Arnold Kling  

Can Elites Save the United States?

Christina Romer vs. Bloggers... Canada's Road to Balanced Budg...

Tyler Cowen writes,

when I look around the globe for episodes of successful spending restraint I see Canada, Finland, Sweden, and now possibly (probably) Ireland, which is in the midst of fiscal restructuring. I see change coming from elites and I see relatively left-wing governments (Ireland, admittedly, is harder to classify) which are trusted by their citizens.

I see smaller countries (Canada's population is slightly less than that of California) with less social distance between elites and mass. Just as the ratio of top income to median income is spectacularly high in the United States, the ratio of power at the top to the power of the median individual is spectacularly high here.

I think that Tyler might agree with me that the ruling class in the United States is not addressing the fiscal problems of the country. However, he might think that our best hope is to restore trust in the ruling class and hope that they turn around.

One can argue that the Tea Party movement is not going to help, in spite of its generic concerns with government spending. The movement lacks a specific program. Its anti-insider character also means that it likely will lack the know-how to translate whatever electoral success it achieves into concrete action in Washington.

The ruling class is confident that when it comes to specific spending programs, the coalition in support of continued spending will always be there. As elitists like to point out, polls show that the only spending that a majority of people want to cut is foreign aid.

I share some of these doubts about whether the Tea Party movement will make a constructive difference on fiscal policy. However, I do not think that the ruling class is going to come around on its own. I think we are going through one of those periods in which the ruling class is fundamentally messed up. The Wall Street-Washington axis fundamentally messed up housing finance, and they have not really learned anything in that area--the consensus solution is to rebuild the securitization machine, with more regulation. The ruling class thinks that we need more central planning of the economy. They are saying, "Markets fail. That's why we need government," rather than "Markets fail. That's why we need markets."

Many libertarian intellectuals deeply resent the populists, perhaps because the populists are not offering much in the way of deference to the intellectuals. What I am seeing is libertarian intellectuals showing their group-solidarity with the ruling class by throwing around accusations of racism, sexism, and homophobia. Nothing makes the ruling class feel better than the sense of moral righteousness that comes from believing in the moral backwardness of those who would challenge it.

Tyler is making a more subtle argument. Perhaps the only thing worse than trusting the ruling class is not trusting them. But I cannot get past my hostility toward the arrogance and foolishness emanating from their quarters.

Comments and Sharing

CATEGORIES: Fiscal Policy

COMMENTS (26 to date)
Tyler Link writes:

Arguing that a high level of trust in government is needed to make drastic spending cuts reminds me of the conservative argument that solidarity and patriotic unity makes wars more winnable. It may be true, but in a free society you can't just wave a magic wand and expect your opposition to fall in line.

Liberals should ask themselves whether we would have been better served with more trust in government during the Vietnam War before they start getting behind this kind of reasoning.

Daniel Klein writes:

Unless one believes that national bankruptcy would be a good thing, Tyler's post/NYT piece contains much wisdom.

He ends by the NYT piece by saying: "How deeply will we dig ourselves in before we create a more mature and more forward-looking political culture?"

Clearly some mechanisms are needed to make politicos more trustworthy and more trusted. They need signals from people other than the political class, the academic class, and leftists, signals telling them that spending, especially entitlements, must be cut very substantially.

Also we need mechanisms for citizens to enlighten and pressure OTHER CITIZENS to favor serious spending cuts.

I have a great idea for advancing such mechanisms.

Let's create a spontaneous, bottom-up network of people who still believe in limited government and free enterprise to organize peaceful rallies around the country, rallies that stand up for just those messages which the political chiefs and other citizens need to hear, and need to see that many of us are so serious about that we are willing to sacrifice our time and energy in organizing and communicating the message.

If we can get many spontaneous gatherings going, politicos will perhaps begin to get the message, will be pressured to get the message. They may, thereby, become more trustworthy and more trusted.

Ted Craig writes:

One could argue that the '90s prove your theory. It was a period of massive political disruption. A sitting president lost an election, an independent candidate won a significant percentage of the popular vote, a "hick from the sticks" won the White House and the Democrats lost Congress.

