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Editorial See other Editorial Articles Title: Wonks vs. Revolutionaries: The Biggest Division Within the Democratic Party By Arnold Kling : BIO| 26 Jun 2007 In "Sicko," the filmmaker calls for abolishing the insurance industry, putting a tight regulatory collar on pharmaceutical companies and embracing a Canadian-style government-run system. Assuming that the Democrats win in a rout in 2008, those of us who are libertarians will be on the sidelines. I wish that I could swallow Brink Lindsey's liberaltarian Kool-Aid, but the blend between liberalism and libertarianism just won't go down. And the Democrats themselves don't seem to want to touch it. Of course, being on the sidelines is not exactly a new position for libertarians. I would say that's where we've been pretty much with the Republicans as well. The purpose of this essay will be to focus on divisions within the Democratic Party on health care, fiscal discipline, energy and the environment, and foreign policy. Out of the factional infighting in these areas, which policies are likely to emerge? Which ones should we be rooting for as libertarians? Wonks vs. Revolutionaries The biggest division within the Democratic Party is between the wonks and the revolutionaries. The wonks want to expand government's role in health care in a number of ways. They want to increase coverage to reduce or eliminate the phenomenon of families going uninsured. They want government to set standards of care and to introduce "pay for performance" for health care providers to help enforce those standards. They want to impose new rules on health insurance companies that will make it harder for them to deny coverage. The revolutionaries want a more comprehensive government takeover in health care. At the least, they would like a system where government pays for everyone's health insurance, as in France. At most, they would like a system where doctors and other suppliers of health care services are paid and managed by the government, as in Canada or the UK. The revolutionaries need to overcome several sources of opposition within the Democratic Party. First, labor unions traditionally have pointed to employer-provided health insurance as something that they wrested from corporations on behalf of their members. Anything that disrupts the current employer-provided system takes away a source of prestige for union leaders. This is even true for public-sector unions, although from an economic perspective it makes no difference whether you call a public-sector worker's taxpayer-funded benefits "employer-provided health insurance" or "single-payer health care." Second, notwithstanding all of the talk of "crisis," many Americans are satisfied with their current health care. Risk-averse politicians want to avoid fixing something that people don't consider broke. Third, it will be difficult enough to find the tax revenue to provide health insurance for those who currently are not paying for it themselves. Increasing taxes to pay for health insurance for the much larger segment of the population that currently does have employer-provided benefits is a really tall order. Ironically, economic ignorance works to support the current system. Most people with employer-provided health insurance are under the illusion that they get it "free" from their employers. If they lose their employer-provided health insurance and their taxes go up to pay for government-provided health insurance, they will view this as having to pay for something that they thought was free. In that sense, supporters of single-payer should have supported President Bush's proposal to have employer-provided health benefits documented as income on tax returns, in order to help dispel the illusion that employer-provided health care is free. As a libertarian, I am not sure whether to root for the revolutionaries or for the wonks. Of course, I do not want to wind up with single-payer health care. On the other hand, I once wrote that "The original sin of America's health care system is employer-provided health insurance." The best outcome might be for America to abolish employer-provided health insurance, try single-payer, have it fail, and then experiment with the sorts of policies that I talk about in my book. Hamilton vs. LBJ President Clinton once joked that if there is reincarnation, he would like to come back as the bond market, so that he could have real power. His advisers told him that without exercising fiscal discipline, he would find that the bond market would cause problems with interest rates and the economy. He listened to these advisers, who counseled restraint on spending, rather than attempting to push the progressive agenda. The Democratic Party base does not want to see a rerun of President Clinton's budget-balancing approach. They are looking instead at Franklin Roosevelt and Lyndon B. Johnson as models for the next Administration. In addition to socialized medicine, they want major new initiatives and dramatic spending increases in anti-poverty programs, education, and so on. They are not willing