December 22, 2018


A New Center Being Born: The market and the welfare state go together. (David Brooks, Dec. 20, 2018, NY Times)

 Niskanen thinkers like Ed Dolan, Samuel Hammond and Will Wilkinson made a simple and empirically verifiable observation. The nations that have the freest markets also generally have the most generous welfare states. The two are not in opposition. In the real world they go together.

The key distinction you have to make, Will Wilkinson writes, is between the redistributive state and the regulatory state. Nations like Denmark, Sweden and Canada built elaborate redistributive states to give their citizens a foundation of economic security. Then they realized they were going to have to liberalize their economies if they were going to be able to afford their welfare states.

Today, those nations have many fewer regulations governing zoning and economic activity. They score very high on the rankings of economic freedom that are put together by conservative outfits like the Heritage Foundation and the Fraser Institute.

Last week, Niskanen released a comprehensive report called, "The Center Can Hold: Public Policy for an Age of Extremes," written by Brink Lindsey, Steven Teles, Wilkinson and Hammond. The report is a manifesto for a new centrism based on what the authors call a "free-market welfare state" model.

They want government to protect citizens against the disruptions of global capitalism: "Without strong income supports that put a floor beneath displaced workers and systems that smooth the transition to new employment, political actors and the public tend to turn against the process of creative destruction itself."

At the same time, they want an open, dynamic society. They want to reduce restrictive zoning and land use regulations that favor the rich and entrenched. They see immigration as crucial to America's long-term prosperity. They want charter schools and wider choice, but within strong government structures to ensure quality. (It turns out that bad charter schools continue to attract students; the education market doesn't work totally unregulated.)

The Niskanen authors are making a compelling case for moderation; for understanding that politics is striking a rough but workable balance between competing goods; for understanding that the world is complex and our knowledge is limited, and so it's best to proceed constantly, but skeptically.

There's no future other than First Way means to achieve Second Way ends.  And it is being driven by two simple realities: globalization and technology are stripping labor of value; and capitalism works best if capital is held universally.

Posted by at December 22, 2018 9:02 AM