“In the last few days, we’ve seen proposals arise from some in Congress that you may not have read but you’d be very familiar with because you’ve been hearing them for the last 10 years, maybe longer. They’re rooted in the idea that tax cuts alone can solve all our problems… So let me be clear: Those ideas have been tested, and they have failed.’ — Obama Stimulus Speech
President Obama is throwing trillions of dollars at the recession in an attempt to stimulate the US and, by association, World economy. All around him, banks are collapsing, shares are diving, people are scared of losing their jobs and being thrown onto the scrap heap. Executive excess, as typified by that totem of extravagance the corporate jet, is condemned by politicians of all political hues.
The Republicans are fighting the Democrats line-by-line in Washington but Obama still has enormous political capital which he intends to spend. Voters are looking to new and old solutions; the era of Big Government has returned in the modern age.
For conservative Americans and free-market radicals, Obama’s plans smack of socialism. Critiques of the Left are centred on the notion of individual freedom. Social democracy, as practiced in Europe and by the Democrats, emphasises the collective over the individual. For the Right, this raises issues of market freedoms, independence of conscience, religion and social self-reliance. Market failure is seen as a temporary, albeit traumatic, aberration; systemic failure is attributed to individual behaviour. Some free marketers want to go further along the Cato model and slash public spending; a case of destroying the village to save it.
The appeal of big government is that it can champion the democratic will; in this ‘credit crunch’, which is really a quasi-depression, everyone is under threat. Professionals, factory hands, office workers and the unskilled have all felt the swingeing axe in the last twelve months; there’s no hiding place when exposed to the vagaries of impersonal capitalism. Successful left wing governments and leaders (Sweden, FDR, Willy Brandt) have constructed what one might call ‘societal insurance’. The plusses of combining and giving the state have a stronger say in our lives during a recession far outweigh the risks and minuses of high-risk, low-guarantee capitalism.
Left wing politics, big government, tax and spend; call it what you like, but the Left is undoubtedly able to connect with people on many levels during economically calamitous times. Firstly, it rejects market and social Darwinism; we can minimise the shock for ‘losers’ in the market who would ordinarily have been ignored by the ‘winners’. Secondly, it taps into a the notion of enlightened self-interest, a staple of economics since Adam Smith; individuals see how they are part of something greater than themselves, a thing called society. Thirdly, it’s an end to economic denial when people’s lives have become unmanageable. Finally, by placing an emphasis on taxation for employment, education and investment, it binds the electorate more closely to the governors.
Societal Insurance allows us to remove some of the appalling risks to all our well-being; the recklessness of bank investment strategy, the fragility of the pensions systems, the disconnect between business and workers. We’re all in this together. Indeed Obama and the European Left are mopping up a mess encouraged by light-touch regulation and speculative booms of the Clinton and Blair years. We need the regulation and government that will save us from being sucked into a Thirties-style morass; we need to change.