Arthur Brooks at WSJ:
There is a major cultural schism developing in America. But it’s not over abortion, same-sex marriage or home schooling, as important as these issues are. The new divide centers on free enterprise — the principle at the core of American culture.
Despite President Barack Obama’s early personal popularity, we can see the beginnings of this schism in the “tea parties” that have sprung up around the country. In these grass-roots protests, hundreds of thousands of ordinary Americans have joined together to make public their opposition to government deficits, unaccountable bureaucratic power, and a sense that the government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud.
The data support the protesters’ concerns. In a publication with the ironic title, “A New Era of Responsibility,” the president’s budget office reveals average deficits of 4.7% in the five years after this recession is over. The Congressional Budget Office predicts $9.3 trillion in new debt over the coming decade.
And what investments justify our leaving this gargantuan bill for our children and grandchildren to pay? Absurdities, in the view of many — from bailing out General Motors and the United Auto Workers to building an environmentally friendly Frisbee golf course in Austin, Texas. On behalf of corporate welfare, political largess and powerful special interests, government spending will grow continuously in the coming years as a percentage of the economy — as will tax collections.
Still, the tea parties are not based on the cold wonkery of budget data. They are based on an “ethical populism.” The protesters are homeowners who didn’t walk away from their mortgages, small business owners who don’t want corporate welfare and bankers who kept their heads during the frenzy and don’t need bailouts. They were the people who were doing the important things right — and who are now watching elected politicians reward those who did the important things wrong.
Voices in the media, academia, and the government will dismiss this ethical populism as a fringe movement — maybe even dangerous extremism. In truth, free markets, limited government, and entrepreneurship are still a majoritarian taste. In March 2009, the Pew Research Center asked people if we are better off “in a free market economy even though there may be severe ups and downs from time to time.” Fully 70% agreed, versus 20% who disagreed.
Kathryn Jean Lopez interviews Brooks at The American Enterprise Institute:
KATHRYN JEAN LOPEZ: Culture war? Didn’t we evolve beyond such talk somewhere around a Pat Buchanan speech at a Republican convention?
ARTHUR C. BROOKS: For many, that 1992 convention speech defined the term “culture war.” But what I’m talking about is a new culture struggle–one fought not over guns, gays, and abortion but over the core characteristic of America: free enterprise. In my book I don’t just demonstrate that free enterprise is the most efficient way of organizing an economy (which it is). I also show that it’s an expression of American values, and, thus, that a fight for free enterprise is very much a fight for our culture.
LOPEZ: Has President Obama made Americans less happy? Is it even fair or reasonable or constructive to ask such a question?
BROOKS: Happiness is important to discuss. The opponents of free enterprise always claim they will make America a happier nation, and we always lamely respond with arguments about economic efficiency. Yet in truth, the better prescription for happiness is on our side, not theirs.Nonpartisan social-survey data clearly show that the big driver of happiness is earned success: a person’s belief that he has created value in his life or the life of others.
Redistributionists always make the argument that relative income is a huge driver of unhappiness–that poorer people are unhappier than richer people simply because they have less money through no fault of their own–and thus we can get a happier, fairer society by equalizing incomes. This is based on a colossal misreading of data and a whole lot of ideology. The truth is that relative income is not directly related to happiness. Nonpartisan social-survey data clearly show that the big driver of happiness is earned success: a person’s belief that he has created value in his life or the life of others. Of course, in a capitalist system, earned success is often rewarded financially, so people who have earned a lot of success tend to have more money than others. But it’s the success, not the money, that does the trick. (We show this by comparing the happiness of people who have the same level of income but have different perceived success levels.)
The system that enables the most people to earn the most success is free enterprise, by matching up people’s skills, interests, and abilities. In contrast, redistribution simply spreads money around. Even worse, it attenuates the ability to earn success by perverting economic incentives. Free enterprise is essentially a formula not just for wealth creation, but for life satisfaction.
LOPEZ: Are free enterprise and big government natural enemies?
BROOKS: There are some things that government does well. When the U.S. government was fighting Nazi Germany and Imperial Japan, it was the champion of freedom in the world. It took a big government to win World War II. But it takes a smart one to realize it is only the entrepreneurialism of individuals that can deliver thriving economies and human flourishing. Government has a role, of course, such as enforcing the rule of law. But when it takes resources out of the hands of innovators and risk-takers, when it regulates small businesses out of existence, when it favors crony corporations instead of entrepreneurs, when it taxes corporations so much they move abroad–then, yes, big government becomes the enemy of free enterprise.
LOPEZ: We’re always told that free enterprise is merciless. Isn’t it the source of misery for everyone but the guys at the very top? (And of course they are guys, because everyone knows women are oppressed in the American economy.)
