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One market under God


Jon Chait has an interesting piece in TNR on the sclerotic condition of contemporary conservative free market dogma, as it tries to parry the Obama administration’s response to the financial crisis, global warming, and health care reform. As Chait emphasizes, all of these issues are textbook cases of market failure, which means that as an ideological matter contemporary American conservatives have difficulty acknowledging they even exist:

Partisan self-interest–an accurate belief that Obama’s legislative failure offers Republicans the most likely road back to power–surely accounts for some of the party’s obstinacy. But at least as powerful is the deepening hold on the GOP of anti-government ideology.

Several years ago, I wrote in these pages that the fundamental difference between economic conservatism and economic liberalism is that the former is driven by abstract philosophical beliefs in a way that the latter is not. Conservatives believe that small-government policies maximize human welfare. But they also believe that they increase human freedom. Liberals, by contrast, believe in government intervention only to the extent that it increases human welfare.

If liberals could be persuaded that tax cuts would actually increase living standards for all Americans, they would embrace them. (This is why nearly all liberals believe that some level of tax rate, be it 50 or 70 or 90 percent, becomes counterproductive.) If conservatives came to believe that tax cuts failed to increase economic growth, most would still support them anyway, because they enhance freedom. As Milton Friedman once put it, “[E]conomic freedom is an end in itself.”

For this reason, liberals tend to do a better job at devising policies that maximize human welfare. They do not do a perfect job, nor is there always a singular definition of “human welfare”–some of the thorniest dilemmas of public policy involve trade-offs over whose welfare to maximize. Still, you’re going to fare better at maximizing human welfare if that is your sole goal, rather than one of two oft-competing goals.

Conservatism can succeed at maximizing human welfare when faced with government failure or some other circumstance that naturally lends itself to ideologically congenial tools, like inflation in the 1970s. But conservatism is plagued by blindness in the face of even textbook cases of market failure.

The piece also contains an amusing review of the too-seldom referenced GOP flip-flop on Medicare, which in the space of a few years has been transformed from the ultimate instrument of socialist tyranny to a sacred human right.

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