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LoganFerree and a gnostic have related diaries today on the article by Brink Lindsey, a honcho from the libertarian Cato Institute, in the current issue of The New Republic. (No, I do not defend every position TNR has taken in the last several years.) Lindsey seeks to advance the "libertarian Democrat" discussion that, so far as I know, was kicked off by our very own Kos.

LoganFerree and a gnostic take a broad philosophical approach. I post this separate diary to address Lindsey's policy proposals on particular issues. Basically, I think Lindsey is significantly (but not completely) on target.

Below the fold: extended quotation from the Lindsey article, a link to it, and my reactions on specific issues. And a poll! Gotta have a poll!

Regretfully, the full article is available to TNR subscribers only. The printer-friendly version, which I find easier to read on-screen, is here.

The gist:

Can a new, progressive fusionism break out of the current rut? Liberals and libertarians already share considerable common ground, if they could just see past their differences to recognize it. Both generally support a more open immigration policy. Both reject the religious right's homophobia and blastocystophilia. Both are open to rethinking the country's draconian drug policies. Both seek to protect the United States from terrorism without gratuitous encroachments on civil liberties or extensions of executive power. And underlying all these policy positions is a shared philosophical commitment to individual autonomy as a core political value.

The central challenge in cementing a new fusionist alliance--and, make no mistake, it is a daunting one--is to elaborate a vision of economic policy, and policy reform, that both liberals and libertarians can support. Here, again, both sides seek to promote individual autonomy; but their conceptions differ as to the chief threats to that autonomy. Libertarians worry primarily about constraints imposed by government, while liberals worry most about constraints imposed by birth and the play of economic forces.

The basic outlines of a viable compromise are clear enough. On the one hand, restrictions on competition and burdens on private initiative would be lifted to encourage vigorous economic growth and development. At the same time, some of the resulting wealth-creation would be used to improve safety-net policies that help those at the bottom and ameliorate the hardships inflicted by economic change. Translating such abstractions into workable policy doubtlessly would be contentious. But the most difficult thing here is not working out details--it is agreeing to try. And, as part of that, agreeing on how to make the attempt: namely, by treating economic policy issues as technical, empirical questions about what does and doesn't work, rather than as tests of ideological commitment.

Allow me to hazard a few more specific suggestions about what a liberal-libertarian entente on economics might look like. Let's start with the comparatively easy stuff: farm subsidies and other corporate welfare. Progressive organizations like Oxfam and the Environmental Working Group have already joined with free-market groups in pushing for ag-policy reform. And it's no wonder, since the current subsidy programs act as a regressive tax on low-income families here at home while depressing prices for exporters in poor countries abroad--and, to top it off, the lion's share of the loot goes to big agribusiness, not family farmers. Meanwhile, the president of Cato and the executive director of the Sierra Club have come out together in favor of a zero-subsidy energy policy. A nascent fusionism on these issues already exists; it merely needs encouragement and emphasis.

I'm with Lindsey on ag policy. I think the controversy on this issue could be largely defused by requiring US gasoline and diesel to have steadily-increasing percentages of ethanol and biodiesel. This would allow farmers to make a good living without subsidies, and would also help with CO2 and other pollutants.

Tax reform also offers the possibility of win-win bargains. The basic idea is simple: Shift taxes away from things we want more of and onto things we want less of. Specifically, cut taxes on savings and investment, cut payroll taxes on labor, and make up the shortfall with increased taxation of consumption. Go ahead, tax the rich, but don't do it when they're being productive. Tax them instead when they're splurging--by capping the deductibility of home-mortgage interest and tax incentives for purchasing health insurance. And tax everybody's energy consumption. All taxes impose costs on the economy, but at least energy taxes carry the silver lining of encouraging conservation--plus, because such taxes exert downward pressure on world oil prices, foreign oil monopolies would wind up getting stuck with part of the bill. Here again, fusionism is already in the air. Gore has proposed a straight-up swap of payroll taxes for carbon taxes, while Harvard economist (and former chairman of George W. Bush's Council of Economic Advisers) Greg Mankiw has been pushing for an increase in the gasoline tax.

