George Will lit off a broadside against the Republican party yesterday in his regular newspaper column. It began with the McCain-Palin campaign gambit that had Obama spreading the wealth around:

America can’t have that, exclaimed the Republican ticket while Republicans — whose prescription drug entitlement is the largest expansion of the welfare state since President Lyndon Johnson’s Great Society gave birth to Medicare in 1965; and a majority of whom in Congress supported a lavish farm bill at a time of record profits for the less than 2 percent of the American people-cum-corporations who farm — and their administration were partially nationalizing the banking system, putting Detroit on the dole and looking around to see if some bit of what is smilingly called “the private sector” has been inadvertently left off the ever-expanding list of entities eligible for a bailout from the $1 trillion or so that is to be “spread around.”

Besides the general fun of watching Will kick the Republicans around for their sloppy rhetoric, there’s a bigger issue. We don’t recognize the difference between Socialism and a strong state. In the US, partly as a result of the conservative assault on government, we think a weak Federal government is the only safeguard to our prosperity.

Cutting taxes had become a Republican tenet to starve the Federal government from growing. (Did it work?) And yet, Americans want their entitlements and their pork projects. They love their Congressmen at the same time that they hate “Congress.”

However, a strong state doesn’t have to be in the social welfare business. It doesn’t have to be a nanny. A strong state can set the rules and step back from the action. It can guide policy through authority, not just activist programs. It can create investment and innovation.

It is easier to have a strong state in other countries where there is a homogeneous population and one group doesn’t worry that the state is going to take the fruits of their effort and give it to another group. In a country without ethnic division, statism can lead easily to socialism. In the US, we opted for a kind of libertarianism. Liberals got a state that stayed out of their social lives and conservatives got a state that stayed out of the economy.

When we needed to use the mechanism of state power, we relied on the military as both an economic support and to provide social functions like job training and research and development. Now that we’re facing an epic economic failure, we’re going to have to resolve the contradictions at the center of our political system and start rationalizing how we use the state and for what purposes.

Here George Will isn’t very hopeful:

In America, socialism is un-American. Instead, Americans merely do rent-seeking — bending government for the benefit of private factions. The difference is in degree, including the degree of candor. The rehabilitation of conservatism cannot begin until conservatives are candid about their complicity in what government has become.

As for the president-elect, he promises to change Washington. He will, by making matters worse. He will intensify rent-seeking by finding new ways — this will not be easy — to expand, even more than the current administration has, government’s influence on spreading the wealth around.

We might find more to feel confident about. Changing what government does should be the change Obama talks about–and effects. There is a role for government in fixing this mess without taking on the responsibilities of becoming a bank and an auto maker. Let alone a hospital.

America can have a strong, but limited, state that sets the rules and polices them well. But we have to agree on the government’s role. If we can, though, we might get a state that can unleash innovation and dynamism. The things that made us prosperous in the first place.

The common interpretation of the New Deal–and you’re hearing it bandied about a lot these days–is that the New Deal didn’t resolve the depression, the war did. War is condition where the state expands its power immensely. A century ago, William James called for “a moral equivalent of war.” He meant harnessing the coordination and direction of a military campaign for humanitarian purposes.

We should be calling for the economic equivalent of war.

‘Socialism’? It’s Already Here.


The Washington Post, November 15th, 2008

Category: BP Cafe

Please use the comments to demonstrate your own ignorance, unfamiliarity with empirical data and lack of respect for scientific knowledge. Be sure to create straw men and argue against things I have neither said nor implied. If you could repeat previously discredited memes or steer the conversation into irrelevant, off topic discussions, it would be appreciated. Lastly, kindly forgo all civility in your discourse . . . you are, after all, anonymous.

8 Responses to “Socialism vs. Statism”

  1. KJ Foehr says:

    What Ronald Reagan giveth, George W. taketh away.

    It will take at least two presidential terms for the Republicans to find their way out of W’s wilderness.

  2. freddie says:

    “However, a strong state doesn’t have to be in the social welfare business. It doesn’t have to be a nanny.”

    All that power, and no politicians to abuse it to buy votes? Not very likely.

  3. CNBC Sucks says:

    As a registered Republican (oh crap, here we go again) in good standing (I get all the GOP junk mail), I hereby revoke all of your “liberal Republican” privileges, Barry Ritholtz. Your unending assault on ignorance and illogical thought is becoming quite cumbersome for the rest of us Republicans (that would be me, George Will, the Christian Right, the KKK and the Nazis, and guests on Kudlow & Company). I encourage you to quit your thinking or finally admit that you are a Democrat.

    Sorry, my “registered Republican” comments today lack bite, because I have successfully avoided CNBC in recent days. On a serious note, though, I really do not know what my Grand Old Party offers this nation anymore. Sorry, I have to reject its old standby policies that create huge economic divides, rape the environment, or generally sacrifice prosperity (scratch that, survival) in the future for expediency in the present. And if you think Bobby Jindal is a rock star, there are a thousand Indian guys still at McKinsey who are smarter and not counseled out of partner track.

