Market-oriented policies in pursuit of liberal goals are not entirely new: Transferable development rights and cap-and-trade are two examples. But governments can transfer a lot more regulatory trappings to market competition by not just establishing tradable rights but also setting themselves up as commercial alternatives that consumers can choose if they prefer: Creating a new (and needed) market for long-term-care insurance is one example. The defeated public option in health care is another example. So would be partial privatization of Social Security (as conservatives advocate)—if the federal government could then compete to retain the investments (which would be the best option for most Americans). I challenged students at the University of Chicago last fall to come up with similar “business opportunities” for government. The most creative was Match.gov: Since the NSA knows more about you than even you do, let it figure out who you ought to date. That’s a horribly funny (or funnily horrible) idea, but it makes the point: In the (increasingly rare) instances where a natural monopoly—and thus usually both a public good and power relationship—exists, this universal backbone provides competitive opportunities for further apps.
Governments also offer a valuable source of trustworthy information, such as providing unbiased consumer rankings (e.g., Nursing Home Compare) or creating a market-empowerment alternative to direct regulation. Obamacare’s exchanges are another example.
But the latter function is increasingly being usurped by private peer-to-peer technologies. While sharing apps like UberX and Airbnb are undermining government regulatory capabilities (as well as incumbent economic actors) in many ways, they also create new collective mechanisms for public goods like dissemination of information and a form of public regulatory oversight through widely and easily available consumer ratings. Crowdsourcing now allows the widespread funding of public goods and other good causes—which doesn’t eliminate the free-rider problems that usually justify compulsory, governmental solutions, but it does seem to render most people unconcerned with them. This may simply be part of a broader social and economic evolution in which an increasingly networked world gives rise to the greater “efficacy and centrality of [both] individual and collective social action,” in the words of network theorist Yochai Benkler.
Mandatory, centralized, and standardized government programs need not be the alpha and omega of collective social action or progressive public policy, then. In fact, they had better not be, or progressivism is unlikely to survive the 21st century. But while conservatives are focusing on ways to “streamline” government-created ladders out of poverty, they might want to start with streamlining government-created barriers: Perhaps the major cause of poverty today is government-imposed restrictions on where people can live, like zoning. Conservatives could lead the charge for less government there. Ultimately, then, we need political leaders at both ends of the spectrum to get out of the two-dimensional binary of more or fewer government programs.
In The Atlantic last year, I laid out a “business plan” for making government what it ought to be in the 21st century. As with any business plan, we need to start with the bottom line, and that means that government, like many industries, needs to be resized to current realities. That’s why I spent much of 2013 discussing the needless spending in every aspect of large public enterprises. But there’s more to rethinking government than simply rejiggering the old taxing and spending levels. It’s also essential to rethink what government does, how it does that, and even what it is. Right now, despite the hype, neither party is really giving that a shot.