The Price of a Free Society

By Paul Starr

These are times that try liberal spirits. On one side, the Bush administration has taken up the agenda of the Christian right and sought to use the power of the state to shape how Americans live and die. On the other, it is undermining many of the positive accomplishments of government, such as Social Security, labor and environmental regulation, consumer protections, and federal responsibilities for health care. Some of the challenges are overt, as in the privatization of Social Security. Others are less conspicuous, as in the quiet abandonment of regulatory enforcement. Conservatives love the Bush tax cuts because they have set us on a fiscal course that makes severe cutbacks in federal programs appear inexorable.

Under assault is the core liberal idea that we can use government to provide for the common good and protect our safety, security, and well-being even as we prohibit government from controlling our private lives and compromising our liberties. Lately, however, in the face of the right-wing crusade against liberal government, moderates and even some liberals have too often conceded political and philosophical ground that ought to be defended.

How to change these dynamics? Resist the moves toward privatization -- yes. Contest the underlying assumptions -- even better. Use every opportunity to champion the things government does well. But any defense of public solutions to America's problems has to begin with realism about the obstacles, and not just from special interests.

The majority of Americans are ambivalent about government, and they have been even at the peak moments of liberal reform. It was during the 1960s that the public-opinion analysts Lloyd Free and Hadley Cantril famously pointed out that Americans tend to be ideologically conservative and operationally liberal. They are hostile to government in the abstract yet like the particular services that government provides. When asked about those services one by one -- national security, education, health care, public safety, transportation, the environment, and so on -- the majority typically want more done and more money spent.

The conventional view of American politics as being divided between two camps, conservative and liberal, is incomplete. Americans are also divided within themselves. Their conservative side comes out especially when government is the issue; their liberal side comes out more when the issues are the issue. So conservatives like to make government the focus of debate, and some liberals respond apologetically. We should forget the apologies -- and the mutual recriminations. The obstacles to liberal innovation are formidable. But, if we take them into account, we can make a strong and confident case for government where public remedy, and only public remedy, can do the job of protecting and extending a free society.

* * *

Three developments have made it extremely hard to advance liberal reform beyond the achievements of the New Deal and Great Society. The crises of the mid-20th century, from the Depression through World War II and the Cold War, resulted in a great enlargement of federal powers and programs. War has always been an engine of state expansion, especially so in the century of “total war,” when governments needed to mobilize their entire societies. Crisis conditions made it both necessary and easier to raise taxes and justify intervention in the economy. Moreover, the mid-20th-century crises hit the United States during the long ascendancy of the Democratic Party, which built major new public programs, as well as confidence in government itself, during that period.

Since September 11, we have had a new kind of crisis and new wars -- but without the total mobilization of the big 20th-century conflicts and under a Republican government that has used national security to justify its own hybrid policy: expanded surveillance powers combined with tax cuts, deregulation, and privatization. As president, Al Gore might have used the same crisis for wholly different public purposes. But for the first time since 1898, Republicans have had the opportunity to use war to entrench themselves in power.

A second historical barrier stems from the aftereffects of the '60s. The great challenge of the Depression had been mass unemployment and destitution, and a program responding to those problems commanded a wide majority. By the 1960s, the focus became minority poverty and minority rights, and the politics became inherently more difficult. Even though the '60s brought a few programs with broad appeal, such as Medicare, many white male workers had no sense that liberal policies were benefiting them. Some of the '60s reforms also attempted to do things on behalf of the poor that no one knew how to do well, and the limits and frustrations of those programs left a bitter residue, including resistance to taxes.

The third historical problem has been that the growth of established programs has crowded out new initiatives. A key factor here has been public policy, particularly in health care, that was far too accommodating of private interests and therefore failed from the beginning to impose effective cost controls. The United States has developed the world's most expensive health system, driving up costs for private and public payers alike. As a result, total government health expenditures per capita (mainly for Medicare and Medicaid) are now almost as high as in many countries with universal coverage. With the aging of the population, spending on existing health programs threatens to soak up new tax revenues in coming decades. Furthermore, Social Security, with or without any privatization, will also have higher costs. The very nature of a postindustrial society is that the total share of the economy devoted to education and other services tends to grow.

In health care, more effective cost containment can partially alleviate these pressures; as Jacob S. Hacker argues elsewhere in this section, public programs of social insurance are typically more efficient than their private counterparts. And as the debate over Social Security privatization has helped to clarify, the federal government provides retirement benefits at lower administrative costs and more dependably than a privatized system would. Nonetheless, in all the advanced societies, the rising cost of older programs has posed an obstacle to new ones and a test of political values.

Over the doors to the Internal Revenue Service are inscribed the words of Justice Oliver Wendell Holmes: “Taxes are the price we pay for a civilized society.” The United States continues to expand economically; we are not becoming poorer. But some of the goods that we buy through taxes are inevitably becoming more expensive because of underlying demographic and economic trends. We can simply refuse to pay the costs and blind ourselves to the human consequences. Or, controlling costs as best we can, we can meet the challenge of paying the price of running a civilized society in our time.

* * *

And not just a civilized society -- a productive one, too. Much of what we do via government contributes vitally to economic growth and efficiency. Conservative views of public spending typically portray it entirely as a drain on wealth. But public expenditures on education, science and technology, health, and many programs for children are critical forms of investment, with a demonstrable history of long-term payoffs.

Government also contributes to our wealth in other ways. Environmental regulation, for example, helps to preserve our “natural capital,” elevating long-term interests in a sustainable future over short-term gains. Financial regulation reduces the likelihood of old-fashioned panics, raises confidence in the markets, and increases the efficiency of capital allocation. Overall government spending plays a countercyclical role, helping to prevent downturns from becoming depressions.

Beyond these economic payoffs, government enables the public to purchase some goods unavailable in any market. As consumers, we are concerned with no one's benefit but our own. That's a kind of freedom, but a society with only that freedom wouldn't be free -- nor would it survive. A free people, acting together, must have some means of placing decisions outside the market to provide public goods and to avoid making all the conditions of life depend on individual economic capacities.

Liberals share with many conservatives a belief in individual freedom that implies limits on the powers of the state (and lately liberals have been freedom's more reliable allies). We don't want government prescribing our religion or how we run our private lives. But we are not convinced that government always need compromise liberty, so when we call for it to intervene, we want the government's powers carefully circumscribed so that individuals enjoy greater liberty than they would have otherwise had. We use Social Security, for example, to help ensure that we can continue to live independently in old age, and we use law to prevent any Social Security official from gaining arbitrary power over us. Unlike conservatives, we believe that the people can enlarge their freedom through the only power that they share in common, which is their government. Taxes are the price we pay for that expanded vision of freedom.

Paul Starr is co-editor of The American Prospect.

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