Sam writes:

So Cowen is saying "Elites fail; use elites" and your prescription is what? "Elites fail; use markets"?

Tom West writes:

I think the USA labors under two serious disadvantages in having to make what are going to be fantastically unpopular cuts.

(1) With a 2 year election cycle, there's no hope that the pain will be over before the enacting party will pay the price.

(2) Electees are primarily responsible to their constituents rather than to their party. There's far less of a "serial dictatorship" strain in American politics. This makes it far harder for the leadership to pass cuts which will lose some members their seats even if it benefits the party as a whole in the end.

RickRussellTX writes:

I think the point is actually *less* subtle than originally thought. Change, particularly elimination or cost-saving reorganization of existing institutions, requires leadership.

Whether that leadership comes from existing leaders, or from historic elites, or from newly elected dynamic leaders isn't really relevant. Ultimately, somebody has to be willing to look at a program or activity, say, "this is broken, and we either fix it or get rid of it", then sell that concept to both voters and fellow politicians.

How will that happen? I don't know that we have sufficient history of cost-cutting and program-cutting in the US to say how it will happen, as we haven't any good internal model. Tyler Cowen seems to be saying, "this is how it worked in other countries", but as he also points out, there seems to be little observable evidence that the same methods would work here.

What I do know is that the 13% of our civilian labor force that works in government (fed, state and local, and almost 15% if you include military) is a pretty darn entrenched group, they're generating the data on which these decisions are made, and it's not clear that anybody is willing to release them.

Lord writes:

The sad thing is the tea parties are nothing but arrogance and foolishness combined with anger at being out of power. Ritholtz's statistic of 57% of them having a favorable opinion of Bush says it all. I just don't know what they prefer most, unnecessary wars, expansion of unpaid entitlements, the 'fiscal conservatism' of tax cuts combined with spending increases, cheerleading the financial crisis, or the bank bailouts. Presumably all of them.

Mike Moffatt writes:

"I see smaller countries (Canada's population is slightly less than that of California) with less social distance between elites and mass."

Do you have any evidence for this whatsoever? As a Canadian, I find this a really bizarre assertion, particularly when you consider Canadian history. Have you ever heard of the 'Family Compact'?

I'm not sure what population size has to do with the distance between elites and masses (e.g. 15th century England had between 2-3 million people, but I have a hard time believing the two groups were particularly close).

Doc Merlin writes:

Wow, progressive talking points. "If we trust government more they will act better."

I think he gets the order wrong, it should be "If governments act better we will start trusting them."

Jon writes:

Tyler's quote includes a bit about mobilizing against medicare spending cuts. I don't agree with the original's authors intent/framing here.

The cuts in medicare were in medicare advantage and in the reimbursement schedule. Cuts in medicare advantage--which was extremely popular--should be disturbing to a fiscal conservative.

To restate matters, Tea Party activists vilified cuts to the cost-containment portions of the Medicare--namely medicare advantage. Mobilizing public sentiment in this way neatly tied together the necessity of maintaining fiscal probity in order to sustain valued public services.

Now, I grant that changes to the payment schedule are a different beast, but I think its widely agreed that simply changing the payment schedule is a futile price-control measure. Structural action is needed.

Tim Lee writes:

Many libertarian intellectuals deeply resent the populists. What I am seeing is libertarian intellectuals showing their group-solidarity with the ruling class by throwing around accusations of racism, sexism, and homophobia.

Which particular libertarian intellectuals do you have in mind here? I can't think of any examples of libertarian intellectuals "throwing around accusations of racism, sexism, and homophobia" against the tea party movement. Certainly Tyler doesn't seem to do this in his column. If you're going to make generalizations about "libertarian intellectuals," it would be helpful to link to at least one specific example.

nohype writes:

It is strange hearing the terms "ruling class" and "elites" in a non-Marxist discussion of American politics. Moreover, we just had an election where the mantra was, "we are the change," a slogan that implied equality, not hierarchy. What has happened in the past year or two so that so many people are now thinking in terms an elite and a ruling class? How does one decide who is in the elite and who is not?

