Forum Final Response
We don’t talk enough about common sense and what outcomes the market should produce.
March 1, 2010
With Responses From
Mar 1, 2010
3 Min read time
We don’t talk enough about what outcomes the market should produce
Dean Baker properly calls the “libertarian” ideology of the past 30 years a mere façade behind which government actively participated in the crafting of rules and priorities that benefited specific groups—banks, big pharma, certain land owners. I surely do not believe that more than a few intellectuals of the right actually ascribed to the theory that a market could exist without government and rules-enforcement. Virtually all who mouthed libertarian rhetoric fully understood that the battle was over whose interests would be protected and how the fruits of the economy would be distributed.
Having said that, the total embrace of the language of libertarianism in public discourse has created a deep public ambivalence, even disdain, for government over the years. While the public discussion from the ’40s through the ’70s recognized the potential of an active government role, that very premise has since been rejected. Consequently, we need to rebuild the intellectual foundation that supports positive views of government participation. Having both theory and stories to do so is a critical part of successful persuasion.
Professors Sides, Binder, and Gelman highlight two important tensions in this effort. The public is ambivalent about government regulation of business, but favors specific regulation of financial institutions; and the public, while overwhelmingly favoring specific legislative measures, almost never punishes those legislators who fail to enact them. Collectively, these tensions speak to our larger inability to get Congress to move forward on significant issues where support is broad-based, diffuse, and disorganized, while opposition is narrow but deep and well-funded.
This superiority of the well-organized and well-funded—such as financial services—is in the blood of Washington politics. Special interests outmaneuver the public, which is too disorganized to bring specific pressure to bear on legislators. This has stymied major reform efforts across all substantive areas for several decades now. If we cannot resolve this problem, we may continue to wander aimlessly in the wilderness as the rest of the world leapfrogs over us. The academic reasons behind our immobilization are well explained by Mancur Olson in The Rise and Decline of Nations and by Albert Hirschman in Exit, Voice, and Loyalty.
Robert Johnson’s own market acumen and wizardry give special import to his ongoing critique of the Obama administration’s rather thin efforts at reform. Johnson’s testimony on derivatives regulation and the risk we face if we fail to do more than has so far been proposed makes clear that toxins are still seeping into our financial system. The continuing ability of the largest market players in derivatives to rewrite reform proposals speaks to the political dynamic that Sides, Binder, and Gelman rightly identify as the source of frustration.
But in moving forward, Johnson directs our attention to the most critical issue: our core values. Oddly, that area of public debate has been largely neglected. We have had too much chatter about mechanics and not enough about objectives—too much debate about the necessity of “public option” and not enough about “ensuring universal coverage,” too much about “credit default swaps” and not enough about basic decency, common sense, and what outcomes the market is supposed to produce.
At the end of the day I strongly believe we need to start a discussion that challenges those of us who support a more active role for government to define what parameters should shape that role and why it is so important that they do.
We have to undo decades of anti-government rhetoric that has metastasized into cynicism and the belief that government cannot accomplish anything useful. It is precisely that cynicism that the likes of Frank Luntz have been calling upon Republicans to harness in opposition to the sorts of reforms that many of us think are critical. We have failed to respond in kind. The progressives’ task, then, demands both intellectual creativity and communication skills. It remains to be seen whether we can succeed before the wave of populist sentiment now coursing through the country is captured by the unthinking “solutions” of Sarah Palin and Glenn Beck. But much rides on the outcome. ©
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