The Courage of Their Convictions
This morning on Brad DeLong’s site, I saw a summary of an editorial (subscription-only) that recently appeared in The Economist, supporting the idea of Social Security privatization while raising extremely well-considered doubts about nearly every facet of the proposals currently circulating. DeLong was characteristically contemptuous of this line of argument and his analysis of the bottom line is devastating. Kevin Drum summarizes The Economist’s perspective as “We support [privatization] for the same reason George Bush does: because it's one of our ideological hobbyhorses.”
Also this morning, Duffy pointed me to a comparable piece in the Wall Street Journal by long-time privatization advocate and economic libertarian Pete DuPont, entitled “Socialism’s Last Redoubt.” He concludes:
Ultimately the argument isn't about investment accounts, or stocks or bonds or "gambling" or "insecurity." It is about socialism versus individualism, about Attlee's social justice and Hillary's common good and Chomsky's economic solidarity. AARP CEO William Novelli is in favor of allowing the government to invest Social Security surplus funds in the stock market, but against allowing individuals to do so--exactly the socialist argument, that government should control the distribution of the nation's wealth.
When you increase an individual's wealth, he becomes less dependent on government, and his attitude towards government changes. Socialists can't allow that, for it erodes their fundamental principle that social justice can only be achieved when important segments of the economy are under government control.
And that is why today's very liberal Democratic Party is so vehemently arguing against personal ownership of Social Security market accounts. The government's Social Security system is socialism's last redoubt, and must be preserved at all costs.
Both of these perspectives cut admirably to the real issue with Social Security in the minds of its opponents: that it is a government program. To economic libertarians, the evil implicit in that is axiomatic. The whole idea of libertarianism is that government should protect the security and property rights of citizens and play no role whatsoever in the operation of the free market. The sophisticated ones will tell you that they believe that the aggregate of a society of individuals each pursuing their selfish interests in an unregulated environment actually produces a greater “good” than a settlement imposed top-down through the actions of government – even a democratic government.
By “good,” libertarians usually mean prosperity (which is certainly good) and justice in the sense that the strong and clever are rewarded in full measure, setting an example for all to be strong and clever themselves. Honest libertarians are often emphatic in their desire for equality of opportunity, although how this is to be achieved in the absence of communal commitment is unclear.
The problem with libertarianism in its extreme form is the same as the problem with any ideological position in its extreme form: the ideals rarely survive contact with reality. Indeed, the evidence for the success of libertarianism as a governing methodology is limited to the rather special case of pre-1997 Hong Kong. And even in the small sample of city-states with strong cultural traditions of education and entrepreneurship overlaid with a sheen of 19th-century British mercantilism, it’s not clear that Hong Kong’s nearly unregulated economy fared any better than the highly-paternalistic model used to great success in Singapore. And if examples of successful libertarianism are thin on the ground in the practical world of governance, the record of extreme socialism is even worse.
From a practical perspective, the most successful forms of government are those that mix free market and government in ways that preserve initiative and competition while mitigating their worst effects through the actions of government. The reasons for this are plain obvious. To embrace either libertarianism or socialism as a complete philosophy, you need to have a painfully limited view of human nature. Libertarians believe everyone is a rugged individual, or should be. Socialists believe we’re all cogs in a larger social construct, or should be. In fact, humans are complicated creatures with aspects of both individual and group affinities. This could only come as news to hermits, shut-in or people whose ideology has completely crowded out their common sense.
In well-balanced human beings, ideological rhetoric that emphasizes either our sacred dignity as individuals, or our solidarity as members of a class or state can stir passions temporarily, but few people live their lives as uncompromising devotees to a theory that does not satisfy their material needs in practice.
So Pete DuPont, the multi-millionaire heir to the Dupont Chemical fortune, is free to pontificate on the marvels of the laissez-faire system. They could do away with Social Security and every other government program tomorrow and it’s fair to say that Pete wouldn’t be worried about eating dog-food in his retirement. Likewise the editors of the Economist, safe in the bosom of a rather generous welfare state in England, can furrow their brows in disappointment that George W. Bush appears less committed and less competent to deliver their utopian vision of small government than they would prefer. In both cases, the debate for them is purely a matter of theory and ideological purity.
There are some regular people who share these views. Particularly since the term “socialist” is so loaded in American discourse, crude appeals to ideology might gain privatization some adherents. But for most people, the issue is about what works.
I think, given the choice, that the vast majority would prefer to depend on the government to provide for them when they’re old and sick than having to constantly worry about exhausting their personal assets or being left to the uncertain mercy of family members or charities. The value of “being in control” of things like retirement savings, medical care, the purity of the food and water you consume, the truthfulness of claims being made about the products you use, and all the other little jobs that the big bad government currently takes care of diminishes dramatically in the face of the true costs and risks of actually being responsible for those things. That’s not socialism, it’s pragmatism.
So this whole unmasking of privatization as a social experiment in libertarian extremism is a positive development in my view. I’m glad folks like DuPont and the Economist editors have the courage to come out and say what’s really motivating them, rather than fooling people with cooked figures, phony claims of “crisis,” and deceptive promises about benefits that will almost certainly never materialize in most cases. From their pampered and distant locations, they can afford their idealism. All others should keep their hands on their wallets.
1:54:04 PM 
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