Snorri Godhi writes:

Actually, I think that the greatest benefit of being a small country is that you cannot afford to make mistakes, or else you end up very quickly in a Greek situation. Therefore, governments of small countries are fiscally responsible even if they take a short-term view. (Also note that there are more small countries than big countries: if fiscal responsibility were randomly distributed, most of the fiscally responsible countries would be small anyway.)

Having said that, I also think that there is more of a gap between the people and the intelligentsia in the English-speaking countries, and especially in Britain and the USA, as compared to continental Europe.

I tend to identify with the European intelligentsia (since I have European citizenship, and a PhD) but am enough of a contrarian to take sides almost always against the intelligentsia in politics. However, in the European context, I am often not sure what side the intelligentsia is on.

Adam Ozimek writes:


For all the time that you spend trying to pin libertarian dislike of the Tea Parties movement on group status concerns, or because "populists are not offering much in the way of deference to the intellectuals", or other undesirable motivations, it really seems like it's you that's biased by an emotional reaction and an obsession with group status. You're acknowledgement that you "cannot get past" your "hostility toward the arrogance and foolishness emanating from their quarters" certainly suggests that anyway.

The other thing that puzzles me is why you're so disgusted by the arrogance of elites but not the arrogance of Tea Partiers. What is arrogant to me is a failure to acknowledge the complexity of the problems that we face, and that "common sense" and "REAL American values" aren't sufficient to fix them. Which arrogance is more repugnant: the arrogance of someone who believes they have solutions but also recognize the complexity and difficulty of the problem, or someone that believes that have the solutions but don't even understand the basic facts and also think the problems and solutions are really simple?

Boonton writes:

Wow, progressive talking points. "If we trust government more they will act better."

I think he gets the order wrong, it should be "If governments act better we will start trusting them."

Perhaps the talking point is more about recognizing ownership of the gov't. For example, the only President you can say was 'imposed' on us by elites with a halfway plausible case was George W. Bush (what's that howling I hear? Sorry my libertarian buddies, last time I checked the Supreme Court is about as elite as you can get). Even there, though, if the voters had cleary been against him and his "wow surplus, gotta give it back now, taxpayers never said 'keep the change'" he wouldn't have won.

Gov't is for better and worse here 'of the people' and 'by the people'. Medicare and Social Security wasn't decreed into existence by the NYT editorial board or by fiat from Paul Krugman. It was enacted by the people and reaffirmed by even the Tea Partiers as they cheered Republicans who asserted even the most modest of cuts in growth rates was 'death panels'. Similiar programs are in place in every other non-dysfunctional, non-primitive country except those in which elites truly run the gov't. Those countries are called dictatorships.

Perhaps Tyler's message can be better understood as dropping the myth of the foriegn alien gov't that somehow got here for reasons unexplained but presumably nefarious. At the end of the day this is ultimately a cop out, like the husband who blames his poor finances on his free spending wife. Perhaps the problem is a lack of responsibility that is enabled by a lot of libertarian "we are the good people, and the problems come from far away Washington" rhetoric.

MG writes:

You should not throw around allegations of libertarian intellectuals "throwing around allegations of racism, sexism and homophobia" without a couple of links to such objectionable statements. I haven't seen Wilkinson, Cowen, Brink, Boaz, Sanchez or anyone else doing this. Show us which statements strike you this way.

Unit writes:

It seems to me that a much simpler explanation for the spending cuts in countries like Canada, Finland etc.. is that taxes had reach a level were people said enough is enough.

Foobarista writes:

A huge problem is local government, which in many places is run by political machines rooted in government unions.

If you're obviously getting fleeced to pay someone's fancy pension that they "earned" at the age of 52, you aren't all that willing to extend trust that more government is better.

The Feds are somewhat better than the worst political machines in places like Detroit or Los Angeles, but at some level, government is government.

Matt C writes:

It's probably fair to ask Arnold to back up his claims of libertarian intellectuals disrespecting the Tea Party movement. I recall one fairly mild statement of disdain from Will Wilkinson and that's all. I think Arnold probably muddled libertarian intellectuals in with the general mainstream smearing of Tea Partiers.

