Wednesday, November 27, 2013

Redistribution, Yes!

Ida May Fuller, the first Social Security recipient

The present skirmish in the Obamacare wars concerns whether those in the individual healthcare insurance market will be able to keep their existing plans.  Most people get their health insurance through their employer or through the federal government (i.e. Medicare or Medicaid), but 9% buy it as individuals directly from insurance companies.  As Obamacare swings into operation it’s causing many of those individuals – it’s hard to say exactly how many – to lose their plans, forcing them onto more expensive plans.  It seems unfair, and it’s proving to be a political disaster for the president, especially considering his repeated promises that this would never happen. Throw in the ongoing fiasco of the federal government’s insurance exchange website and not only does Obamacare begin to seem fundamentally flawed, but – as some kind conservatives have helpfully suggested – so does liberalism itself.

Hardly.  As the indispensible Jonathan Chait has explained in numerous clarifying pieces, if you wish to make sure that (nearly) everyone has adequate health insurance then there must be some mechanism for making the young, healthy and affluent help pay for the old, sick and poor.  For example, Obamacare forces insurance companies to cover people in the individual market with pre-existing medical conditions, most of whom have been denied coverage or forced to pay exorbitant premiums.  How is that additional coverage paid for?  Partly it comes from subsidies to poorer individuals from Medicaid, which is, of course, funded by taxpayers.  But Obamacare also raises the regulatory standards of health insurance plans with the specific intent of forcing healthy individuals to pay for better plans so that insurers can provide care for more expensive patients.  (It also does so to protect consumers from unreliable plans, like those with lifetime caps and serious lapses in coverage.)

But all this is true of employer-based health insurance as well; i.e. it forces those who need health care less to pay for those who need it more (subsidized by taxpayers).  Such plans usually have a set price, regardless of age, sex or medical status, thus allowing a large group of people to pay for the small number which will actually need expensive care.  Such risk-pooling is the basis of all health insurance – indeed, of all insurance.  Obamacare, as Ezra Klein says, “basically makes the individual market more like the group markets.”  That is, it makes it more redistributive.  Yes, redistribution rests at the heart of any insurance system, public or private.  And we’re all willing to contribute to those systems because the future is uncertain; even the best actuarial tables cannot predict with any certainty who will need the benefit of insurance.  We buy fire insurance even though, as Chait so eloquently puts it, “fire insurance is a bad deal for people whose houses don’t burn.”

But let’s take that one step further: Redistribution rests at the heart of all liberalism.  This is liberalism’s open secret, and one’s view of this principle makes or breaks one’s support for the entire liberal welfare project.  Every worker pays Medicare taxes, but Medicare only supports those over 65.  Medicaid only covers those below a specified financial threshold.  Even Social Security provides slightly higher benefits to lower wage workers (relative to their lifetime income).  For political reasons liberals generally attempt to disguise the redistributive aspects of their programs; for example, Social Security taxes are paid into individual accounts.  But to modern liberalism a secure retirement is an individual and social good that humanitarianism simply and firmly demands.  Could we consider ourselves a just society if there were people who had worked their whole lives who were forced to retire in destitution?  It was exactly destitution to which all too many workers were consigned by pre-welfare-state laissez-faire capitalism.  Relative poverty causes so much harm, we should feel ashamed if it denied people the requisites of even a modestly fulfilling life: nourishment, education, decent housing, a secure retirement and medical care.  And if those with less can’t pay for those minimal goods, then – as long as it’s practical and sustainable – those with more must foot the bill.  This is the essence of modern welfare state liberalism: Taxing the affluent at higher rates and spending that money on insuring that working and poor people posses the minimal requirements of civilized life.  (This is the crucial distinction between welfare liberalism and socialism, which advocates the equalization of most or all social goods; liberalism merely advocates minimal standards and for a much shorter list of goods.)  Redistribution is part of the rationale even for infrastructure and public institutions, such as roads, bridges, hospitals, universities, crime control, emergency management.  Such things are generally regarded as benefitting everyone, but they’re partially funded through progressive taxes, and there are such things as private highways, private police, etc.

Since conservatives generally equate what you deserve with what capitalism allocates to you, they consider any non-capitalist redistribution to be inherently unjust.  Pragmatic conservatives – quite a rare species! – may tolerate a very short list of public goods and social insurance programs, but only for the sake of market efficiency or social comity.  But, as conservatives, they would never concede that anyone has a moral claim on some good for which he could not pay, such as a poor person who cannot afford a college education.  But if you accept that there are some goods for which everyone should be forced to pay, even those who will never directly benefit from those goods, then you have accepted the rationale for the welfare state.  All that’s left at that point is to argue over which goods should be on the list.  Should we have public healthcare but not public housing?  Should we have food stamps but not public day care?  We have moved from the realm of moral justification to that of policy detail.  To be sure, the devil is in the details; even liberals like Ezra Klein dislike Obamacare’s employer mandate, for example.  But if you accept, for instance, that people without children should pay taxes for schools, or people who don’t drive should pay taxes for highways, then you support the welfare state in principle.  However much you feel the urge to make moral complaints about liberal social policies, you can reasonably make only practical or economic ones.  You are a redistributionist.  Accept it.