  4. algernon says:

    “A strong state can set the rules and step back from the action.” That is what we need, but you are dreaming if you think it is acheivable in this country ruled by Democrats & the mainstream media–forgive my redundancy. G. Will has it exactly right. Republicans blew it & now will be succeeded by an even more corrupt party.

  5. David Merkel says:

    Barry, I’m going to toss out a third possible cause for the end of the Great Depression. The first two are FDR’s programs and WWII, both of which I don’t find compelling.

    I grew up in this business as a risk manager, and a bit of a innovator there. I had experience with nonlinear dynamic modeling which most actuaries and financial analysts, even most quants, don’t get or use. The economy, and most industries are nonlinear dynamic systems, which means there will be cyclical behavior, and that behavior will be more volatile the greater the level of fixed commitments in the system that must be satisfied.

    Economies that primarily use equity finance are more stable than those that primarily use debt finance. It becomes easier to have a cascade of failure the greater the overall debt burden is on the system. So, the total debt level has a major impact on the behavior of the economy. In 1929, total debt to GDP was 280%. By 1941, that level was 160% or so, where it stayed (more or less) until 1985.

    After that, debt to GDP moved up parabolically to 360% by 2007, and now we find ourselves in the soup in two ways: 1) total level of debt, 2) complexity of debt because of securitization and to a lesser extent, derivatives.

    Why did the depression end around 1941? Reason 3 (my reason): enough debt had been paid down or written off, and loans could be made to good borrowers, but only enough that financial sector would grow slowly (not faster than GDP).

    The answer today, in my opinion, is that we need expedited procedures for bankruptcy to reset the system, getting lenders to compromise with borrowers, and bring down the debt to GDP ratio. I don’t think the present programs will work, and they may actually prolong the crisis, a la Japan. In my opinion, we won’t see significant economic growth until the debt to GDP ratio falls into the 150-200% range.

  6. jdmckay says:

    I really don’t understand why anyone gives G. Will credence for anything. He’s spouted slice-off-the-top conservative euphemisms for over a decade, all the while ignoring growing economic disease underlying it all. Whatever critiques he has for GOP, it’s coming in the rear view mirror. Where was will when “liberals” were shouting US debt was going off the edge, outsourcing everything may not be a good idea, and educating our populace might help economy along a little bit down the road?

    And let’s not even get started on Iraq…

    The most aggravating meme, however, is this “spreading the wealth” fear mongering… hi principled in tone, warning of ubiquitous socialism (which most of those guys don’t understand anyway), and all the rest of this claptrap. Please explain this: I’ve been watching closely for a long while now. When I finally stopped counting, I had 230+ referances to K-Street &/or Bush white house…

    * hiring industry rep/lobbyist/lawyer for some official position
    * said rep writing legislation, ver batem, codifying desires of said industry
    * receive full WH and/or congressional clout ushering bill into law
    * quietly resign after just as quietly being “hired” upon completion of legislation, returning to industry for reaping of rewards they’ve just legislated.

    Through all this, virtually no debate from GOP on merits, good sense, or even constitutionality of any of these things… just return on investment from donors. Bribery. They’ve been running a bourse for years now. There has been -0- regard from these guys for any principle, other than pass-through legislation to highest bidder, which they call: free market.

    Does anyone know the definition of principle? Does the morphing of such vapid government operation described w/that term bother anybody?

    And how does Wall Street… utterly corrupt rating agencies, +/- $50t of 90% worthless paper saturating the globe while 10′s of 1000s of these guys sliced off $m’s in “fees” and “earnings” off joe-the-plumbers bank accounts… how the hell do these bastards get a fear mongering voice anywhere accusing a 3-4% swing in income tax rates as “distributing wealth” while same crowd has been scooping helo-buckets into everyone else’s $$, scooping what they can like Appalachian mtn top coal mining operation, selling junk so unbelievable saturation point which has put entire US economy & USD at risk… and these guys are worried about income redistribution?

    Are you kidding? AFAIC Max Headroom had more insight that George Will.

    Sheesh… with “esteemed” pundits like this, no wonder we’re broke.

  7. daveNYC says:

    Gotta love the theme of his article. “Republicans are bad and messed things up, but I’m telling you, that new guy is worse.”

  8. wu.ming says:

    fantastic analysis and remix of will’s point.

    “America can have a strong, but limited, state that sets the rules and polices them well. But we have to agree on the government’s role. ”

    perhaps in order to do this, we as private citizens have to embrace more ‘socialism’ in the private sector so that we can absolve govt. of those responsibilities? to resolve to become more interdependent with govt. rather than sitting on one of the 2 extremes, dependency or independency?

    we don’t have to become like the amish in order to appreciate and mimic some their principles of community.

    SEMCO in brazil and are excellent models to provide a starting point of how to rethink this.

    someone said very recently, “change does not come from the top-down, it comes from the bottom-up”. one does have to necessarily support the person who said this or his policies in order to appreciate the wisdom of this statement.