That said, I could see how he could make that mistake. I mostly read Econlog, so maybe I missed it, but I have not seen any other intellectual libertarians willing to stand up and acknowledge what is right about the Tea Party movement. They may be unsophisticated and icky, and they may be co opted by the culture warriors tomorrow, but today they are *the* mainstream faction opposed to things like TARP and Obamacare. I can see why Arnold might feel a little frustrated about being the only guy who will credit them for it.

Matt C writes:

Jon said:

To restate matters, Tea Party activists vilified cuts to the cost-containment portions of the Medicare--namely medicare advantage.

Is this really true? I didn't notice it, but I might have missed it. Can you link to support for the idea that this was a major goal for Tea Party activists?

Foobarista writes:

The whole point of "not trusting government" boils down to "not trusting the government in policy execution". If you don't believe the government is competent or is too corrupt to effectively execute policies, you won't be interested in policy debate.

This is the ultimate reason Tea Party types don't have a "positive" agenda. To have a positive agenda and a belief that this or that policy will be useful, you have to believe the machinery of government is functional. If you don't, the only answer is make the government as small as possible.

Chris writes:

People, such as Paul Volcker, who argue in favor of a VAT say that a VAT is better than a financial crisis, given that spending cuts won't happen. Regardless of whether this is true or not, this argument implicitly assumes that the financial crisis will happen overnight when in fact, there will be several warning signs ahead of time. Interest rates will steadily rise if it becomes more difficult for the government to sell debt. The inflation rate will steadily rise if the U.S. government monetizes its debt.

I don't believe the general public will ever tolerate high interest rates or high inflation rates (certainly not both simultaneously) and will vote out the incumbent President and many incumbent members of Congress should this happen. If the general public takes a firm anti-tax stance on top of this, spending cuts that right now look to be politically impossible might just become the most politically feasible option.

Patrick writes:

Fiscal crises in democracies are resolved when politicians realize they must make unpopular cuts to save the government. What's the point of currying favor with the voters if there's no office to be elected to? Only when the government itself is imperiled can they find the spine to stand up to the voters and say, "Stop being a bunch of babies. You can't have it all."

This has nothing to do with "distance" between those naughty, naughty elites and the pure, noble, virtuous common-folk. Public opinion is incoherent on fiscal issues, and public policy can't be much less stupid than public opinion. If Washington were entirely populated by saints who knew better, so what? They'd just be replaced by people who tell voters what they want to hear. Government is no saner than the electorate will permit it to be.

I can't disagree more with Arnold's opinion of Tea Partiers. I'd *love* to see him try to sell a Medicare voucher system to them. That would snap him back to reality.

With all that said, I believe better days are ahead. I believe Winston Churchill was right when he said, "You can always count on Americans to do the right thing—after they've tried everything else."

David C writes:

Don't know about sexist, but Tea Partiers are more racist and homophobic than the average American.

The NYT/CBS poll also doesn't look too good for them. This jumped out at me:

"Are the benefits from government programs such as Social Security and Medicare worth the costs of those programs?"
Tea Party
Yes 62%
No 33%

General Public
Yes 76%
No 19%

To get that 14% improvement you have to support a group that's strongly opposed to gay rights and increased immigration and has a favorable opinion of George W Bush.

Boonton writes:

I think given what we've already seen its a pretty bold presumption to assume that the Tea Partiers value either coherence or consistency in their political platform rather than simple emotionialism. I can see them applauding a 50% cut in Medicare or decrying a 5% decrease in Medicare's growth rate as granny murder depending only on whether the person hawking it has a last name that ends in 'in' or 'ma'.

Mark Bahner writes:

"Medicare and Social Security wasn't decreed into existence by the NYT editorial board or by fiat from Paul Krugman."

No, they were both illegally created, in violation of the Constitution. They were illegally created, because the people who created them knew that they could never get the votes needed to pass Constitutional amendment(s) that would be needed to legally bring them into being.

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