Most Americans – with their sober and practical generosity – easily accept the logic of liberalism.  That practicality lets them support universal healthcare in general while still seeing Obamacare’s faults.  Most of Obamacare’s complexities and confusions result from using private institutions – i.e. insurance companies – for public ends.  Thus, its redistribution involves the regulation of private insurance plans in addition to the typical liberal funding mechanism of direct taxation.  But given the moral urgency of universal coverage and the redistribution it demands, the only alternative would be a single-payer scheme, in which the federal government acts as the health insurance company for all Americans and pays for the system out of progressive taxes.  Once again, we can argue over policy details, but let’s have the adult version of that argument, in which we accept the necessity of federal government redistribution. Conservatives may rail against redistribution in principle, while they lambaste Obama for cutting Medicare funds. And liberals may tout the benefits of tight regulations on individual plans while swiftly running from any redistributionist rhetoric.  But, outside the Tea Party’s tightly sealed ideological ghetto, everyone in America actually supports redistribution. They support it because human decency demands it.  They support it because they know that someday they may come to need it themselves.  They may consider it a necessary evil or a positive good, but they understand, intellectually or viscerally, that modern life would be intolerable without it.  That is the open secret not just of liberal politics, but of all American politics.

Friday, November 15, 2013

Toward a Smarter Welfare State

“Should any political party attempt to abolish social security, unemployment insurance, and eliminate labor laws and farm programs, you would not hear of that party again in our political history.” – President Eisenhower

The recent government shutdown and debt ceiling standoff have deepened and illuminated the most important division within conservatism, that between the pragmatists and the radicals.  The latter were only too happy to use any means necessary – even the threat of economic conflagration – to slay the monsters of Obamacare and debt, while the pragmatists understood that political battles are won with more than the simple iron resolve that moral certainty bestows.  That is, the radicals have jettisoned pragmatic considerations almost entirely, as if process and outcome were dirty words, corruptions that only inhibit the full manly functioning of righteous moral strength.  How can you compromise when your enemy is the socialist vanguard pointing like a dagger at the heart of Americanism?  But alas, the real world – a Democratic Senate and president, an anxious business community, an unconvinced public – turned out to be less than tractable to idealistic holy war.  As the pragmatists perceived all along, bravado has its limitations.

But the differences between the pragmatists and radicals are more than merely tactical or stylistic, they are substantive as well.  In the past few weeks a few thinkers on the right have explicitly endorsed the welfare state as created by liberals in the 20th century.  Here’s Arthur Brooks, president of the conservative American Enterprise Institute:

One of the things, in my view, that we get wrong in the free enterprise movement is this war against the social safety net, which is just insane. The government social safety net for the truly indigent is one of the greatest achievements of our society. And we somehow want to zero out food stamps or something, it’s nuts to want to be doing something like that. We have to declare peace on the safety net.

And James Pethokoukis, Brooks’ colleague at the AEI, acknowledges that without federal welfare programs our recent economic troubles would have impoverished many Americans:

The pain from the Great Recession, as bad it was, would have been far worse for middle- and low-income Americans if we were still in a sort of 1920s, Coolidgean world that many on the right these days seem to long for.

Even hard conservative columnist Charles Krauthammer agrees:

There’s no question of accepting the great achievements of liberalism — the achievements of the New Deal, of Social Security, Medicaid, Medicare.  The idea that you rescue the elderly and don’t allow the elderly to enter into destitution is a consensual idea [accepted by] conservatives, at least the mainstream of conservatives.

When such important conservatives urge a declaration of peace on the social safety net, it’s news!  Until now this has been the position that dare not speak its name, at least not sincerely.  Conservatives constantly issue protestations of support for programs like Social Security and Medicare, but haven’t we known all along they didn’t really mean it?  Liberals, at least, have long suspected as much.  If Brooks, Krauthammer, et al. are urging conservatives to accommodate the New Deal doesn’t that mean that until now they’ve been waging war against it?  Haven’t they been trying to roll it back since, well, since it was created? Certainly Red State writer Erick Erickson understands that the founders of modern American conservatism hoped to roll it back:

The present editors of National Review, over the last several years, have made it clearer and clearer that they now speak mostly for the well-fed [i.e. accommodationist] right and not for conservatives hungering for a fight against the leviathan. They have made their peace with the New Deal, moving beyond Buckley. For that matter, Mike Lee, Ted Cruz, and most of the defunders have largely made their peace with the New Deal. And still National Review is too timid to join the merry band of defunders themselves too timid to approach the parameters under which William F. Buckley started his charge.

