Liberalism Without Limits

Source: Liberalism Without Limits
John E. Schwarz
October 10, 2010

Liberalism, once dominant in American politics, has for decades been in retreat. Even with Democrats in control of two branches of government, liberalism today is locked in a standoff against a deeply flawed conservatism. How did it come to this? That is the underlying question of Never Enough: America’s Limitless Welfare State, a thought-provoking book by William Voegeli, a visiting scholar at Claremont McKenna College and a former program officer at the conservative John M. Olin Foundation.

Voegeli argues that the public’s loss of confidence in liberalism is rooted in a failure by liberals to define the limits of government. “Liberal rhetoric,” Voegeli points out, “never engages in this issue: what would be the size and nature of the welfare state that was not contemptibly austere, that did not urgently need a larger budget and a broader agenda?” Since liberals haven’t set limits on government, voters have been forced to do so instead. At the same time, many conservative ideologists advocate what amounts to the complete dismantling of the welfare state (a course of action that Voegeli, himself a conservative, considers neither viable nor decent). The result has been demoralizing gridlock.

Voegeli contends that much of the trouble began with Franklin Roosevelt in a 1932 speech that is sometimes called the New Deal Manifesto. “The task of statesmanship,” Roosevelt declared, “has always been the re-definition of [unalienable] rights in terms of a changing and growing social order.” Having claimed such power, FDR and his allies devised a “second Bill of Rights,” included in which was the right to a living wage, the right to a decent home, the right to adequate medical care, the right to a proper education, and the right to protection from the economic fears of old age, sickness, accidents, and unemployment. These rights, FDR suggested at times, were drawn from each individual’s “right of equality in the pursuit of happiness.”

By doing this, says Voegeli, the architects of the New Deal were creating a “living Constitution.” In the past, the “interpretation of a Constitution of enumerated powers meant to secure inalienable rights had been a matter of applying timeless principles to changing circumstances,” writes Voegeli. “A living Constitution denied the existence of timeless principles” and left the power of government, potentially, entirely open-ended and without limit.

Many liberals recognize the perils of mutable “rights” secured by ever-expanding government, but, says Voegeli, they tend to devote their energies to justifying the expansion of government rather than indicating where it all stops. For example, some liberals mount an appealing defense of the welfare state by evoking the greater common good, a line of argument that focuses on the need to harmonize individual rights with the larger public interest. Voegeli correctly observes, however, that this approach fails to set any premises either for defining what the greater common good should be or for setting appropriate boundaries on it.

Having established liberalism’s continuing tendency to expand the state, Voegeli proposes an alternative vision for the role of government in our economic lives. It starts with the premise that “a decent society is obligated to prevent the small minority of citizens who are chronically unable to fend for themselves, and the larger minority occasionally and transitionally unable to do so, from leading miserable lives.” It is to this minority of citizens, says Voegeli, that government assistance must be available, not to the more fortunate majority. While Voegeli offers no precise agenda, it’s fair to deduce that in his ideal polity programs like Social Security and Medicare, which now go to everyone, would be subject to means testing. Many other programs, such as welfare assistance or federal aid to education, would be more seriously means-tested than they now are. These positions are not inconsistent with some Tea Party rhetoric and indeed are reasonably close to the “roadmap” for future cuts in government that Rep. Paul Ryan, the top Republican on the House Budget Committee, has been touting to much fanfare in conservative circles.

Who is in “the small minority” that Voegeli describes, however, isn’t clear, nor is it explained why a decent society is obliged to assist the worst off and no one else. If liberals fail to outline a principle by which to limit the welfare state, so too, arguably, does Voegeli. Still, since liberals clearly call for a larger welfare state than conservatives do, Voegeli can perhaps be excused for placing the onus solely on liberals to explain where it ends. As for conservatives, their task, as Voegeli sees it, is to insist that liberals spell out when “the welfare state has done all we can expect of it and can no longer be beneficially expanded … or make them pay a political price for refusing to.”

In one sense, Voegeli’s call to conservatives is unnecessary: liberalism has already paid a severe political price for its shortcomings, to the political advantage of its opponents. Still, the nation would be far better off if liberals, instead of losing elections, would meet the challenge Voegeli lays down: to set forth a liberal vision of the welfare state that does the job and at the same time establishes clear limits on itself, all with an eye to the bedrock founding principles of the nation.

To accomplish this, liberals must return to the notion of liberty, or freedom. Liberty is the nation’s guiding value, and its principles, grounded in natural law, are what still lie at the heart of modern liberalism. They undergird the most fundamental liberal ideals and delineate both the role of and limits on liberal governance.

Perhaps the most ancient natural right of freedom is that of economic independence. Only if you can earn your daily bread without undue dependence on the consent of others can you really have freedom of action. That’s why freedom and economic independence are intertwined. To philosopher John Locke, economic independence in the natural condition meant having sufficient access to the commonly owned earth to provide the usual living of the time through one’s own efforts. Locke believed strongly in the ownership of private property, but the right was expressly bounded, based upon enough and as good being left for all others.

