New Republic editor John Judis has a couple of insights about the Obama administration’s economic and social goals. He points out that, for more than a century, Progressive and free-market forces have gone through cycles of “reform and reaction.”
The Progressives — who the Antiplanner’s faithful ally John Baden calls the “American counterrevolutionaries” — have repeatedly sought to increase the size and scope of government: railroad regulation, public land agencies, and the income tax in the 1900s; social security, low-interest home loans, and government ownership of power plants in the 1930s; medicare, the war on poverty, and environmental laws in the 1960s.
In between, friends of free markets tried to roll back these reforms, but were never completely successful. Thus, each successive reform era has further increased government power and reduced free markets.
This reminds the Antiplanner of the basic strategy used by the wilderness movement (in which I was active from about 1975 through 1993). Wilderness activists basically considered all land that had already been preserved as wilderness or some other classification to be “theirs,” while all remaining land was potentially theirs. Successive Congressional land-use bills or presidential decrees would put more land in “their” category, but no matter how much they got, it was never enough.
At the time, I called this the “scorched earth policy,” meaning wilderness advocates embedded so many poison pills in the protected lands that no one would ever try to declassify them. This isn’t necessarily a deliberate strategy; just an effect of our political system.
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People who are attracted to such policies tend to judge them based on their intent rather than their results. In fact, they nearly all either backfired or had huge unintended consequences.
Railroad regulation was imposed just as trucks appeared in 1907, leaving railroads helpless against growing competition. “Progressive” income taxes ended up with so many loopholes that, for many wealthy people, they weren’t really progressive. The federal loan companies, such as Fannie Mae and Freddie Mac, played a key role in the current crisis when they succumbed to political pressure to buy increasingly risky loans.
Social security is a giant Ponzi scheme that is also the most regressive tax on the books, not to mention the fact that it provided billions of dollars of surpluses for Congress to borrow with no hope of ever paying it back. Medicare is an even bigger Ponzi scheme, while the war on poverty created a semi-permanent underclass that has been all but forgotten by the liberals who claim to care most about them.
Environmental laws worked when they focused on technical solutions, but they failed miserably when they attempted to change people’s behavior. As transportation expert Alan Pisarski recently told the Institute of Transportation Engineers, technical solutions to air pollution are responsible for 95 to 105 percent of the improvements in air quality in the past 40 years, while behavior solutions produced only minus 5 to 5 percent of the improvements (minus 5 because some behavioral solutions made pollution worse).
Unfortunately, Obama’s plans are all about changing behavior. This means two things: they will be expensive — especially when counting the unintended consequences — and they won’t work. High-speed rail and urban revitalization are all about redesigning the country for yuppy elites, not ordinary Americans. The question for free-market advocates is: how can we minimize the damage now and roll back the reforms later?
ROT: Judis goes on to outline the ways in which Obama wants to build on past reforms. First, he wants to use “the budget to shift the locus of industrial production toward ‘green’ jobs and products.†He also wants to “make dramatic changes in transportation with its intervention in the auto industry and in its funding of high-speed rail.†Finally, he wants to institute a form of “national planning†in order to “reverse existing trends†towards “suburban housing [and shopping] malls.â€Â
Railroad regulation was imposed just as trucks appeared in 1907, leaving railroads helpless against growing competition. “Progressive†income taxes ended up with so many loopholes that they weren’t really progressive. The federal loan companies, such as Fannie Mae and Freddie Mac, played a key role in the current crisis when they succumbed to political pressure to buy increasingly risky loans.
Unfortunately, Obama’s plans are all about changing behavior. This means two things: they will be expensive  especially when counting the unintended consequences  and they won’t work. High-speed rail and urban revitalization are all about redesigning the country for yuppy elites, not ordinary Americans. The question for free-market advocates is: how can we minimize the damage now and roll back the reforms later?
THWM: Anti-selective?
High-speed rail and urban revitalization are all about redesigning the country for yuppy elites, not ordinary Americans
Are “ordinary Americans” excluding from high-speed rail and urban revitalization, or does every single “ordinary American” simply hate dislike high-speed rail and urban revitalization?
