A number of people (including Matthew Yglesias) suggested that they didn’t really understand my arguments about the deficiencies of left neo-liberalism, because they were too abstract. I’ve spent the weekend reading an Advance Reading Copy of Suzanne Mettler’s The Submerged State, which in addition to being a fantastic little book in its own right (and excellent value!), has a number of relevant – and quite concrete – points. Mettler wrote up a broad summary of her arguments last month for the Washington Monthly. But in the book, she goes into much more detail about the sources of the pattern of policy making that she argues against – the provision of welfare state benefits through semi-invisible tax breaks and forms of private provision rather than directly.
Mettler is quite clear about the origins of this direction in conservative thinking, and in interest group politics. The submerged state allows conservatives to have their cake and to eat it – they can on the one hand continue to rail against the evils of bureaucracy, and on the other provide benefits to their key constituents. It also allows politicians to buy off private interest groups who would otherwise oppose policy changes. But Democratic neoliberals also played a very important role.
After Democratic candidate Walter Mondale lost his bid for the presidency in 1984, the Democratic Leadership Council (DLC) formed in an effort to take control of the party away from liberals. The DLC championed tax expenditures, and in 1988 its affiliates in Congress pushed successfully for large increases in the EITC and for other new tax credits for the working poor. While Republicans had proposed tuition tax breaks as far back as the early 1960s, it was Democratic President Bill Clinton who finally called for their successful enactment in the form of the HOPE and Lifetime Learning Tax Credits, which he signed into law. Once Democrats controlled both Congress and the White House in 2009, tax expenditures constituted their policy tool of choice, as numerous new and expanded tax breaks were tucked into bills intended to encourage particular activities and to stimulate the flagging economy.
Here, Mettler’s claim is not that the neo-liberals of the DLC are evil villains, or that their policies are useless – some of these tax breaks (the EITC in particular) have been valuable. But the turn towards submerged state measures as the “policy tool of choice” has pernicious broader consequences. It means that people fail to understand the ways in which they actually benefit from government. This not only makes it hard both to build a long term constituency for welfare state expansion where such is merited, it cripples democratic debate – people have difficulty in talking coherently about the role of the US state in providing welfare, when many US state functions are systematically obscured.
This further leads onto Mettler’s concerns with the technocratic approach of key Obama administration decision makers to policy making, which rests on what Sunstein and Thaler, its two key proponents, have accurately described as ‘libertarian paternalism.’
Obama has surrounded himself with proponents of behavioral economics … Behavioral economists champion experimental research, conducted with the rigor of randomized drug trials, to determine which policies work and which do not. … Identifying systematic ways that people fail to act in their own interests, they seek policies designed to encourage them to do so. They favor such plans, for example, as automatic enrollments in pensions for workers without a 401(k) … Their approach is thus highly useful in shaping public policy to promote the attainment of salutary social and economic goals, such as saving for retirement and healthier eating habits.
While the attributes of behavioral economics, including its nonpartisanship, are therefore commendable, the approach circumvents the core ambitions that Obama prioritized in his campaign, namely, restoring the connection between Americans and their government and revitalizing citizenship. … These forms of interaction regard people primarily as consumers, as participants in markets, who need choices arranged for them in strategic ways so that they will be induced to behave appropriately. Fundamental to democracy is the idea that people are citizens, active participants in governance. It requires that people should be reasonably aware of what representatives do on their behalf; that they should be able to form their own views about such actions; and that they should be able to be involved in the political process and have their voices heard. Policy analysts need to consider, then, how public policies influence the health of democracy.
Mettler thus proposes abandoning ‘nudge’ politics in favor of evidence-based policy making that requires policy makers to “reveal” the operation of policies, and hence reveal governance to citizens.
This is a theory of politics then, under which the key problem is that Americans don’t understand the consequences of policies, and politicians and interest groups have systematic interests in obscuring them. Furthermore, the actions of leftleaning neoliberals (among whom might be included Sunstein and others) in favoring policies that are designed either to use conservative-friendly means towards liberal ends, or to invisibly shape actors’ market choices towards socially beneficial goals, can have unfortunate consequences. They make it more likely that individuals will fail to understand the ways in which the state benefits them – and hence make people more likely to think of themselves as disconnected actors making purely personal choices in a marketplace where they get no help from the state, rather than active citizens engaged in shaping their common destiny.
It’s clear that Mettler is a lefty – she is betting that if people understood these expenditures better they would be persuaded that the state can do a lot of good (and would also be better placed to push for reform where appropriate). But one could also imagine democratically inclined libertarians being in favor of a de-obscuring of the operations of government, both because it is appropriate in its own right, and because they are willing to make the opposite bet.
Furthermore, one could imagine leftwingers who have different priorities (e.g. focusing on the need to revive organizations that might both better inform citizens about their policy interests (and mobilize them around these interests), getting some valuable lessons from her arguments. Mettler talks about the role of civic associations and other organizations towards the end of the book, but they are not her focus. Equally, her arguments are not incompatible with these theories of politics (which might range from democratic Marxism through various forms of social democracy). Nor are they incompatible with partisan-friendly theories of politics. White and Ypi’s recent article on partisan justification (paywalled) emphasizes the ways in which political parties can educate and inform their members in the kinds of ways that Mettler is interested in.
Equally, the kinds of effects that Mettler’s account highlights are not exhaustive. Even restricting oneself to effects of the policy process (rather than the broader politics of group formation etc), one might look more generally at the circumstances under which (as Paul Pierson describes it), “effect becomes cause,” that is, under which policies generate constituencies that can create feedback loops in which the new constituencies demand more policies. Mettler discusses this in the context of the submerged state – but there are braoder implications. Such loops might have beneficial or pernicious consequences, depending on specific circumstances.
The example of the outsized political power of the financial industry today is one possible example of the latter. I suspect that one could trace back this power in large part to decisions both by conservative politicians and by left-leaning neo-liberals to free up financial markets in the 1980s and 1990s, which both strengthened the financial industry and increased its appetite for more and further policy concessions. A set of policies which were (in part) the result of good intentions – the belief that increased market size and the consequent efficiencies were necessarily going to benefit ordinary citizens – may have had quite the opposite effect, because it created a political constituency that was able to argue successfully for concessions that dramatically weakened the US and world economy, and to shape political, academic and media debate so as to systematically exclude critics. I haven’t seen any good history which really puts the facts together to either confirm or refute this hypothesis – but it is plausible that the obviousness of this hypothesis explains at least a little of the neuralgia that my previous couple of posts have exacerbated.
(NB that I owe the initial Mettler-theories of politics connection to Peter Frase).
Update: corrected to remove a misleading suggestion (that Mettler’s work doesn’t fully cover Pierson-type policy effects).