While the conditions Locke placed on the ownership of private property in the context of liberty are no longer as well remembered as they should be, they were well understood at the time of the nation’s founding. To Thomas Jefferson, the natural right of independence required that each man have sufficient means to earn a decent livelihood through his efforts. To this end, Jefferson advocated that government grant a fifty-acre homestead from the public lands, enough to support a customary livelihood, to each and every citizen who had never possessed such. As for the Declaration of Independence, the most famous of the self-evident truths contained in Jefferson’s own drafting of the Declaration asserted that “all men are created equal and independent.” The newly enacted Bill of Rights of Virginia and several of the other states proclaimed this same idea. George Washington, James Madison, and John Adams all held similar views. Abraham Lincoln later brought Jefferson’s vision to statutory life through passage of the Homestead Act and other reinforcing federal economic programs.

FDR’s declarations of rights were therefore less radical than Voegeli seems to believe. Rather than inventing new rights, or undoing old ones, Roosevelt was simply applying the unalienable natural rights of liberty as understood by Locke, leading Founders, and Lincoln to new conditions. The frontier had long since been closed. “Fifty acres and a mule” could no longer be offered to every willing citizen. Modern Americans needed alternative ways to achieve the economic independence upon which genuine freedom relies. “True individual freedom cannot exist without economic security and independence,” Roosevelt declared in advancing the “second Bill of Rights.” “Liberty requires opportunity to make a decent living according to the standard of the day, a living which gives a man not only enough to live by, but also something to live for.”

Such principles had to be translated into a concrete course of action. Lacking land for the millions of Americans who were shut out of work by market forces, Roosevelt created something else: a modern welfare state. The expanded role of government would counter the expanded role of remunerative employment and market conditions in the post-frontier era. If most workers were to be the employees of someone, then they must have not only effective education and training available to them, but also sufficient employment opportunities to earn at least a minimally customary living and get ahead. In cases of a dearth of opportunity, there must be provision to tide over those without work. For those especially vulnerable to market caprice, such as the old or the infirm, some form of social security should be made available. In keeping with the principles of freedom, all programs, as much as possible, were to be tied to individuals’ own work history, as unemployment insurance and Social Security both exemplify.

Roosevelt understood that economic independence also included the right of every man to secure the fruits of his labor. The vaunted Adam Smith, who strongly influenced the Founders, expressed the principle this way: “It is but equity that they who feed, cloath, and lodge the whole body of the people, should have such a share of the produce of their own labour as to be themselves tolerably well fed, cloathed, and lodged.” Market forces often diverge from this principle, and, in such cases, only government can serve as a corrective mechanism, by, among other things, setting minimum wages, establishing wage subsidies, encouraging and enforcing collective bargaining to help pay keep up with workers’ productivity, and instituting progressive taxation. These actions might raise the hackles of conservatives, but freedom relies on basic societal equity, which includes the principle that sufficient economic opportunity be available to all. The New Deal was an attempt—often successful, sometimes not—to restore this first principle of freedom after decades of erosion by economic injustices that had developed during industrialization and intensified during the Great Depression.

With respect to the degree of action taken by the state, there is a crucial principle of liberty that speaks to the appropriate size of government. The principle is that government must intervene no more than required to get the job done. Freedom is harmed when government taxes or regulates its citizens more than is necessary, such as if indiscriminate funding formulas were to send federal tax dollars to school districts that are already well-off. By the same token, however, freedom is harmed when government taxes or regulates less than is necessary to meet a principle, such as when schools are left without enough money to purchase updated textbooks or standard equipment. In sum, freedom does not call for small government. Rather, it calls for the smallest government that remains able to fulfill the principles of freedom. That is what the ideal of “limited government” means. Recall that the Founders themselves replaced the weak Articles of Confederation with a far more extensive and powerful federal government based on a consensus that more government was necessary for more freedom.

Voegeli surely agrees with the notion of government being as large but no larger than needed. That is why he proposes means-testing many of the benefits provided by today’s welfare state—to make sure that only those in need, and not those without need, get assistance. When we step back to examine the functioning of our markets as a whole, however, we see that Americans by the scores of millions do not enjoy the economic freedom envisioned by the Founders. While the welfare state must do no more than is necessary to remedy this problem, it must also do no less.