To Erickson even the rabid radical insurgent Senators throwing their own bodies into the gears of the welfare state – pledging their sacred honor and risking almost certain presidential candidacy – have too easily resigned themselves to the slow suffocation of liberty that is the welfare state.  Has extremism for its own sake become Erickson’s pre-eminent value?

If the radicals consider Cruz and Lee to be too accommodating then they naturally perceive the welfare state concessions of Brooks, Krauthammer et al. as nothing more than abject surrender to the statist enemy.  To Andrew C. McCarthy of National Review, it’s obvious that all real conservatives oppose the safety net; to accept it is to “deviate significantly from . . . the tradition of Buckley, Goldwater, and Reagan.”  No real conservative could accept “redistributionist schemes that fleece some citizens for the benefit of others.”  McCarthy’s definition of conservatism precludes support for any program based upon progressive taxation, i.e. everything on Krauthammer’s list.  The entire liberal welfare state project is just a huge scam:

The New Deal and its Great Society successor programs, by contrast, are frauds designed to create permanent dependency on government (and fealty to the party of government).

The welfare state is a devious instrument designed to enslave the population.  The well-off are tied down by taxes and regulation and their lessers are urged to discard their self-sufficiency and lounge lazily in the gilded cage of government largesse.  And liberal politicians sit at the top, laughing malevolently as they corrupt the moral principles Americans once held dear:

There is no disciplining or escaping Leviathan. And if, as is inevitable, federal officials expand their outlandish schemes and promise favored constituencies more than they can deliver, they just borrow or print ever more money: Government borrows from its tapped-out self, monetizing its debts, degrading our currency to reward sloth and punish thrift even as it steals from future generations.

Even a onetime moderate like Mitt Romney seemed to actually believe such foolishness, or pretended so to raise money.  But does this McCarthyite nonsense represent the mainstream of conservatism?

Reihan Salam – a genuinely thoughtful conservative, one always worth reading – puts all this in perspective:

Recently, a friend of mine observed that conservatives can be divided into roughly three camps with regards to the idea of a federally-financed social safety net: (1) there are those who oppose it on normative grounds and who believe that political efforts should be geared towards rolling it back; (2) there are those who oppose it on normative grounds yet who recognize that its political entrenchment can’t be wished away, and so they believe that political efforts should be geared towards containing its size, restraining its worst excesses, improving it at the margins, and rolling it back when the opportunity presents itself; and (3) there are those who affirmatively believe that the federal government ought to play a role in financing the safety net, yet who are keen to make it as fiscally sustainable, work-friendly, and pro-growth as possible.

Both the first and second groups – call them purists and pragmatists, respectively – wish to cleanse America of the corruption that is the liberal welfare state; but the pragmatists, daunted by its deep popular support, wish to fight it with prudence and stealth.  The third group – call them technocrats – wants to remake it in conservative fashion.  The purists and the pragmatists differ only in means; the technocrats differ from the other two in ends.  Most of the Tea Party clearly falls into the first group, while most of the GOP establishment falls into groups two and three (or is it only group two?).  Indeed, the goal of the Tea Party is to make the Republicans exclusively purist!  And the purists seem to have trouble distinguishing the pragmatists from the technocrats.  McCarthy, for instance, seems to think the establishment is entirely made of technocrats:

It is not an exaggeration to say the GOP establishment is more sympathetic to Obama’s case for the centralized welfare state than to the Tea Party’s case for limited government and individual liberty.

No, it is quite an exaggeration, as any liberal can attest.  Salam’s categories are quite illuminating. Consider that while many conservatives denounced Romney’s 47% remarks, many supported them.

But the purists are indulging themselves in one great denial fantasy.  Simply put: the welfare state is here to stay.  Conservatives typically make a great show of accepting the sad inevitabilities of human existence – notably social inequality – while decrying the liberal urge to improve society as foolish utopianism.  But isn’t the welfare state, even with its systemic downsides, part of the fabric of society, and a beneficial part, at that?  Doesn’t it make capitalism more humane?  Doesn’t the public – even the Tea Party with their “Keep Government out of my Medicare” signs – demand its continuance? Aren’t purist conservatives – wide-eyed idolaters of virtuous, anarchic capitalism – the true utopians?  The group we’re calling conservative pragmatists are only pragmatic about methods; there is nothing pragmatic about hoping to repeal the New Deal.  Not because the American people would loudly object; but because modern capitalism unfettered by a strong, countervailing welfare state would cause intolerable economic and social suffering.  Indeed, it was the concession to pragmatism – a classic conservative principle from Aristotle to Burke – that brought liberals from their classical free market idealism to the modern welfare state meliorism they now advance, if sometimes in excess.