In either case, why?
The Progressives  who the Antiplanner’s faithful ally John Baden calls the “American counterrevolutionaries† have repeatedly sought to increase the size and scope of government…
“Progressivism” is really progressive enslavement. The environmental laws are okay, but alternately they could have been based on reviving or redefining nuisance type laws or property rights, rather than outright regulation. Otherwise, you can usually count on a piece of legislation creating a bigger problem to replace the original alleged problem that it was meant to deal with. Then you have to create a new new piece of legislation to deal with the unintended consequences of the original piece of legislation, and so on.
With this massive wave of new deficits coming down the pipeline just as the Baby Boomers are starting to retire, my thought is that payroll taxes for Social Security and Medicare are going to get ratcheted up once again sometime this decade, along with income taxes. If my prediction comes true, then in order to counter the effects of these regressive payroll taxes, Congress will also be forced to ratchet up Earned Income Tax credits for lower income people so that they won’t get all of their meager earnings taxed away.
At the time, I called this the “scorched earth policy,†meaning wilderness advocates embedded so many poison pills in the protected lands that no one would ever try to declassify them. This isn’t necessarily a deliberate strategy; just an effect of our political system.
Ah, yes. Preserving ecosystems is ‘scorching the earth’. The sky is green in a certain ideologies’ world, isn’t it?
In fact, they nearly all either backfired or had huge unintended consequences.
As did policies that favored approaches that Enron, Bechtel, Union Carbide et al. took. Wecome to the world, ideologues!
DS
Dan, that reminds me of some thing Dolly Parton once said:
“It costs a lot, to look this cheap.”
ROT:“technical solutions to air pollution are responsible for 95 to 105 percent of the improvements in air quality in the past 40 years”
ws:Nice try, but those technical solutions weren’t formed on the “free market”, they were technical solutions mandated by the hand of government (regulation) from resisting auto makers. You often cite this fact, without realizing what you’re saying (in essence you’re saying government regulation helped increase air quality).
I like free markets, and they can work — but they don’t work for everything. Suppose America took a free market stance to slavery or civil rights (many Libertarians are against civil rights, not due to racism, but due to personal freedoms). I’d suggest we’d still have a largely unequal population divided by race, as free markets are often slow to react or change.
ws said: Suppose America took a free market stance to slavery or civil rights (many Libertarians are against civil rights, not due to racism, but due to personal freedoms). I’d suggest we’d still have a largely unequal population divided by race, as free markets are often slow to react or change.
THWM: Though what would stop slaves from killing their masters? More likely there would be warlords ruling over a given area in a Mad Max manner.
Though what would stop slaves from killing their masters? More likely there would be warlords ruling over a given area in a Mad Max manner.
You’re right, the obvious outcome from limiting government to the preservation and protection of private property rights is a Mad Max warlord distopia. Thanks for clarifying, you idiot.
I was writing about the elimination of government, not limiting of government.
The existance of government, means the non existance of a true free market.
A free market can only exist through anarchy.
Also you’re not an idiot, just a bigot.
ROT:“technical solutions to air pollution are responsible for 95 to 105 percent of the improvements in air quality in the past 40 yearsâ€Â
ws:Nice try, but those technical solutions weren’t formed on the “free marketâ€Â, they were technical solutions mandated by the hand of government (regulation) from resisting auto makers. You often cite this fact, without realizing what you’re saying (in essence you’re saying government regulation helped increase air quality).
Ooooh , good catch – missed that one.
It’s true: the cost of regulation has 5-7x the benefits here: the avoided costs of fossil fool combustion have a benefit of 5-7x the cost.
DS
Re the reform cycle – I like P J’s take on it:
The Left is the party of government activism – the party that says government can make you richer, smarter, slimmer, taller, and take a dozen strokes off your golf game.
The Right is the party that says government doesn’t work. And then they get elected and prove it.
Owen McShane said: The Right is the party that says government doesn’t work. And then they get elected and prove it.
THWM: Indeed, they’ll rob the treasury.