Comments on: Milton Friedman on social democracy

By: George

George — Mon, 20 Dec 2004 23:49:26 +0000

John Q: thanks for your response. Not trying to create more work for you, of course. I wouldn’t have known to ask the question without your pointer to Friedman’s article. Yet it does shed more light on the familiar argument between Reaganites and New Dealers—though in my experience, only those on the fringes are saying anything really fundamentally different from each other. Most people in the center just choose slightly different soapboxes. But if there were real evidence for some long-term change in the relationships between the public and private sectors, now that would be interesting.

By: John Quiggin

John Quiggin — Mon, 20 Dec 2004 22:44:46 +0000

The aggregate ratio of government expenditure (all levels) to GDP has been more or less constant in the US since 1980, but defense spending and interest have declined, so there has been a modest upward trend in the kind of spending I’m talking about. And it’s my perception that in areas like access to higher education, there are problems traceable to spending cuts that will have to be paid for in the future. However, I need to do more work on this.

By: George

George — Mon, 20 Dec 2004 22:04:29 +0000

George: My argument is that, although underlying demand for services has grown, neoliberalism has held spending down, more in the US than elsewhere. If you look at projections for health care spending in the US though, this balance is going to be difficult to sustain. But for 20 years? If so, amazing that “neoliberalism” has been so successful as to halt the march of such inevitable social factors, through both Republican and Democratic Presidents and Congresses. Perhaps Reagan’s admirers are right when they talk about his fundamental and positive effect on the economy—going so far as to claim the boom of late 1990s as the “Reagan economy.” I’ve always wondered about how true that is. I’m not saying you’re wrong, just that more evidence would be necessary to support your explanation of Friedman’s observation. And if you’re right, there are a few obvious follow-on questions. For instance, if social spending as a proportion of GDP has been artificially held down for the past two decades by “neoliberal” thinking, will it inevitably explode to make up for lost time, like a balloon mortgage? Has permanent damage been done to the economy in the meantime? On the other hand, is it possible that the trends forcing growth in the relative importance of social spending have been permanently stilled?

By: jasper emmering

jasper emmering — Mon, 20 Dec 2004 12:13:10 +0000

We (the reality-based community) need to have an easy, short and clear anwer to give people who “trust” (“believe in” is the better term) markets over anything else. That’s why I think posts like Quiggin’s ought to flood the internets.

By: cm

cm — Mon, 20 Dec 2004 10:09:24 +0000

tracy: Well, maybe you should send your kids to a productivity-enhanced school with 1 teacher in front of 40 students, then to a college where the lectures are given by TAs and 1 professor runs 500 students, and when you see the doctor, you’re through with it in 10 minutes. (Actually the latter may not be too far from the truth already.) Doing multiple-choice tests (that require less original thought) instead of going through essays is cheating. (But it makes for great test evaluation “productivity”.) What are you doing for a living? And how is your productivity coming along? As opposed to that of fat government for a change.

By: derrida derider

derrida derider — Mon, 20 Dec 2004 03:16:35 +0000

And isn’t it interesting how in health and education, which are dominated by government provision, there either don’t seem to be any productivity increases (education) or productivity increases don’t lead to price drops (health)? This reasoning is a classic instance of inverted causality. The same innate market failures that make a laissez faire solution very unattractive in these industries make productivity increases difficult. The point is that govermnets tend to intervene only in the hard bits of the economy. And BTW have you noticed how “productivity increases don’t lead to price drops” in Defence too? Is that because of public rather than private provision?

By: derrida derider

derrida derider — Mon, 20 Dec 2004 03:15:29 +0000

By: Tracy

Tracy — Sun, 19 Dec 2004 20:04:25 +0000

As more people figure out how to game the welfare system (or, more kindly, find themselves supported when they make bad decisions and thus face greater incentives to make more of them) then the welfare system will get more expensive. Then you can add in an aging population to the expensive side. And isn’t it interesting how in health and education, which are dominated by government provision, there either don’t seem to be any productivity increases (education) or productivity increases don’t lead to price drops (health)? And governments can always find things to regulate. After all, all those MPs were elected to make the world a better place. And the tool they have to do that is to pass laws. Hammers, nails? Incidentally, all those who think that markets are dependent on the government – how long do you think it would take you to buy some illegal drugs? It would take me, I estimate, about 4-5 phone calls. Markets can survive in the face of intense hostility from governments, albeit rather less efficiently and more bloodily. Probably not for every product – running an illegal trans-Pacific airline would probably be impossible – but the black market is alive and well.