Ah yes, liberal excess.  Wouldn’t conservatives better serve their country by making themselves the skeptical interrogators of liberal schemes rather than romantic, bomb-throwing revolutionaries determined to blow them up?  Do they wish to destroy America in order to save it, or do they wish to really make it better?  Conservatives are painfully aware that the real world, with its overwhelming complications and obstinate unpredictability can confound the noblest and best researched reform plans.  Humans have a way of undermining the most incisive sociology.  Which isn’t to say that no program can be well designed or positively beneficial; many are.  It’s to say that of all the contributions that conservatives might be disposed to make to our arguments over the structure and scope of our national welfare state, the most helpful is keeping liberals humble.  Constructive conservatism can keep liberal feet on the ground.  And it could force liberal awareness of the genuine moral dangers – dependency, rent-seeking, alienation – lurking behind all welfare programs; not in order to sabotage those programs, but to strengthen them.  Together, hopeful liberalism and cautious conservatism could forge a smarter welfare state.

And liberals must learn not to confuse constructive, technocratic conservatives with the pragmatic or purist ones.  Not all conservative welfare proposals are demolition plans in disguise.  Though, sad to say, many are.  Does anyone really believe that George W. Bush proposed the partial privatization of Social Security in 2005 in order to save Social Security rather than starve it of funds?  And no reasonable person can mistake Paul Ryan’s plan to turn Medicare into a system of ever-less-valuable vouchers for a plan to save that program, despite protestations to the contrary.  Even if ideologues like McCarthy find Ryan’s proposal much too welfare-friendly, the numbers simply prove otherwise.  And all the recent supposed panic over the size of the national debt is primarily a technocratic excuse for the purist desire to reduce spending; if the debt was their real concern conservatives would be only too happy to raise taxes as well. Liberals can be forgiven for not trusting technocrats when the principal intent of the pragmatists is to trick people into thinking they’re technocrats!  The best recent example of liberals reaching out to conservative technocracy is the Obamacare saga.  President Obama, the Conciliator in Chief, crafted a market-friendly health insurance program originally proposed by seemingly genuine technocrats in reputably conservative think tanks, successfully launched in Massachusetts by its genuinely technocratic Republican governor, and supported by a whole host of (quite transparently) pragmatic conservative heavyweights.  What did liberals get for their attempted compromise?  Purist stonewalling, mendacious propaganda and McCarthyite paranoia.  At any stage in the legislative process conservatives could have joined in and helped improve Obamacare; even now they stubbornly refuse to do so.

How can liberals hope to deal in good faith with a party so dominated by purists and pragmatists?  A party in which the purists think their own pragmatists are traitors to the essence of America?  A party whose pragmatists deliberately conceal their true purist intentions?  Genuine conservative technocracy seems as elusive a mirage as the purist dream of a dismantled welfare state.  We seem to be stuck for the foreseeable future with a Republican Party and a conservative movement in thrall to populist Tea Party purism.  And we see now that the real conservative divide is not, as is normally understood, that with purists on one side and pragmatists and technocrats on the other.  Rather it’s between those who would – with whatever tactics – undermine the welfare state and those who would improve it, between conservatism as a small-government crusade and conservatism as accommodation to the real world.  But this is quite an uneven division; adult conservatism seems to exist only among a very few thoughtful writers, like Reihan Salam, Conor Friedersdorf, Daniel Larison, Russ Douthat, David Brooks.

If there is hope it resides with what some have called Sam's Club Republicans; that is, working class whites with generally conservative instincts who nevertheless wish the federal government would do more to ameliorate their tough economic conditions.  Such a group might make a respectable constituency for a genuinely technocratic Republican Party.  For the moment they seem to lack the populist passion displayed by their upscale, better-educated Tea Party overlords; but a smart politician might appeal to them with a technocratic program that satisfies both their instincts and their interests.  There are perfectly workable and sustainable conservative technocratic proposals, as Obamacare itself is beginning to show (alarmism to the contrary). Widespread support for a moderated welfare state would go a long way toward marginalizing Tea Party purism and easing the unbearable polarization that causes us so much grief.   The welfare state – fought for by working people, desperately needed by the poor, embraced by a middle class frightened of capitalist cruelty, wrangled from hard struggle against concentrated wealth and privilege – is too precious, too necessary to be lost.  The good news is that it won’t be.  The bad news is that one of our two major parties is dominated by those who don’t think that’s good news.  At least – and at last! – Arthur Brooks, Charles Krauthammer, Andrew McCarthy and Reihan Salam have made all that quite clear.