Not only do I think Lindsey makes sense on the policy merits, I also think tax reform is a plum issue for Democrats to seize. We should take a lesson from Evil Master Karl Rove and campaign on our opponent's strength. Imagine the Dems pitching roughly this: "The tax code is riddled with loopholes that are only available to corporations and people wealthy enough to afford squads of accountants and tax lawyers. This has given the rich a windfall and left the children and grandchildren of the middle class up to their eyeballs in debt to the Chinese. We need a simpler, fairer, tax code that pays for American priorities with American funds."

Entitlement reform is probably the most difficult problem facing would-be fusionists. Here, libertarians' core commitments to personal responsibility and economy in government run headlong into progressives' core commitments to social insurance and an adequate safety net. Yet a fusionist synthesis is possible nevertheless, for the simple reason that some kind of compromise is ultimately unavoidable.

With millions already dependent on the current programs, and with baby boomers beginning to retire in just a couple of years, libertarians' dreams of dramatically shrinking federal spending are flatly unrealizable for many years to come. But liberals must face some hard facts as well. Spending on Medicare, Medicaid, and Social Security is now projected to increase from about 9 percent of GDP today to approximately 15 percent by 2030. Already, spending on the elderly consumes more than a third of the federal budget, and the fun is just getting started. If a fiscal crisis is to be averted, if economic growth is to be sustained, and if there is to be any money left to fund domestic programs for people under 65, the federal safety net is going to have to be recast.

One possible path toward constructive compromise lies in taking the concept of social insurance seriously. Insurance, to be worthy of the name, involves the pooling of funds to protect against risky contingencies; "social" insurance fulfills the same basic function but makes the government the insurer. Unemployment insurance is a species of legitimate social insurance; wage insurance, much talked about, would also qualify. But Social Security and Medicare as currently administered are not social insurance in any meaningful sense, because reaching retirement age and having health care expenses in old age are not risky, insurable events. On the contrary, in our affluent society, they are near certainties.

We can have true social insurance while maintaining fiscal soundness and economic vibrancy: We can fund the Earned Income Tax Credit and other programs for the poor; we can fund unemployment insurance and other programs for people dislocated by capitalism's creative destruction; we can fund public pensions for the indigent elderly; we can fund public health care for the poor and those faced with catastrophic expenses. What we cannot do is continue to fund universal entitlement programs that slosh money from one section of the middle class (people of working age) to another (the elderly)--not when most Americans are fully capable of saving for their own retirement needs. Instead, we need to move from the current pay-as-you-go approach to a system in which private savings would provide primary funding for the costs of old age.

Here I think Lindsey lets his ideology get in the way of the facts. The Dirty Little Secret of Social Security reform is that the system would be fine with some modest tweaking -- a little more revenue, a little less benefits paid out -- no fun, certainly, but hardly the Apocalypse it's been made out to be.

And on health care, Lindsey avoids the elephant in the room -- universal coverage. Medicare? Medicaid? We don't need no stinking Medicare/Medicaid. Covering everybody, including those currently enrolled in Medicare/Medicaid, would be CHEAPER than our current "system."

These are only suggestions, meant to start conversations and debates. If a new kind of fusionism is to have any chance for success, it must aim beyond the specifics of particular, present-day controversies. It must be based on a real intellectual movement, with intellectual coherence. A movement that, at the philosophical level, seeks some kind of reconciliation between Hayek and Rawls.

If such an exploration could be launched, liberal and libertarian thinkers would begin talking with one another and engaging one another regularly. Over time, they would come to see themselves as joined in a common endeavor. And, in the shared identity that would emerge, there would be plenty of room for continuing disagreements, even sharp ones, just as there is in any robust political movement.

Can liberals and libertarians really learn to work together? I don't know, but their alternative is most probably to languish separately.

All right, Kossacks. Have at it.

Originally posted to HeyMikey on Tue Dec 05, 2006 at 08:26 AM PST.

Poll

Libertarian Democrat "fusionism" is:

50%30 votes
16%10 votes
11%7 votes
10%6 votes
10%6 votes

| 59 votes | Vote | Results

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