By: Nicholas Weininger

Nicholas Weininger — Sat, 18 Dec 2004 22:56:49 +0000

John—maybe, but I’m not sure the distinction is meaningful. One can certainly compare at least roughly the extent to which different folks’ negative liberty is protected under different systems, so equality of negative liberty can be used as a metric. And a commitment to equal outcomes, or “not-too-unequal” ones, could well be taken as a definitional characteristic of a socialist system.

By: abb1

abb1 — Sat, 18 Dec 2004 22:29:32 +0000

This ‘equality of negative liberty’ – is this something like that caricature about Bill Gates and a homeless guy both being equally denied the right to sleep under the bridge (by Anatole France, IIRC)?

By: John Quiggin

John Quiggin — Sat, 18 Dec 2004 22:21:58 +0000

Nicholas, I misunderstood you, but then isn’t equality of negative liberty a definitional characteristic of your preferred system rather than an outcome?

By: Firebug

Firebug — Sat, 18 Dec 2004 22:16:55 +0000

Weininger: John— when did I mention equality of opportunity? I’m talking about equality of negative liberty. I do not view equality of positive opportunity as any more of an appropriate metric than equality of outcome. Your views represent a lunatic fringe shared by less than 5% of the population (and that is a generous estimate). I’m guessing that you’re a libertarian, or maybe you’ve drunk Ayn Rand’s Kool-Aid. That’s OK, I drank it once too. Maybe you’ll get over it when you move out of your parents’ basement and into the real world where the “free market” isn’t always perfect. No doubt you believe that self-interest is very important. So do I – and guess what? For the VAST MAJORITY of people, a laissez-faire system is NOT in their best interests, compared to European (or 1960s-1970s American) welfare capitalism. Why should the working class and middle class support a government that protects the property of the rich and does little else? What’s in it for them? You don’t seem to understand the idea of a social contract. Your property doesn’t exist in a state of nature (where it would be subject to seizure by the strongest brute on the block at will); it exists due to the protection of the laws and the government. And the government exists at the sufferance of We, the People. Why would we – the majority of Americans – want a system that offers no safety net and no protection against the cruelties of the marketplace? You want to have your cake and eat it too. You want the protection of your property that only the law can provide, but without the concessions every civilized society demands in return. The type of robber baron government you want can be imposed only by a dictatorship. If you were in charge, working Americans would be wheeling out the guillotines by the end of the first week. We were damned lucky that we in the US got FDR instead of some lunatic like Huey Long. If you and your coterie of clowns manage to bring back laissez-faire, God only knows what it will lead to this time.

By: Nicholas Weininger

Nicholas Weininger — Sat, 18 Dec 2004 21:20:56 +0000

John—when did I mention equality of opportunity? I’m talking about equality of negative liberty. I do not view equality of positive opportunity as any more of an appropriate metric than equality of outcome. s. weil—“macro-level healthcare outcomes” are, in fact, an egalitarian metric. Moreover, the failures of the US health care system are not an argument against free-market health care, since the US system is not a free-market one and has not been so for at least forty years.

By: S. Weil

S. Weil — Sat, 18 Dec 2004 20:52:03 +0000

Univeral health care in most of the industrialized world beats the current system in the US by almost any metric, egalitarian or otherwise. Those countries spend far less/person yet have better macro ~~level healthcare outcomes. The idea that the low costs of healthcare in the other countries is due to free~~riding on US funded drug research fails a basic smell test. Drug reasearch is a trivial (30B/500B) portion of pharma revenues – what the other-country health care systems refuse to do is add to the 200B+ a year in ecomomic rents captured by big Pharma through patent monopolies. It is only common sense to regulate the prices charged by a government established monopoly.

By: John Quiggin

John Quiggin — Sat, 18 Dec 2004 20:23:19 +0000

I’ve pointed out here that the distinction between equality of opportunity and equality of outcome is problematic. The two are complements, not substitutes.