Arnold Kling  

Elephants in the Big Tent

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Evaluating Health Care Systems... Middle Class Squeezed Up...

Who speaks for the Republicans? Is it David Brooks?


Now almost every leading politician accepts that government should not interfere with the basic mechanisms of the market system. On the other hand, almost every leading official acknowledges that we should have as much of a welfare state as we can afford.

He goes on to say that we cannot afford the welfare state as it is currently structured, and to correct the problem we should

push back the retirement age, reduce benefits for upper-income people, redesign the welfare state so that individuals have control over their own benefits packages.

It sounds like he is advocating what I once disparaged as the Flex-dollar Welfare State.

Or is the representative GOP elephant Stephen Bainbridge, who writes,


The freedom to accumulate property and use it as you wish does more than merely protect economic interests. Economic liberty, of which the rights of private property are the foundation, is a necessary concomitant of personal liberty—the two have almost always marched hand in hand. The pursuit of property has been a major factor in destroying arbitrary class distinctions, moreover, by enhancing personal and social mobility...

Unfortunately, we live in a society in which neither party is fully committed to protecting private property rights. Both parties routinely infringe on property rights through taxation and regulation. At least since the Reagan Revolution, of course, the GOP has been the lesser of two evils on this score. If Bush is serious about creating an ownership society, however, he must convert the GOP into an affirmative friend of private property-promoting and protecting ownership by all (not just corporate elites).


The last sentence, in the hands of a Ralph Nader type, could be viewed as a mandate for heavy corporate regulation. However, I suspect that what Bainbridge means instead is that the government should not get chummy with big corporations. I believe that Bainbridge is arguing against a government that only protects the interests of powerful lobbyists while cheerfully taking away property rights from everyone else.

Or is the big elephant Healthcare Savings Accounts, as Holman Jenkins argues?


two early promoters of the accounts, eHealthInsurance and Assurant, found this year that more than one-third of their applicants were previously uninsured, two-thirds were over 40, and many were at the lower end of the income scale.

This is surprising only to those who never understood why the tax code was the problem in the first place. Notice that the typical family policy doled out by companies to their employees represents a total price-tag of about $9,086 a year. If you're in the top tax bracket, the effective after-tax cost to you is about $5,500. If you're in the working-poor bracket (i.e. pay no federal income tax), it's $9,086.


It sounds as though HSA's are a tool for Health Insurance Disintermediation. But I still think that they are too wonkish, and even Jenkins refers to the "HSA kludge."

For David Brooks, the "ownership society" means that government cuts back the welfare state just enough to avoid a train wreck. For Bainbridge, it means that government gets off the little man's back. For Jenkins, it means HSA's.

UPDATE: for another discussion of possible tensions within contemporary Republican philosophy, see Kevin Hasset's piece in TechCentralStation.

UPDATE 2: More Bainbridge

For Discussion. Given these disparate views, is "ownership society" well defined?


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Lawrance George Lux writes:

Defined? Don't you mean confused? Definition of ownership can only be settled by economic evaluation of how Property is earned. What percentage of Property is produced by provision of Commerce and market infrastructure. What percentage is provided by Education through a competent Workforce. What percentage of Property acquisition is derived through social instrument funding of capitalization. What percentage is accumulated due solely to the personal initiative of the entrepruenor?

Effective economic study would probably state that Taxes are too low, return on Capital is too low, the cost of Government is too high, the repayment to Education and Labor too low, and the projected Owner has a really inflated sense of Self along with vastly inflated demands for a rate of return.

I will probably be called a Commie for this, but MBAs should realize they are not the only ones deserving of reward. lgl

Theo Lekkas writes:

lgl,
You are right, we MBAs (or candidates in my case) are not the only ones who are "deserving" of rewards. Anyone who works is "deserving" of reward. In fact anyone who works is "deserving" of all the fruits of their labor. That is why I would say that taxes are too high, not too low, since taxation is simply confiscating the wealth that was produced by the "deserving".

Regards,
Theofanis Lekkas

Lawrance George Lux writes:

Theofanis,
The trend since the 1950s, especially since 1963, has been to eliminate or reduce Business taxation. I have always doubted Supply-Side Economics of letting Business escape taxation as economic incentive. Indications are that removed taxation, or reduced, simply allows Business leadership to overpay themselves while at the same time reducing their work load. I find it the same with low Interest rates. The Economy only works well, when there is extended pressure on the managers of production; this said pressure only marginally affecting investment, even increasing it to get effective Returns. lgl

Jason Ligon writes:

A tax on business is just a tax on consumption unless you want to cap prices, too.

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