BROOKS: Absolutely not. The data show that a poor man who earns his success and believes he has a chance to get ahead through his own efforts–that man is happier than a “guy at the very top” who does not feel he has earned his success (or that anyone really can). And it’s as true for women as it is for men. Free enterprise does not bow to gender, class, race, or ethnicity. It rewards hard work, dedication, initiative, talent, and street smarts. It’s truly a force for liberation, not oppression.
The values that Brooks expresses in The Battle are eerily similar to my own. I really wish this book were right from cover to cover. But I’m afraid that Brooks’ analysis of public opinion is deeply mistaken. While the median American is almost certainly more pro-market than the median European, he’s still a social democrat. And while recent policies are probably a little more statist than the median American prefers, the statist quo is very popular.
Brooks’ whole book revolves around his 70/30 claim: 70% of Americans are pro-market, and just 30% are anti-market. His data work seems OK as far as it goes, but he ignores three key problems.
First, Americans only seem staunchly pro-market at the most abstract and symbolic level. On most specific policy issues, the pattern reverses. Americans favor as much or more government spending on almost everything. Only 41% of Americans are against or strongly against “control of prices by legislation.” (GSS variable identifier SETPRICE) Only 21.3% are against or strongly against “supporting declining industries to protect jobs.” (GSS variable identifier SAVEJOBS) Just 15.7% disagree or strongly disagree with the view that “America should limit the import of foreign products in order to protect its national economy.” (GSS variable identifier IMPORTS) All things considered, the best you can say about the American public is that it pays lip service to free enterprise.
Second, even lip service to free enterprise is partly an illusion created by binary response options. If Americans have to choose between free markets or socialism, 70% or so prefer free markets. But if you offer them intermediate choices, the picture changes. Brooks mentions that Americans are most supportive of capitalism when you call it “free enterprise”; I’d guess that “private enterprise” is an equally lovable label. But when the GSS presents the statement, “Private enterprise is the best way to solve America’s economic problems,” the breakdown is 16.3% strongly agree, 37.1% agree, 32.4% neither agree nor disagree, 12.5% disagree, and 1.8% strongly disagree. (GSS variable identifier PRIVENT) For a less favorable label like “capitalism” or “free markets,” the median American would almost certainly be neutral. On a balanced question, I’d guess a lip service breakdown more like 35% pro-market, 40% neutral, and 25% anti-market.
Third, even self-styled pro-market Americans are normally only relatively pro-market. What fraction of “pro-market” Americans want to substantially cut – much less abolish – Social Security and Medicare? They’re the nation’s largest social programs, their moral and market failure rationales are flimsy at best, but almost everyone loves them.
Once you take a more realistic view of American public opinion, there’s not much of a split between the policies voters want and the policies voters get. Even the 2008 bailout looks fairly popular if you include an intermediate response option. I wish it weren’t so, but if the American public wanted free-market policies, they’d have them. The point of free-market philosophy is not to defend public opinion, but to change it.
On the essential virtues of limited government, reliance on entrepreneurship, and rewards determined by market forces, I am with him. These are vital principles, too much neglected. But his framing of the broader issue is excessively Manichean. Those competing visions of private enterprise and statism are not irreconcilable, as Brooks insists. They have in fact been reconciled. The result is the mixed economy, which is what we all have. It is not a question of preferring one pure model or the other, but of choosing a point on a continuous scale. To put it another way, the US is not nearly as exceptional as Brooks says.
His account of what is at stake reminded me that I rebuked George Will a little while ago for saying Obama was putting the Founders’ vision of limited government at risk. Please. The constitution survives as a legal text, which is a kind of miracle, I grant you, and a tribute to its amazing flexibility. But its flexibility is the point. The Founders’ intent, so far as the limits of federal power are concerned, has been wholly subverted: it had to be, because the political consensus that supports the constitution has changed out of recognition too.
Progressives and conservatives alike call the United States a “free-market economy”: both sides have an interest in perpetuating this delusion. The idea is ridiculous – as ridiculous as calling Europe’s economies “socialist”. True, the blend of government and private enterprise is a bit different between the US and the European average, but the models (insofar as it makes sense to talk of a European model) are neighbors not polar opposites.
All this was true, obviously, long before 2009. Obama, I agree, does want to narrow the gap a bit more – but it just was not that wide to begin with. Public spending is lower in the US, but not vastly lower once you remember to add state and local spending to federal outlays; the US healthcare anomaly accounts for a lot of the remaining difference.
In most respects (labor protections are the main exception) the US regulatory state is at least as comprehensive and intrusive as those in Europe. As for the constant tyranny of petty bureaucracy, let me say as somebody who has lived in Britain and now in the US that it seems even worse here. One’s interaction with officials of one sort or another is endless. Admittedly, I am an immigrant living in DC, which demands additional oversight. Who knows what I might get up to? Still, these days, I wince every time I hear, “It’s a free country.” No, it isn’t.
