My initial effort at blogging was so ambitious (a 3-parter on health care policy that finally crossed the finish line at almost 4000 words) that I needed a month-long hiatus. Anyone reading it was probably thankful. So I promised myself, and now you, that this one will be much more succinct but no less important.
The topic is winners and losers, both in the economy and with public policy, a subject referenced briefly in the health care blog. Google the central conservative tenet that “government shouldn’t pick winners and losers” and you’ll find a plethora of the usual Republican suspects, e.g., Paul Ryan, Mike Pence, Sarah Palin, Mitt Romney, etc., preaching the gospel, inevitably referring to some policy initiative of the Obama administration. Curiously however, in the middle of my Google search I came across a clip from that ultimate news source The Daily Show with Jon Stewart dated 10/25/2012 in which Stewart demonstrates humorously as well as persuasively that every decision that government makes picks winners and losers. Say what?
Turns out that Stewart is absolutely right. Think of the government (federal, state or local – doesn’t matter) as simply a conduit for dollars. They flow in primarily in the form of taxes, and they flow out as government expenditures (whether those flows balance, and how much is lost due to inefficiency, are separate issues). The government always chooses whom to tax and to what extent (the losers), and it always chooses the recipients and beneficiaries of its expenditures (the winners). Put differently, every government action has redistributive (altering the winners and losers) consequences. Sounds to me like a pretty universal process. So the silly argument that government shouldn’t pick winners and losers is really tantamount to saying that the government shouldn’t exist at all, since that’s what all government programs do!
But then how does one explain the persistence of this misguided conservative mantra? I can think of three possibilities. One is simply superficial thinking, in this case a likely combination of two blissfully ignorant propositions: “if it’s government it must be bad” and “if you say it enough it will become true.” Given the list of deep thinkers noted above this is certainly a plausible explanation. But let’s give them the benefit of the doubt and consider the possibility that they know their claim is both misleading and meaningless. What then do they really mean?
They often are actually saying that the winners and losers pre–government intervention, i.e., those of the unfettered private marketplace, are preferable to those created by the government action. Yes, there are also winners and losers with no government involvement at all. How are they determined in unregulated capitalism you ask? Hint: $$$$. Alternatively, what the right sometimes really means is that their form of government intervention is OK but others are wrong-headed. Critics of Obamacare sometimes played the ‘government shouldn’t pick winners and losers’ card, but as quickly became clear their proposed alternative – the American Health Care Act or Trumpcare – also created winners and losers, just different ones.
Bottom line: In a world of scarcity there will always be winners and losers, whether picked by a central authority or a decentralized marketplace. The policy challenge in a capitalist democracy is to define the most appropriate ‘rules of the game’ where both markets (dollars define winners) and government action (often corrective of market failure or excessive dollar inequality) must uneasily coexist. There is in fact a vast literature in both philosophy and economics on this topic (see for example the work on distributive justice by John Rawls or Karl Polanyi). Not surprisingly reasonable people disagree. But at minimum the right question should be asked, and one thing is pretty clear – the disingenuous ‘government shouldn’t pick winners and losers’ mantra doesn’t help much, since it amounts to nothing more than saying ‘my winners and losers are better than yours.’
For me a logical perspective on the rules of the game has been summarized by economist Arthur Okun in his 1976 classic Equality and Efficiency: The Big Tradeoff. Since I pledged brevity at the outset the reader will need to consult the original for his full argument, but here’s a sample:
“I personally would not be greatly exercised about unequal prizes won in the marketplace if they merely determined who could buy beachfront condominiums, second cars, and college slots for children in the bottom quarter of academic talent.” (But it is unacceptable when capitalism) . . . awards prizes that allow the winners to feed their pets better than the losers can feed their children.”
“The tyranny of the dollar yardstick . . . given the chance, would sweep away all other values, and establish a vending machine society. The rights and powers that money should not buy must be protected with detailed regulations and sanctions, and with countervailing aids to those with low incomes.”
Translation: Sometimes the government needs to pick winners and losers.
Garygrams 