State Intervention in the Economy

In The Atlantic Monthly (subscription required), Jack Beatty has a thoughtful column called "Recharging the L Word" in which he posits that "Democrats must embrace the principle of economic interventionism that lies at the heart of liberalism."

"For the New Dealers "reform" meant reforming capitalism; it meant state intervention in the economy to increase the economic security and individual freedom of ordinary Americans. That idea, a synthesis of populism and progressivism, was called liberalism. Liberals have been in retreat from liberalism for at least a generation. They defend Social Security, but not the principle of intervention behind the New Deal.

snip

Yet the problems the Democrats highlighted in last year's election campaign—from global warming to growing inequality—cannot be managed without state intervention in the economy. Liberals shrink from the "L-word" just when reality has renewed its relevance.

The pollster and political scientist Samuel Lubell famously observed that Americans are ideologically conservative and programmatically liberal. Consequently, liberals have justified economic intervention in pragmatic terms, ceding the ideological high ground to conservatism. But the conservatives in power have demonstrated that the liberal-conservative distinction is not between intervention and laissez-faire. It's between intervening to achieve public benefits that could not be realized through the private market versus intervening to reward special interests. The Republican Party of George W. Bush has lavished billions in subsidies on profitable industries; John McCain refers to the Administration's energy bill as "No lobbyist left behind." Corporations pump millions in campaign contributions into one end of the GOP, and not a few Democratic lawmakers extract billions from the other—in subsidies, tax breaks, and regulatory relief. In decrying the resulting budget deficits, the Democrats legitimate the core, "fiscal responsibility" idea of conservatism which is honored only in the breach by conservatives themselves. Having a real conservative party, one that believed in fiscal prudence as the guarantor of laissez-faire, would be nice; antiquity has its charms. But the Democrats should not be that party. What they say about deficits today could come back to haunt them tomorrow, when they will have to borrow to implement policies that—unlike Bush's tax cuts—at least benefit the future generations paying for them."