A Less Intrusive Government Could Still Maintain a Safety Net

The right would benefit from drawing a sharper distinction between fights over how to make markets freer on one hand and how to protect the losers on the other.

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Rand Paul's Wednesday speech at Howard University is significant mostly because it's a very public attempt by an ambitious Republican to engage black voters, a core Democratic constituency. For analysis on that angle, don't miss Jordan Bloom at The American Conservative, Dave Weigel at Slate, Adam Serwer at Mother Jones, Jack White at The Root, and Josh Kraushaar at National Journal. The speech showcased some of the Kentucky senator's strengths and too many avoidable weaknesses to be considered a total success, but efforts like these will pay dividends for Paul if he keeps making them and learns something from each outing. This small beginning is enough to establish him as better on outreach than most in his party.

But I'd like to focus on a passage that could be found in any speech that Paul gives and suggest a different approach. Summing up the Republican philosophy about government, he bundles a bunch of policy stances together that GOP candidates would be wise to disaggregate. Said Paul:

Democrats still promise unlimited federal assistance and Republicans promise free markets, low taxes, and less regulations that we believe will create more jobs. The Democrat promise is tangible and puts food on the table, but too often doesn't lead to jobs or meaningful success. The Republican promise is for policies that create economic growth. Republicans believe lower taxes, less regulation, balanced budgets, a solvent Social Security and Medicare will stimulate economic growth.

... High taxes and excessive regulation and massive debt are not working. The economy has been growing at less than 1 percent and actually contracted in the fourth quarter. If you are struggling to get ahead, if you have school loans and personal debt, you should choose a political party that wants to leave more money in the private sector so you will get a job when the time comes.

What I'd love to see Republicans do, for political and substantive reasons, is to emphasize the distinctness of these questions: (1) How generous and expansive should the safety net be? and (2) How free should the market be? The safety net's size, the level of taxation it requires, and the attendant affect on the economy are vital subjects, and can't be totally separated from the balance of economic policy -- a safety net that provided any layabout with a $100,000 annual living stipend would quickly distort incentives and bankrupt the nation. Still, you'd never know from Republican Party rhetoric that a nation can choose, for better or worse, to have a relatively generous safety net and a government that doesn't otherwise intrude unduly into the free market.

Put another way, it is irrational for Republicans to be ambivalent about the difference between Denmark and France. But neither the GOP nor the conservative movement seems able or willing to distinguish them from one another. They're conceived in the popular imagination of right-leaning Americans as bastions of big-government socialism that might as well be identical. I'd rather live in America than Denmark or France. But as Jason Brennan once put it in his book Libertarianism, "There's a difference between the administrative state -- which tries to control, regulate, and manage the economy (and everything else), and the social insurance state, which taxes citizens and provides publicly-funded social insurance. Hard libertarians oppose both the administrative state and the social insurance state, because they believe both violate people's rights. Classical liberals and neoclassical liberals dislike the administrative state for a variety of reasons. But they are more open to the social insurance state. The social insurance state, by itself, if run properly, still allows citizens an expansive range of economic freedom."

The GOP can expand that range of freedom even if it loses on social insurance. The proof:

Denmark ranks much higher than the United States on property rights, freedom from corruption, business freedom, monetary freedom, trade freedom, investment freedom, and financial freedom. Denmark also rates 99.1 in business freedom, 90.0 in investment freedom, and 90.0 in financial freedom. In comparison, the US scores 91.1, 70.0, and 70.0 respectively on these measures.

It's plausible to imagine an America where citizens preferred a social-insurance state like what we have now, or slightly bigger, but an administrative state that is smaller and more constrained. My instinct is certainly that Republicans would have more success at this particular moment attacking and reforming the administrative state than significantly shrinking Medicare and Social Security. And administrative-state reforms could help stimulate significant economic growth.

It's also possible that voters would prefer generous social insurance and a smaller administrative state ... but that forced to choose between shrinking or growing both they'd grow 'em.

The distinction I'm suggesting would seem to make particular sense for a Republican Party that never in fact cuts major entitlement spending anyway. Paul Ryan, who is held up within the GOP as an allegedly courageous fiscal conservative, insists that the current cohort of seniors shouldn't see any reductions in Social Security or Medicare spending -- his cuts are always scheduled to take place many election cycles from now in a distant year when, according to the life plan I can't imagine he doesn't have, he's president or a senator or a game-the-system executive.

"I disagree with my Democratic colleagues about how sustainable our entitlement spending is, and how much any one person should be asked to pay in taxes," Senator Paul or one of his GOP colleagues could say, "and we'll probably continue agreeing to disagree about those questions. What I can't understand is why Democrats won't work with me to make it as easy to open and run a business here as it is in Denmark. Why they won't help me to reform a regulatory regime that advantages big corporations that can navigate the red tape and hurts upstart entrepreneurs who can't afford to compete in a way that is required for a healthy economy?"

There are a dozen similar digs someone like Paul could make, and a dozen sharp Democratic retorts. The upshot might be, "We'd agree to a freer market if you'd agree to take better care of its inevitable losers." Even Republicans who'd regard that as a hard compromise to swallow should ponder whether it would in fact be an improvement on the status quo. I think it would be, especially if conservatives made a concurrent attempt at manifesting the sort of social safety net Matt Yglesias once described: "Typically when you see a safety net in place, you're not really looking at someone who's trying to be safe. You're looking at someone who's trying to do something dangerous. Because it's dangerous, there's a safety net in place. But the main point of the net is to facilitate risk-taking behavior not to make you safer than the average person."

Friedrich Hayek, who showed that support for a safety net can co-exist with a deep appreciation for the freedom and utility of markets, has more to offer the right at present than Ayn Rand.