The nation is divided almost exactly 50-50 into conservative
and liberal ideologies and the political parties that espouse those ideologies.
There seem to be hardly any pragmatic moderates left in the middle.
In many ways both sides are the same. Both sides have issues
on which ideology trumps science and hard evidence (for example, climate change
for the right, vaccine side-effects on the left). Because of our flawed
electoral process, both sides are beholden to special interests that pay for
their very expensive campaigns (for example, unions on the left, corporations
on the right – though in recent elections both sides seem to have been for sale
to business.) But they do have different
ideologies, and therefore different agendas.
But each ideology, liberal and conservative, Republican and
Democrat, suffers from a fundamental flaw, which their followers are either incapable
of seeing, or at least are unwilling to acknowledge.
Liberals, whose rhetorical focus, if not always their own
actions, is on helping the underdog, want more social services from the
government. Many have confused equality of opportunity with equality of outcome
and would like a European-style welfare state to create (relative) equality of outcomes.
But in fact the Europeans themselves have shown the two fundamental problems
with this approach.
(1) It takes money, a lot of money, to pay for welfare states.
If the nation taxes individuals and businesses heavily to pay for it, it drives
the economy down and makes it less competitive in the world markets, reducing the
tax take even further. If instead politicians
borrow heavily to pay for it, the nation accumulates a massive debt which it
can never repay. Greece is a classic case
of this, but some US cities and states, whose politicians promised
over-generous pensions in return for votes, are now in terrible financial straits.
(2) Humans respond to incentives, and are very good at “gaming”
the system. If the welfare state is
generous enough, many people will opt to take the state money rather than work.
If the safety net is generous enough, many people won’t bother to save or plan
or buy insurance or retrain themselves when their jobs disappear. If pensions
are generous enough, many people will opt to retire early rather than stay in
the work force. All of these depress the economy, making even less money available
to pay for the social services even as demand for these social services is
increasing. Again, Europe is a clear example
of this. Nations like Greece, who espoused early retirement and generous
pensions, are now in terrible financial trouble because their economies simply
couldn’t pay for all the services they promised.
Conservatives, on the other hand, whose rhetorical focus, if
not always their own actions, is on individual freedom, want a smaller, less
intrusive and less expensive government (except, of course, that they would
like to have government enforce their own “family values” on everyone). They
profess to believe in unfettered free-market capitalism, in which individual
initiative and work is rewarded (except, of course, that they also support market-distorting
subsidies, tax credits and tax exemptions for favored businesses).
But the core flaw in the conservative ideology is that unfettered capitalism doesn’t work. As mentioned in (2) above, humans are pretty good at “gaming” any system, including capitalism. Without controls, capitalists will quite naturally maximize their profits by any means available – price-fixing cartels in product markets (or the equivalent wage-fixing cartels in labor markets – unions), misrepresentations and deceptive advertising, “dumping” below cost to drive competitors out of the market, bribes and kickbacks to obtain contracts, trading on insider information, buying protective tariffs and import restrictions from compliant politicians, etc, etc. The list goes on and on, because people can be quite creative in this area.
When it is working well, capitalism does what no socialist central
planning authority seems to be able to do, it continually and efficiently reallocates
labor, capital, raw materials and finished products where they are most needed
and best used. It does this with price signals.
If rare walnut boards can be sold for firewood at $5 a cord but will fetch
$1000 a cord from a furniture factory, most of the walnut will naturally go to
the furniture factory, which is a better use of such a scarce commodity. If buggy whip makers can’t find work because
their product isn’t needed much anymore but computer programmers make $100,000
a year because we don’t have enough of them, there is a natural incentive for
at least some of the buggy whip makers to re-train themselves as programmers. The
result is that even imperfect capitalist systems like ours are vastly more
efficient and productive than central planning systems favored by communist and
socialist systems, as even a cursory study of economic history will show.
But to work well capitalist markets have to be fair and the
price signals relatively undistorted. It takes government regulation and constant,
vigilant oversight to make that happen. The conservative myth that markets
would work better if government would just get out of the way is just that, a
myth. It may well be true that in some
areas government bureaucracy over-regulates (bureaucracies have their own
pathologies), but it is naïve to think capitalist markets would work well
without constant and tight government supervision.
What is true is that both liberal and conservatives
ideologies have some seeds of truth or reality in them, and a blending of the more rational
parts of each would probably produce quite a workable system, as it has in the
past. But to get back to that we need a lot more pragmatic moderates among our
politicians than we seem to be electing nowadays, and that requires a lot more
pragmatic moderation among voters than we are seeing.
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