to be thwarted by questions about where the money might come from to pay for this. The fiscal responsibility chorus is still around, however. For example, there is The Hamilton Projects, where sober economists worry about tax reform, putting entitlements on a sustainable path, and other issues that are not so dear to the hearts of the LBJ crowd. My prediction is that we will see tax increases on estates, high incomes, and other popular targets. We probably will see some middle-class tax reforms, particularly with regard to the Alternative Minimum Tax, which was aimed at Republican constituencies when it was enacted but today is probably causing more pain for Democratic constituencies, including residents of high-tax states like New York and users of middle-class tax breaks for education. If the economy remains strong, so that tax revenues are healthy, then the big spenders probably will get a lot of their wish list, such as government day-care programs, more money to throw down the public school drain, and job training programs. The only thing that can stop the next wave of taxpayer-funded feel-goodism would be a recession in 2008-2009. It is unlikely that the Hamiltonians will be able to put entitlement reform on the agenda. Libertarians may wish to join with Hamiltonians in efforts to bring about sensible tax reforms and budget cuts (perhaps agricultural subsidies can be trimmed) and to try to keep marginal tax rates from reaching punitive levels. But I expect the descendents of LBJ to overwhelm the descendents of Hamilton. Economists vs. Avenging Angels With regard to energy and the environment, there are economists and there are avenging angels. The economists would like to see higher taxes on carbon emissions. The avenging angels want to punish the evil corporations that they blame for everything wrong with energy and the environment. My prediction is that the avenging angels will triumph. They will attempt to reduce carbon emissions through regulation. A Democratic economist who favors carbon taxes will have to keep his mouth shut, or else it will be shut for him. One potential compromise between economists and avenging angels could be a permit-trading system for carbon emissions. In such a system, industries that have carbon emissions as a by-product would have to buy permits or face stiff fines. The cost of these permits acts as a tax on carbon emissions. A really pure permit-trading system, in which the permits are initially allocated by auction without special preferences, could work as well or better than a carbon tax. In practice, these systems are never pure. On the contrary, where they have been enacted, in the European Union, they have become favor factories, with politicians doling out permits to favored constituents. If the Democrats go in the direction of a permit-trading system, then libertarians might play a role in trying to ward off or expose the favor-factory outcome. Carter vs. Truman Among Democratic Presidents, Jimmy Carter represents a moralistic outlook, in which, for example, Palestinians are innocent victims and Israelis are cruel oppressors. Harry Truman represents a more realistic world view. Many Democratic policy wonks are closer to Truman, but many Democratic activists are closer to Carter. I should not fail to point out that when it comes to foreign policy, libertarians are at least as divided as Democrats. Many libertarians, including Presidential candidate Ron Paul, are dovish and anti-interventionist. Those of us who are libertarian hawks support the use of force to try to contain radical Islam. For any libertarian, the biggest concern about Democratic foreign policy ought to be what I call the phenonenon of The UN party. Both the Democratic base and the party wonks would like to strengthen the United Nations and other international bodies, notwithstanding that these organizations are rife with corruption, rabidly anti-American, and heavily under the influence of regimes headed by tyrants. The closer we get to world government, the farther we get from libertarian ideals. Moving the Ball If politics were football, then I would say that the Clinton and Bush years saw little forward progress for either side. Clinton might have moved the ball toward the progressives' goal line, but only a few yards. I would say the same about President Bush--he moved the ball a few yards in the direction of the progressives' goal line. I would not necessarily extrapolate the recent past into the future. My concern is that in 2009 the progressives will pick up really big yardage. In that case, the state will take another quantum leap in size.
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#1. To: farmfriend (#0)
Depends on how you define 'hawk' -- most Libertarians would probably agree that shelling the Barbary Pirates was a good idea but that quietly overthrowing a government is a bad idea. It all depends on the circumstances.
Not me... you need a much bigger infrastructure to shell pirates, while quietly overthrowing governments is something we should applaud.
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