Arnold Kling  


The Far-Seeing Arnold... The Anti-Hack...

The Brink Lindsey essay that everyone is talking about is here.

Allow me to hazard a few more specific suggestions about what a liberal-libertarian entente on economics might look like...

Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption. Go ahead, tax the rich, but don't do it when they're being productive. Tax them instead when they're splurging--by capping the deductibility of home-mortgage interest and tax incentives for purchasing health insurance. And tax everybody's energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation--plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill.

...We can have true social insurance while maintaining fiscal soundness and economic vibrancy: We can fund the Earned Income Tax Credit and other programs for the poor; we can fund unemployment insurance and other programs for people dislocated by capitalism's creative destruction; we can fund public pensions for the indigent elderly; we can fund public health care for the poor and those faced with catastrophic expenses. What we cannot do is continue to fund universal entitlement programs that slosh money from one section of the middle class (people of working age) to another (the elderly)--not when most Americans are fully capable of saving for their own retirement needs. Instead, we need to move from the current pay-as-you-go approach to a system in which private savings would provide primary funding for the costs of old age.

The people talking include Sebastian Mallaby, Daniel Drezner, and Tyler Cowen.

My inclination is to agree with Brink on all of his particulars, but disagree with him on the bottom line. In my own recent essay on entrepreneurship and education, I began by saying,

I have been losing interest in the contests between Democrats and Republicans in Washington. I am more anxious about the outcome of the struggle between innovators and incumbents in the field of education.

I admire Brink's intellectual prowess, but I think that trying to overcome the political power of the AARP and teachers' unions with "some kind of reconciliation between Hayek and Rawls" is like walking into a gunfight holding a fork and spoon.

And speaking of fights, there is the little matter of militant Islam. If you think that we need to be less aggressive and more accommodating to the "international community," then fusing with liberals may seem appealing. I come from a different place.

UPDATE: See also Julian Sanchez and the links in his post. Virginia Postrel's peroration,

If it's going to happen, such an alliance can only start among honest intellectuals who are not interested in scoring partisan points. How many of those are left, I'm not sure.

is food for thought.

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The author at Woodstock in a related article titled Liberals and Libertarians writes:
    There was good debate about Brink Lindsey's article Liberaltarians on Volokh today. Greg Mankiw also weighs in. For those who haven't read it, Brink Lindsey has proposed many issues where libertarians and liberals can agree on. It is worth the [Tracked on December 6, 2006 1:04 AM]
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Dave L writes:

I see little difference between this economic platform proposed by Brink Lindsey and that of the standard economic platform of the Bush presidency. Most Republicans (protectionists like Pat Buchanan aside) support decreased taxes on saving and investment, decreased payroll taxes (and other regulations that hamper the labor market), and a shift to private saving as opposed to government pension and entitlement programs.

Lindsey - "we need to move from the current pay-as-you-go approach to a system in which private savings would provide primary funding for the costs of old age."

This solution sounds curiously similar to the "private savings accounts" proposed by Bush, which was met with stiff opposition by the liberals of the democratic party.
The only major distinction I see between his "liberal" (which means democratic)platform and the current "conservative" platform is taxes on energy. And I dare any party to raise gas costs after the public's overwhelmingly negative response to price hikes in recent years that were out of the governments control. I would have to say that Lindsey would do well to more closely examine the real policies of the liberals he attempts to find common ground with as well as the policies of conservatives, which may be more economically sound then he gives them credit for.

Barkley Rosser writes:

Ah, you want to make sure it is the militant Islamists who have the fork and spoon, right?

Barkley Rosser writes:

Well, Hayek supported some social safety nets, including famously, national health insurance, much to the disgust of harder line Misesian libertarians. However, this was the original ideology of the sozialmarktwirtschaft, the "social market economy" as cooked up by the Ordo-Liberals of Freiburg in the late 1940s, heavily under the influence of Hayek.

Matt writes:

Allright, this is a one time offer, the complete solution to public education.

Eliminate all federal education programs for grammar school, save the school lunch program. Substitute a twice weekly buffet dinner at the school for parents guardians and students.

We should understand how this helps.

Otherwise, the idea in the inner city is to get the citizens highly motivated in getting government exactly right, an optimum public sector. Price and demand for government should go directly to income on each addition or deletion of government.

We are better off with parents fighting to save their bottom line by making local government efficient; even if that means a negative income tax. Our problem now is that the inner city is being dispossessed, like the peasants in a DeSoto "Mystery of Capital" book.

Will Wilkinson writes:

I believe I've seen Jackie Chan defeat a gang of gun-toting Yakuza with a fork and spoon. Maybe he also had a serviette. But it's totally possible.

Dennis Mangan writes:

What you're missing here is that liberals want to use taxes to punish people, especially productive people.

spencer writes:

We have been cutting taxes on savings and investment for a quarter century. during this time the personal savings rate has collapsed and the share of capital spending done by those subject to the personal tax rate -- partnerships, s-corps, etc.-- has been cut in half.

If for 25 years a policy has been tried and produced exactly the opposite of the desired results don't you think it is time you reconsidered your policy proposals?

Matt writes:

"What you're missing here is that liberals want to use taxes to punish people, especially productive people."

Wrong. The ones trying to punish are the angry libertarians who have organized themselves into leftists. A leftist is a small government libertarian who has been ripped off by conservatives and their penchant for big government.

Liberals are quite unbiased about punishing anyone, the classical liberal just wants things to roll along as best things can be rolled along.

The purpose of the progressive tax is to keep the wealthy from growing government, in particular to keep the classical American conservative from using government on some expansive and poorly run foreign or domestic policy.

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