Arnold Kling  

Hypothetical Bargains

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Below the fold is an essay that is partly a reaction to reading parts of William Voegeli's new book, Never Enough, which ruminates on liberalism, conservatism, and the welfare state.

In the end, I gather what Voegeli proposes is a hypothetical bargain. If liberals will agree to some finite limit on the welfare state, conservatives should agree to try to make the best of it by making design changes (such as means testing) that maximize the benefits of the welfare state relative to its costs.

The title of the book suggests that liberals have never thought in terms of offering such a bargain. No matter how big the welfare state becomes, they think it ought to be bigger. In what I have read, Voegeli does not explain why liberals think this way. He might have cited Thomas Sowell on "the unconstrained vision." In any case, I think he is making an unstated assumption that liberals would accept his hypothetical bargain if conservatives would only offer it. Or, alternatively, that the voters would elect large majorities of conservatives based on a platform that includes the hypothetical bargain.

I certainly doubt that liberals would accept such a hypothetical bargain. Consider another hypothetical bargain that is popular with market-oriented types. We'll let you (the liberals) decide how much to spend per capita on education, if you will let us (the market-oriented) determine how it is spent (i.e., using vouchers). I have never come across a liberal who liked that bargain. They cannot imagine depriving children of government's expertise in education. Similarly, I doubt that a liberal would accept Voegeli's bargain, because it makes no sense for anyone, rich or poor, to be deprived of the expert guidance that the state can provide in making choices about saving and health care.

Indeed, I would suggest to Voegeli that the welfare state is not the root of the disagreement between what I call the Established Church of Unlimited Government and the heresy of limited government. The root (or better yet, the soil) includes what Daniel Klein calls "The People's Romance," in which the state is infused with mystical qualities. It also includes what I might call "The Progressives' Romance," in which technocrats and social scientists are infused with mystical qualities.

Relative to the soil of magical thinking about the state and about technocratic expertise, the welfare state is merely the largest weed. It is a weed that seems particularly vulnerable at the moment, because of the current situation in Greece and the similar situation implicit for the United States in the medium-term projections of the Congressional Budget Office. But I am not convinced that trimming the weed would be a sufficient achievement for libertarians/conservatives, given the soil.

To illustrate, consider another hypothetical bargain. Suppose that liberals offered to keep the combination of Social Security, Medicare, and Medicaid below 15 percent of GDP and overall Federal spending below 20 percent of GDP indefinitely, in exchange for which they would be given free rein on other policy issues. That is, they could dictate energy and environmental policy, enact unlimited "nudges" to try to change what people eat or how they invest, impose regulations to address what they perceive as inequities in the work place and in access to credit, and so on. Should we accept that bargain? It seems to me that Voegeli offers us no basis for rejecting it, although I myself would be quite opposed.

Over the past decade, I have offered many ideas for trimming the weed. Most of them are based on raising the age of eligibility for Social Security and Medicare and indexing the age of eligibility to longevity going forward. I will continue to advocate such an approach.

However, I think that the soil is the more important problem. If the nation's educated elite were to wake up tomorrow with a firm grasp of Hayek's insight into the knowledge problem, then the Progressives' Romance would disappear from the soil. And if the average American were to wake up tomorrow with a firm grasp of Tocqueville's insight into the ability of civil society and voluntary associations to serve as vehicles for solving collective problems in a democracy, then the People's Romance would disappear as well. In my view, unless these changes in the soil take place, we are destined to be overrun by weeds, one way or the other.



COMMENTS (14 to date)
Doc Merlin writes:

Leftists only accept compromises that move their position of power forwards. This internal backbone is their major strength.

david writes:

And if the average American were to wake up tomorrow with a firm grasp of Tocqueville's insight into the ability of civil society and voluntary associations to serve as vehicles for solving collective problems in a democracy, then the People's Romance would disappear as well.

If institutions existed to solve $_problem, then institutions would exist to solve $_problem.

It doesn't help that the United States is culturally diverse; a small country will have civil institutions that largely align with its own popular moral compass. But a large country will invariably have regionally dominant civil institutions that violate the moral intuitions of those elsewhere, and the marketplaces of goods and ideas don't eliminate such disparities or regional monopolies. Do I need to mention civil rights again? The market did not drive out segregation even where it was not required by legislation.

david writes:

Doc Merlin, who accepts compromises that don't move their position forward?

We know that US net welfare spending is near West European levels without delivering as much, so here's an alternate explanation. US welfare policy is stupid because stupid policy is simple. Simple policy is passed because only simple policy has political viability.

