission have shown that occupational licensing by state legislatures actually reduces competition while increasing the price of services, all in the mistaken belief that bureaucratic regulation can elevate professional standards. On the other hand, consumers using Internet sites such as Yelp and Angie’s List have no trouble finding dependable providers who charge reasonable fees.

Back in the 1950s American liberals, like their social democratic cousins in Europe, promised to protect voters from dysfunctional government by using social science to identify and correct any failing in a federal, state, or local program. But as citizens have become increasingly skeptical of bureaucratic regulation, many on the Left have seemed less interested in reforming public institutions -- and their employees, whose union dues fund the Democrat Party – than in inflaming popular dissatisfaction over a variety of social grievances, real or imagined.

Hence liberalism’s increasingly histrionic demands to end a supposed war on women, redistribute wealth, outlaw voter identification laws, and protect the environment from the slightest trace of carbon. On liberal campuses, speakers with contrary opinions are shouted down, variously intimated, or simply denied a forum.

The Right’s reaction to these developments should be no surprise. It is bad enough to have to pay part of the bill for increasingly discredited government programs, but to be cast in the role of villain by an opposition that ignores the empirical standard it once used to justify its own agenda is hard to take calmly.

But in spite of the rising rhetoric from both sides, we are not living through some modern equivalent of the French Revolution or even the fall of the Berlin wall. As I noted at the top, the real economic differences that separate Americans are remarkably small from an historical perspective.

What we are living through is a painful period of contentious fiscal retrenchment, during which credentialed liberal elites are likely to suffer disproportionately. The Left has traditionally argued that public policy should be a function of what works best, and as America resolves its fiscal problems, that is exactly what will happen.

Lewis Andrews is Senior Policy Analyst at the Yankee Institute for Public Policy in Connecticut.

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