What’s Left: The Problems Facing the Economy

Elton Steinberg

A mantra of liberals since their movement gained momentum in the 19th century has been that government solutions to societal problems often have unintended consequences. They argue that a bramble of conflicting desires and limited access to data often prevents the government from functioning as an effective problem solver.

The electorate, however, also lives in a similar confusion of conflicting desires and limited data. A farmer in rural Mississippi, making $7.25 per hour, declares he has a better idea for how to spend the hard-earned dollars withheld from his paycheck, supposedly used to fund welfare programs in a coastal city. The fact that the farmer’s missing income most likely returns to him in the form of a refundable tax credit is ignored. 

Some policymakers demand that Obamacare be repealed. The government should have no business deploying its vast coffers in industries like the healthcare market. Government intervention will supposedly skew incentives, leading to lost jobs and poor healthcare. Clearly, profit motivates doctors in the U.S. and everyone else in the healthcare industry to provide the best care in the world.

For the same reason, the government should not regulate financial transactions. Red tape will impede growth. That is, unless the situation gets really, really bad. Then, there are no objections to the government providing trillions of dollars in bailout funds. After the crisis has passed, these policymakers allege that the financial institutions have learned their lesson, and more government intervention will lead to negative outcomes.   

If we are to embrace this school of thought, that is to say, if we are going to demand that government limit its actions to those that aim to solve root issues, then let’s not pick and choose when to apply this principle. Policymakers should not make decisions to bandage societal ills for a few months or a couple of years, only to let the wound continue to fester. Rather than living day-to-day, reacting to situations that cause suffering, maybe it would be wiser to seek out the root of the problem and intervene vigorously and decisively.

Instead, many policy makers are so concerned about being reelected by an electorate moved by sound bites of Ayn Rand worshippers and trade unionists that they cannot possibly be concerned about the root issues. Many policymakers are motivated to provide solutions they can write home about and are not necessarily concerned about future outcomes. Policies that will positively affect future outcomes will generally interrupt the consumers’ satisfaction and, therefore, will be unpopular.  

For voters, the choice is clearly between politicians who generally sell bandages, offering brief respite from suffering, and those that maximize quarterly profits, offering quick riches to a small minority. A voter does not choose between real ideologies. Neither party offers effective long-term solutions. Each panders to a conflicted electorate with limited data. An informed voter might avoid the party that espouses liberal ideals but does permit the government to take any action to upset the status quo, making a caricature of the liberal ideals that it touts.