And only simple policy has political viability because liberals know conservatives like Kling actually wish to decapitate progressive policies altogether, whilst conservatives know liberals have no real limits in mind. So there is no room for trust; both sides plan for whether their proposed policies will have numerous beneficiaries and hence political viability in the future.

Take the SS retirement age, as an example - suppose liberals oppose raising the age due to a minority of retirees who might justifiably need it earlier. Conservatives counter with proposal to raise the age whilst keeping earlier eligibility for disability or means-tested need. Liberals realize that the smaller program means that in a decade conservatives can simply dismantle that too, because the number of recipients is then too small to resist a legislative effort. No deal.

This example captures the essence of the problem, I think, although in practice, conservatives and liberals alike oppose raising the retirement age (yes, even in the Tea Party, which is disproportionately older and on such government programs).

Yancey Ward writes:

I am pessimistic on this issue- the state will grow until it collapses in revolution. The revolution can arise for a number of reasons, and those reasons will shape what state follows. If the revolution arises because people start to see the state as a boot on their back, then a higher state of freedom may take root; but it is just a likely, maybe more so with the people's romance, that the collapse will be seen as a failure of the state to do enough, in which case a dark future awaits.

John Alcorn writes:

Arnold, the technique of hypothetical bargains is surprisingly effective, revelatory. Insightful post.

Matt C writes:

> No matter how big the welfare state becomes, [liberals] think it ought to be bigger.

Yup. I think Joe Latte (Joe Sixpack's liberal brother) would reject the idea--bluntly stated--that we should have the state in total and absolute control of health care, child rearing, marriage, education, workplace policy, nutrition, retirement, etc. But he will always support an *incremental* change toward greater state control. It all goes to the same place in the end.

Lori writes:

What about this bargain: You get full tax exemption for all capital gains, and henceforth the marginal corporate income tax rate is the unemployment rate times 3.5. Call it a 'trust but verify' version of 'trickle down economics.'

Doc Merlin writes:

"Doc Merlin, who accepts compromises that don't move their position forward?"

Right wingers often do. In the name of reaching-across-the-aisle or bipartisanship, right wingers destroy their own position of power through compromise.
A good example is ecological laws, right wingers tend to fight to keep the status quo and leftists to increase ecological regulation, so the standard effect is for slow movement away from the right winged position.

Dan Weber writes:
We'll let you (the liberals) decide how much to spend per capita on education, if you will let us (the market-oriented) determine how it is spent (i.e., using vouchers).

Oddly, I made the exact opposite proposal, I think on this blog, last year WRT health care. (Google can probably find it.)

Have the conservatives agree to a general fund with $2000 each year for every man, woman, and child in America. Then have the liberals spend it the best way they think they can to improve everyone's health care.

The appeal for liberals is that they would have the budget that Western European countries do in health care (they average about $2000 per head), and they know that if they were just in charge things would work, so things would work.

The appeal for conservatives is that, since they know that the liberal version won't work, they are setting up their opponents to fail -- for no more money than the government is spending right now on Medicare and Medicaid.

I've found more resistance from conservatives than liberals on this proposal, though.

BZ writes:

@Doc Merlin:

Amen!

I was listening to a preview of Judge Napolitano's new show the other day when I heard him exclaim that their mission was to "Fight against the growth of government".

Dadgummit, if libertarians and the right would just stop setting a goal of "fighting against the left", and start fighting FOR smaller government, we might actually get somewhere.

mark writes:

This is all true. You will find people now arguing that cellphones and high speed internet access are necessities that need to be provided or subsidized, directly or indirectly, to all Americans. If anyone can find an example of a progressive statement of what is enough, please post a link or reference.

John Fast writes:

I highly recommend the book The 2% Solution for a list of "grand bargains" that are designed to appeal to both liberals *and* conservatives.

Michael Strong writes:

This:

"If the nation's educated elite were to wake up tomorrow with a firm grasp of Hayek's insight into the knowledge problem, then the Progressives' Romance would disappear from the soil."

combined with learning public choice theory, is exactly what happened to me. I still feel as liberal as I ever did morally and spiritually, but cognitively the left-liberal position now strikes me as nonsense.

As Hayek said, the leftists are hold the positions they do because of intellectual error. That is why their dominance in academia is so tragic; the world believes, sadly, that these people are intellectually authoritative. The people who believe that 1 + 1 = 6 rule our academic institutions.

kent writes:

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