Tyler Cowen of Marginal Revolution attempts to define liberalism (and conservatism and libertarianism) in one sentence. For liberals, he comes up with, “We don’t want to rake people over the coals with risk,” which I think is pretty close to the truth and fair, especially as regards economic matters. The crux of the debate when it comes to Social Security, bankruptcy laws, universal health care, mandatory minimum wage, public education, and most other domestic issues that aren’t driven by the Christian right is the degree to which the government insulates people from risk. There’s an honest debate to be had about what the right answer is both in terms of our moral posture and what best serves the greater good.
My personal philosophy is that relying on markets to sort things out is generally the most efficient approach, but I never forget that liberals who want to insulate people from risk aren’t the only people looking to pervert the function of those markets. Most of the lobbyists in Washington are working to get Congress to pass laws to insulate their clients from risk, and their clients are big business. Their risk is reduced by having fewer responsibilities to their employees and customers, less environmental regulation, more regulation of their competitors, and financial support from the government. They have plenty of cash to buy legislators and no shame when it comes to asking for free hand outs.
I’m also mindful of John Maynard Keynes’ famous statement that “In the long run we are all dead.” Markets may be the best long term solution to allocating resources, but I find it inhuman not to attempt to ameliorate the suffering caused by dislocation in the meantime.
Update: I got an email from a reader who was confused about my bottom line position, which is this: I believe that the US government does not do a good enough job right now of insulating people from risk.