Obama, Economy, and State

I have often written about recent political realignments with divisions between left and right being based far more upon social issues and foreign policy (especially Iraq) than upon economic issues as in the past. Capitalism has defeated socialism, enabling left-libertarianism to become a growing philosophy on the left and with liberals often being stronger supporters of the free market system than conservatives who back corporate welfare. Some conservatives continue to believe right wing taking points that liberals support socialism and oppose the free market, but this has been changing. Via Andrew Sullivan I find this post from Warren Coates which shows that some conservatives understand this change. Coates describes his political philosophy and why he is comfortable with a move towards the left:

I am a Barry Goldwater Republican. I believe that we and our families and friends are largely responsible for our own well being, that government should be kept small and focused on what only it can do well, that free markets are the most effective way to create and allocate wealth, that the individual freedoms, checks and balances on government, and separation of church and state in our constitution and its Bill of Rights provide the best environment for my personal moral and material development and in which I can live in harmony with my neighbors, and that if I work hard (which almost always means serving the needs of others) I have the best chance of doing well for myself and family. I believe in a strong national defense (but not empire building) and international collaboration and cooperation in today’s globalized world. In order to keep them relatively honest, governments operate under significant disadvantages relative to private enterprises with free trade, but there are some things that only government can do or do best and therefore they should be done well.

I think that these principles best serve the establishment of a just and prosperous society for all. Over the years considerable evidence has been developed and presented to support these views. Developing an economic and civil society that reasonably approximates these ideals has made us (and the increasing number of countries that have adopted similar principles) the enormously wealthy country that we are today. Even the poorest in our midst live better and healthier lives than the average person in the rest of the world. This is not because every one is “successful” and does well in free market capitalist economies, but because allowing the cleaver, energetic, and hard working among us to benefit from their efforts generates the enormous wealth from which the losers or handicapped can be compensated or looked after (charity—for which America is famous—and social safety nets.) Goldwater/Reagan republicans helped advance these principles and Clinton’s New Democrats largely embraced them as well. So what era is coming to an end and why is it happening?

While it seems pretty clear that American politics has started to swing to the “left,” I think that the next political cycle will take the form of corrections of some problems and excesses of the Reagan Revolution, not an abandonment of our general preference for market over government production and distribution. Bill Clinton’s New Democrats moved the center of the Democratic Party to the right of Richard Nixon. Even if the swing left overshoots that new center, it is likely to remain to the right of LBJ and Hubert Humphrey.

Important and fundamental arguments between communism and capitalism or socialism were won by the champions of free markets long before the collapse of the Soviet Union (though that was the final nail in the coffin). As a student at UC Berkeley in the mid 60s, it was a rather uphill argument that prices (incentives) mattered and that therefore the market generally allocated resources efficiently and that public policy needed to build on and take seriously the incentives it created for people to behave this way or that. This is no longer questioned by any serious person. Consider Barack Obama’s recent statement that “the market is still the best way to allocate resources productively, that some of the [regulatory] excesses of the 60s and 70s may have hampered economic growth, [and] that we don’t want to return to marginal tax rates of 60 or 70 percent.”

Sullivan responds:

Disenchanted with the statist, utopian and negligent conservatism of the Bush years, he’s ready to give the Dems a shot. The conservative failure has been so deep and its consequences so dire that a new start is needed.

Coates believes, as I do, that it will not be the end of the world for free market conservatives if Obama wins. It wasn’t when Clinton won. Although there are many areas in domestic policy where I disagree with Obama – I’d pick entitlement cuts over tax hikes, I’m leery of cap-and-trade, I worry about the creeping socialization of healthcare – the much bigger issues of a return to constitutional norms, to a realist and prudent foreign policy, a return to the Geneva Conventions, a restoration of America’s reputation in the world, and a rebuke of the Morris-Rove politicking of the past generation compel me more.

I agree with Sullivan’s reasons for supporting Obama but also feel that his concerns, while not without merit, are even less significant than he fears. As a physician I have long been concerned about “creeping socialization of healthcare” but after practicing for well over twenty years I have found the reality has been that corporate control of healthcare has been a far greater problem, and warnings of socialized medicine have been greatly exaggerated. Hopefully Obama will stick to his opposition to mandates, which is essential in keeping government programs honest.

The knee-jerk view of conservatives in support of lower taxes and less government regardless of the situation is one reason why they might have dominated for several years but will never win. Most people on the surface prefer lower taxes, but at some level many realize that what is really important is to get good value for their tax money. After all, few would want to live in the wilderness with absolutely no taxes but also no government services, including the infrastructure which makes the free market system possible.

While controlling expenditures on entitlement programs is essential, a majority also realizes that Medicare and Social Security are two government programs of value which also respond to weaknesses in the market economy. Medicare has managed to provide health care to the elderly and disabled, two groups excluded from employer-based coverage, far more economically than the free market is capable of, while preserving greater choice for both patients and physicians than is provided by corporate medicine. We can argue whether our current system or a government-run single payer system is better nation wide, but for the individual market (including the elderly and disabled) there is no viable option other than government. While Social Security is no substitute for retirement investments, it provides a necessary safety net which only the extreme right would consider eliminating.

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  1. 1
    b-psycho says:

    Of course the conservative definition of “less government” always turns out, ironically, to mean way MORE where it is most obvious.  No one would ever say “more torture, please!” with a straight face, but they like that kind for some reason…

    BTW: I know you’re not the radical type, but I was curious what you’d say to things like this, an anti-state argument from the Left on healthcare.

  2. 2
    Christopher says:

    I had no idea you’re a doctor.

    What area of medicine? My partner went back to school and made a mid-life career change and in December, he will have his BSN. He loves it and now he’s even talking about becoming a Nurse Practitioner.

    It’s an outrage bordering on criminal, that Bush wants to reduce the DRG Medicare bases its payments to physicians. I simply can’t understand the logic of knee-capping doctors who see Medicare patients.

  3. 3
    Snoop-Diggity-DANG-Dawg says:

    “…but at some level many realize that what is really important is to get good value for their tax money. ”
    “While controlling expenditures on entitlement programs is essential, a majority also realizes that Medicare and Social Security are two government programs of value.”

    Seriously?  These are you examples of people getting ‘good value’ for their tax money?

    – The cost of Medicare is rising at such a rapid rate that program cuts and (surprise) tax increases will be necessary to keep it solvent.  And after the government takes it over?  They’ll run it approximately as well they run the post office.
    – And social security?  (Oxymoron alert)  Even Al Gore recognizes that Social Security as we know it absolutely untenable and will not be around in 30 years.

    Want to throw a dollar away?  Give it to the government.

  4. 4
    Ron Chusid says:


    I practice internal medicine.

    One technical point, with the complexity of Medicare reimbursement. The DRG system is used for payment to hospitals, not physicians.

  5. 5
    Ron Chusid says:


    The cost of Medicare is rising as a consequence of both increased number of beneficiaries with an aging population and due to overall increases in health care expenses due to increased technology and other factors. Despite this, Medicare is rising far less than then double digit increases private insurance costs most years.

    Besides rising at a less rapid rate than private insurance premiums, Medicare provides medical care to its population without leaving over forty million uninsured and an equal number under insured as is the case with private insurance.

    Social Security has successfully provided benefits for many decades since it was formed and will be around for decades to come. Naturally such a large program continually requires adjustments with changes in the population, but that in no way means it is untenable.

    Many things are best handled by the market. Some things are handled better by government. It is the unwillingness of the far right to face this reality which leaves them unable to govern.

  6. 6
    Christopher says:


    Thanks for the clarification.

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