Brink Lindsey at The American Prospect:
Brooks’ narrative works somewhat better with respect to conflicts over the size of government. Here, at least, there is a clear distinction between the United States and Europe. Levels of social welfare spending in Europe are generally much higher than they are in the U.S..
Does America’s smaller welfare state reflect important cultural differences between us and folks on the other side of the Atlantic? Yes, probably, but the main one is hardly worthy of defending. A 2001paper, “Why Doesn’t the United States Have a European-Style Welfare State?” by economists Alberto Alesina, Edward Glaeser, and Bruce Sacerdote, provides powerful evidence that race is at the center of the story. There’s a strong negative relationship between a country’s racial heterogeneity and its levels of social spending, and within the U.S., states with larger black populations spend less on welfare programs. “Americans think of the poor as members of some different group than themselves, while Europeans think of the poor as members of their group,” the paper concludes.
Don’t get me wrong: I’m no fan of the European welfare state. There are sound economic reasons for rejecting it as a model. Most decisively, the aging of the population and the continued development of promising but expensive medical treatments are rendering it unaffordable, and fiscal constraints will sooner or later lead to significant restructuring here as well.
But Brooks doesn’t want to use economic arguments. He counsels against “getting stuck in the old arguments over money.” Instead, he wants to defend America’s track record of more modest social spending on cultural grounds. And that is a really bad idea. Our tragic history of race relations may have inhibited spending, but we should be ashamed of that cultural heritage. We certainly shouldn’t embrace it and brag about it. Brooks apparently doesn’t realize what he’s doing; he thinks he’s touting good old Yankee self-reliance. But his argument is offensive even if he’s oblivious to how offensive he’s being.
In any event, it’s not anti-poverty programs that are threatening to send the U.S. budget spiraling out of control. Rather, it’s the middle-class entitlements, Social Security, and especially Medicare. And you can’t blame those programs on the machinations of the dastardly “30 percent coalition,” because they are overwhelmingly popular across the electorate. According to an April New York Times poll, 76 percent of Americans think “the benefits from government programs such as Social Security and Medicare are worth the costs of those programs.” And amazingly, the percent only drops to 62 when the sample is restricted to the 18 percent of people who say they support the Tea Party movement!
Here again, Brooks’ effort to turn economic policy problems into “us versus them” cultural conflicts collapses in failure. On the vexing question of how to defuse the entitlements fiscal time bomb, there is no “us” and “them.” The politics of us versus them is almost always ugly and illiberal. And on the policy questions that Brooks is concerned with, there’s no need for such deliberate divisiveness. Yes, there are strong disagreements about market regulation and the proper size and scope of social spending, but these disagreements are not based on some irreconcilable differences in values. Vigorous support for continued economic growth is nearly universal across the political spectrum. How else will we put jobless Americans back to work, and how else will we pay for the activities of government, without a strong, dynamic private sector? A similarly broad consensus exists for the following two propositions: On the one hand, a government safety net is needed to protect Americans from various hazards of life; on the other hand, that safety net shouldn’t bankrupt us.
Figuring out how to restore growth and how to construct an effective but affordable safety net, are questions for debate, analysis, and democratic decision-making. My answers to those questions may differ from yours, but dividing up into warring tribes and demonizing each other aren’t the ways to figure out who’s right.
Lindsey’s critique is well worth the read. It’s always messy business to so inelegantly mix economics and culture, and I’m never fond of new wars however abstract they may be. As a devout culture-war pacifist, I don’t want economics turned into the next abortion debate. I’m perfectly fine with it remaining an economics debate. That’s an important debate with no sign of subsiding anytime soon.
Turning a debate over economics into a cultural question only serves to obfuscate. As Lindsey notes, we’re sure to blur “issues of regulation and redistribution” in ways that make the topic almost useless and indecipherable. That’s fine for the purposes of populism, but for the purposes of governance and creating sustainable positive attitudes toward markets, it’s trouble brewing.
Countries with very lavish redistributive welfare programs, such as Denmark and the Netherlands, also embrace extraordinarily free markets with very little government intervention or regulation. Free trade in these nations is widely accepted, but so are high taxes and cradle-to-grave social welfare programs.
If you take a look at the Heritage Foundation’s Index of Economic Freedom, you’ll notice that a number of countries with much more redistributive economies nonetheless make the list and seven rank above the United States, including Ireland, Switzerland and Canada. This despite social-democratic programs such as universal health care! Whether the social programs in these countries are sustainable is another question altogether, but they in no way reflect attitudes toward markets or free trade.
Rather than creating a new culture war – between the ones we have already, the drug war, and the very real wars burning overseas, do we really have time to start another? – we should be focusing on creating a more sustainable fiscal future by reforming middle class entitlement programs like Social Security and Medicare.
UPDATE: James Poulos at Ricochet
Kain responds at The League