Saturday, March 7, 2009

Big Government and Gutless Politicians

Many thanks to my good friend Dave for calling my attention to an extremely insightful recent article by journalist/historian Michael Lind that echoes some of my own thoughts rather eloquently: Obama's timid liberalism. Invoking memories of important public works projects sponsored not only by liberal Democrats such as FDR but conservative Republicans as well, he notes that
once upon a time in the United States, public goods -- from retirement security and energy research to public roads -- were provided by the government and paid for by taxes. As late as the Nixon administration, the provision of public goods by government was considered perfectly compatible with a robust market economy by so-called Modern Republicans like Eisenhower and Nixon as well as New Deal Democrats like Roosevelt, Truman, Kennedy and Johnson. In the intervening 40 years, however, free-market fundamentalists of the Chicago School have managed to change the debate, redefining "socialism" to mean not only public ownership of the means of production, but also public provision of public goods. Rather than fight back, most Democrats in the last generation adapted to this hostile conservative political climate by jettisoning New Deal "big government" liberalism for "market-friendly" neoliberalism.
. . . . . . .
You might have thought that the Crash of 2008 would have led Democrats to reconsider this neoliberal approach to providing public goods by private means. But to judge from President Obama's budget, the White House is still living back in the neoliberal era, when the diminutive Milton Friedman cast a giant shadow.
Right on!!!!

I'm especially impressed with what he has to say about the cost of education, as this has been bugging me for a very long time and hardly anyone wants to speak up:
The problem with higher education is that it costs way too much. Tuition costs at private universities and some state universities have been growing far more rapidly than inflation. A crude, old-fashioned, old-thinking New Deal liberal would see the problem as one of excessive prices demanded by universities, not insufficient funds on the part of the students whom the universities gouge. The hypothetical New Deal liberal would threaten to deny universities their privileged tax-exempt status unless they spend more of their endowments on tuition and keep their prices affordable.

The neoliberal alternative is to avoid impolite and divisive inquiries into the reasons for skyrocketing tuition costs. That would entail the government concluding that prices in a particular industry (in this case, a nonprofit industry) are too high, something that government should not do. Instead, the taxpayer will be forced to cough up money to help students meet the exorbitant fees. . . . Government subsidies without government price controls would encourage cost inflation, one might think, but this possibility appears not to bother the brilliant economists on Obama's team.
Why isn't anyone else saying this sort of thing? The whole "higher education" imperative has become a huge racket, with educators who should know better insisting that every high school grad simply must have a college education at all costs and the government encouraging skyrocketing tuition and a myriad of other fees as well. All paid for by the same "easy credit" that's wreaked havoc in the financial sector and imposed on far too many young people a lifelong burden of outrageous debt.

He then gets into another pet peeve of mine, the whole alternative energy issue:
Then there's energy. The problem with alternative energy sources like solar power and wind power is that they are still too expensive, compared to coal, natural gas and nuclear energy. The answer, according to a minority of enviromentalists like Ted Nordhaus and Michael Shellenberger, should be massive, Manhattan-style public sector R&D to discover ways to bring alternative energy prices down -- in absolute, not just relative, terms, to maintain cheap electricity for American industry and American households. That would be the Roosevelt approach. But the Obama approach is to use a cap-and-trade system to artificially raise the prices of conventional energy, in the hope that private capital (with modest help from public capital) will pay for efforts to invent a cheaper solar cell or wind turbine. The fact that most of the left embraces cap-and-trade should not blind us to the fact that cap-and-trade is a classic example of an indirect, overly complicated, "market-friendly" neoliberal approach, touted originally by conservatives and neoliberals as an alternative to the allegedly discredited "top-down, command-and-control" approach that gave us, among other things, the TVA, the Manhattan Project and the Internet.
Thanks once again to Al Gore, who's got everyone running scared, looking for any way they can to drive up the cost of conventional energy sources before the new, "clean" technologies are mature enough to compete. Prices are forced up, dumb solutions like biofuels are implemented prematurely, because everyone is now in panic mode and not thinking straight. God forbid we implement a "big government program" to develop alternative energy sources properly and in good time before unleashing them on our fragile economy. No, we must find a "private sector" solution immediately -- funded by the taxpayer in any case, with plenty of extra cash for all those middlemen we need to insulate us from any trace of "socialist" taint.

Lind continues, with lots more good stuff. You really need to read the whole thing, its very forcefully and convincingly argued. Thanks so much, Dave, for sending me this link.

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