And the problem is severe indeed. More than one-quarter of all employed Americans—nearly 40 million workers—are paid under $11 per hour, which is to say less than what is widely considered to be the lower limit of a living wage. The vast majority are white and aged twenty-five to sixty-four, many of them with some education beyond high school. Even in the good times, the proportion of employed workers paid less than a living wage hasn’t dropped beneath 20 percent in over forty years. Then there are Americans who are doing even worse: those with no work at all. Today, the unemployed make up another 10 percent of U.S. workers. Finally, there are some 10 million workers who are employed only part-time, even though they seek and need full-time work. Unless we are to regard fully one-third of all workers in the American labor force as undeserving, there is an immense gap between Jefferson or Lincoln’s understanding of true liberty—under which every willing citizen has access to the proverbial fifty acres—and the reality left by market forces.

If that isn’t dire enough, we must also consider what the averageAmerican worker, the man (or woman) in the middle, has had to contend with. He has gotten almost no real pay increase since 1973—barely 10 percent over those thirty-seven years—despite an 80 percent improvement in worker productivity during that same time. Not only did this fuel the escalating debt that caused the present economic crisis, as the economy came to rest upon a foundation of swelling debt in place of rising pay; it also violated Adam Smith’s principle about equity, under which a worker enjoys the fruits of his labor. It was during this stretch that the average annual pay of the top 1 percent of Americans rose from $194,000 to $576,000 as measured in today’s dollars, a real pay rise of greater than 180 percent and a growth rate eighteen times faster than for the average worker. Just as happens when the minimum wage is raised at the bottom end (which conservatives tend to oppose), the billions in salary increases at the top end are passed on to consumers in the prices they are charged. To support the skyrocketing hike in annual compensation for the top 5 percent, which now costs a cool $1 trillion more than in 1973, the average American household pays a hidden premium of thousands of dollars per year today even as its own wages have flatlined.

All of this is to say that untrammeled market forces have failed the most basic principles of freedom. Perhaps this was to be expected in an era of a mounting oversupply of labor, brought on by the baby boom and its shadow, combined with a steep decline in union power. But with such a wide chasm between the routine operation of market forces and the fundamental principles of freedom to which Jefferson and Lincoln—and Roosevelt after them—were deeply committed, it is difficult to means-test or focus existing assistance programs much further. Consider some of the most important programs: temporary welfare assistance; wage subsidies to boost pay (the Earned Income Tax Credit); unemployment benefits; food stamps; school nutrition; housing aid; federal aid to education; job training; and health care assistance from programs outside of Medicare. All of these programs are already means-tested and directed primarily to Americans in the bottom third of the income ranks. They also account for a fair proportion of welfare-state spending.

What is mainly left to be considered, then, are two welfare-state giants: Social Security and Medicare. In principle, means-testing them could save many billions of dollars. But, again, principles must eventually be translated into real-world policies, and here the specifics are crucial. Unfortunately, Voegeli gives few details. Would all workers continue to pay in, as they do now, but only some receive benefits? Even if Social Security payments were restricted to those with gross incomes of under $50,000 in retirement, that would still leave about 90 percent of Social Security recipients eligible for full benefits—and wouldn’t cut anything close to what Voegeli seems to have in mind. Or would we reduce the size of benefits across the board? That would cause serious hardship to the majority of households, whose wages haven’t grown for decades and who have therefore been unable to build significant additional savings for retirement.

And, what of Medicare? In its absence, the access it offers to medical care for the elderly, perhaps the highest-risk group, would be far beyond the financial means of all but a very small proportion of households. Of course, one money saver would be to create incentives to guide our health care spending toward treatments that actually work for patients. The Obama administration advocated doing precisely that, but conservatives cavalierly scuttled it, claiming that it would result in government death panels. So much for discipline and efficiency in government!

If Washington were to tax the nearly $1 trillion in pay hikes to the top 5 percent at a rate of 50 percent and to crack down on tax fraud and offshore tax evasion (which by themselves cost hundreds of billions in tax revenues annually), the combination would suffice to address the structural deficit we currently face, including resolving the long-term financing issues of both Medicare and Social Security. In addition, it would leave enough revenues with which to bolster the creation of millions of new good private-sector jobs and public-sector infrastructure employment. That, along with a more solid minimum wage, encouragement of collective bargaining, and more effective use of the government’s contracting power, would start to bridge the gap between the age-old principles of American liberty and the way all too many Americans are now treated by the economy. Sufficient resources to complete the job, and possibly even permit some tax reductions, would result from applying the axiom of freedom that government must be large enough to achieve its proper ends, but no larger. That axiom would be the basis for overdue cuts in areas ranging from health care outlays and farm expenditures to military spending.

Or do we want to leave matters as they are now? Do we want to continue paying as consumers for outsized salaries while ignoring the confining economic struggles that average Americans have been enduring for decades? Do we want to live with such danger to both our liberty and our economy? That’s the choice now facing us. That’s the choice Voegeli ignores. And that’s the choice that liberals, in the name of liberty, are best endowed to make.  John E. Schwarz is a Distinguished Senior Fellow at Demos in New York City; professor emeritus of political science at the University of Arizona; and author of Freedom Reclaimed: Rediscovering the American Vision.

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