The Anti-Economist — From the November 2013 issue

The Future Progressive

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In his classic book On Liberty, the nineteenth-century British philosopher John Stuart Mill urged that man strive to become “a progressive being.” Mill defined progressivism as the cultivation of individuality; to live progressively, he wrote, a man requires personal freedom. But Mill and other liberal philosophers of his era also saw that individual development could not happen without a community. This recognition was the starting point of progressivism as a philosophy of government. As the longtime Oxford professor Alan Ryan puts it, modern liberalism’s aims are to “emancipate individuals from the fear of hunger, unemployment, ill health, and a miserable old age,” and to “help members of modern industrial societies flourish in the way Mill . . . wanted them to.” The progressive maintains that change is a way of life, that society must work to ensure this change is for the better, and that government is the most important means of doing so.

As American policymakers fight over social-spending cuts and the right wing of the Republican Party, intent on defunding and dismantling Obamacare, threatens to shut down the federal government, fiscal doomsaying has become a disguise for an increasingly successful attack on this philosophy. One common feature of the many destructive economic ideas that have flourished in recent years is that they seek to prevent Washington from responding to change. Take for example Grover Norquist’s “Taxpayer Protection Pledge,” which requires its signatories to vote against tax increases regardless of circumstance. Currently 218 of 233 Republicans in the House and thirty-nine of forty-five in the Senate have signed the pledge, which means that nearly half of our federal legislators have actively chosen to limit their own options in responding to the nation’s changing needs. It’s one thing to be ideologically averse to tax hikes, but how can a legislator possibly know in advance that increased revenue will never be genuinely needed?

A similar dynamic was at work in the prelude to the 2013 budget sequestration, which arose from a belief among conservatives that the nation had to cut social spending now in order to address a predicted budget crisis ten years in the future. The Budget Control Act, passed in 2011, set hard caps on government expenditures, beginning this year. Even before these cuts went into effect, it was clear they would be terrible for our fragile economic recovery, but no agreement could be reached to reverse them. The government, privileging long-term deficit control over short-term growth, had decided to tie its own hands, with the result that the deficit is projected to fall from 10 percent of GDP in 2009 to less than 3 percent by 2018, while unemployment will remain high and economic expansion sluggish for the foreseeable future. Perhaps Congress would have done better to respond to an economy in flux.

This brings us to what may be the worst — and, for me, certainly the most disheartening — economic idea of recent years. In 2010, President Obama established the National Commission on Fiscal Responsibility and Reform, headed by former Republican senator Alan Simpson and former Clinton chief of staff Erskine Bowles, to come up with ideas to balance the federal budget. The cornerstone of the Bowles–Simpson plan was its proposal that federal expenditures be permanently capped at 21 percent of GDP. This level is near the average for the past forty years, but as the baby boomers age and medical costs rise, periods of increased spending will be inevitable. We couldn’t stay below the Bowles–Simpson ceiling without drastic cuts to social services. Though neither Obama nor Congress has acted on the idea of the 21 percent cap, the proposal continues to be taken seriously among policymakers. The bipartisan duo returned to Capitol Hill earlier this year with a modified plan that involved even less in the way of new taxes but maintained the principle of spending caps. Their proposal is an attack on progressivism precisely because it refuses to recognize the dynamics of social and economic evolution, of change itself. Economies change, social expectations change, our knowledge about the personal resources people need in order to achieve fulfillment changes.

Neither the federal government nor state governments could have known in 1789, the year the Constitution was ratified, that they would one day finance canals and railroads, build schools and medical-research facilities, subsidize land-grant universities, develop vast municipal water systems, create a network of interstate highways, and provide a public pension system for the elderly and a safety net for the unemployed.

What don’t we know about the future today? We are only beginning to learn how important pre-kindergarten education is to a child’s development, just as we once had to learn that high school is critical. We are beginning to understand the challenges posed by fossil-fuel consumption and climate change, and the substantial government investment these challenges demand. Economists almost to a person support free trade, but they should also support the establishment or expansion of social services to protect workers. It’s no coincidence that Nordic nations, with their world-leading quality of life, tend to have not only the most open economies but also the broadest (and most expensive) safety nets.

Imagine if we had drawn a red line before the Great Depression, when federal spending hovered below 10 percent of GDP. Keeping under such a ceiling today might mean eliminating either defense spending or Social Security entirely, or half of each. Medicare would never have been a thought. Do we forgo more spending on worthy programs merely to meet an arbitrary fiscal objective?

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