The high cost of hating government
The tourniquet applied by the outgoing Congress to the economy allows a two-month breather before we are consumed by the next deadline. The president and his party can allow themselves a brief moment of celebration for imposing higher taxes on the richest Americans, but the next stage in fixing the nation’s fiscal problems may not be as easy. By the end of February, lawmakers must find enough cuts in public spending to allow the debt ceiling to be raised. Two more months of uncertainty will prevent businesses and consumers from making spending decisions that would bolster the economic recovery.
The devil is not so much in the detail of the arguments to come as the big picture that frames the debilitating running debate. While the difference between the sides is ostensibly over taxes and public spending and borrowing, the more profound division is over where government should begin and end. For many of the Republican Party’s Tea Party insurgents, the choice is even more fundamental: whether there should be a government at all. Their unbending position, demanding an ever-diminishing role for the federal government, has levied an enormous unnecessary cost on everyone else.
Since Republicans regained control of the House in the 2010 mid-terms, when the Tea Party tide was in full force, they have attempted to freeze the size of government, coincidentally putting a brake on economic recovery. They have vetoed attempts at further economic stimulus, encouraged America’s economy to be downgraded by the ratings agencies by threatening not to extend the debt ceiling, and tried to veto any and every tax increase in the fiscal cliff talks. Their aim is to shrink government by starving it of funds. Such uncompromising absolutism has led to the dampening of business confidence and investment that would have created jobs.
It is not just the economy that has suffered from the absolute positions held by the anti-government rump in the GOP. Their insistence that the Founding Fathers intended us to be allowed to carry guns of any sort, including the rapid-fire assault weapon that killed 20 children and six adults in Newtown, Connecticut, last month, continues to hamper attempts to curb the nation’s murderous gun violence. Ghosts from the eighteenth century are preying on our school-children, abetted by those who believe that compromise on amending our gun laws is surrendering to the forces of big government. Such unbending absolutism costs human lives.
Similarly, suspicion of government is behind the growth in home schooling, that narrows the education of children, deprives them of a sense of community, and diminishes their social skills. It came as little surprise to read reports that the Newtown shooter was kept home from school by his mother, a “survivalist” or “Doomsday Prepper”, who stockpiled food and guns because she expected an imminent economic apocalypse. Such paranoia about the role of government is a recurring theme in our society’s most appalling massacres, from the bombing of the Federal Government Building in Oklahoma City in 1995 by the anti-government militiaman Timothy McVeigh, who killed 168, including 19 children, to the FBI siege of the anti-government Branch Davidian sect in Waco, