15 November 2008

Perhaps it is the inevitable result of modern (classical) liberalism; we don't like to see people struggle or get hurt.  We want all to be content and happy, and to us that entails liberty.  The fact that some other cultures see things differently, and use our sense of justice against us is problematic, but that's a subject for another day.  The inevitability is that we are inclined to want to take care of those that can't take care of themselves.

That's noble.  But as with those who would use our justice against us, there are many in our own culture who would happily use our generosity against us.  These are those who can take care of themselves but choose not to when they discover an easier way.  Our proclivity to worshipping equality feeds  such a choice: why struggle when you can have it given to you?

In a free market culture people are left to their own devices, and those that are able, and make the effort can achieve beyond those that don't or won't.  And some get hurt.  We might not feel bad when failed risk takers get hurt, but they inevitably drag others down with them, and we feel bad for them.  The fact that in the long run free markets really do make it better for almost all is lost in the concern for those who slip and fall in the short run.  This struggle between long run and short run will always exist and keeping a balance is challenging.

Currently, for many reasons, the balance is drifting left.  Honest concern for others is clearly one reason; ignorance of and bias toward free markets and how they work is another; a strong belief in general egalitarianism is a third.  Furthermore the non-achieving, being more numerous than the achieving, provides a large constituency for those to whom power is more important than anything else.  The founders of our country were concerned about that, calling the potential the tyranny of the majority.

Recently we underwent a historical sequence of events that have nudged the balance even further left.  A combination of actions  by government, individuals and businesses, all basically feeding on human greed caused an untenable growth of wealth that reached its inevitable end, and because of the size of the problem and the general and severe pain that letting markets take their course would have produced, government took steps to attempt to avert the most dire circumstances that could have resulted, steps that were socialistic in nature - temporarily so, if followed to the logical conclusion upon which they were initiated.

But at the same time, and probably largely because of the perceptions that surrounded the financial crisis, perhaps the most liberal government that has ever existed in the United States came to power - controlling both houses of our legislature and the executive branch.  This confluence of events will clearly give our natural drift to the left a strong supporting nudge, perhaps merely speeding up the inevitable.

The question is, will it destroy the balance between big government controls and free market freedoms?  The difference?  History has made it clear, if narrowly understood, that excessive government controls dampen economic growth; there simply is too much to control, and government can not do it effectively.  But the complexity of world trade, urban living and international stresses and inequities, and pure size of the problem of living demand that  government take a hand where necessary.  Where necessary; and where is that?  At the balance point, admitedly a circular argument.  As one economist put it, we are all in agreement as to what it is we want to achieve - the best possible for our populace - but we are in disagreement as to how that is to be achieved.

Middle ground, balance point, thoughtful compromise - call it what you will; it is the secret of our success to date and it will determine our success in the future.   For let there be no doubt, success and economics are one and the same: it's the economy stupid, and always will be, because economics determines quality of life.

Our slow drift leftward - toward a socialistic philosophy - has just been given a sharp impetus in the same direction.  Whether that is dampened toward a continued rough balance between government control and free markets, or allowed free reign toward increased government control will determine our future - perhaps not immediately, but eventually; balanced?  or not?  One way or the other this historic confluence of events has offered us a test.   How we react to it will be long studied and often debated.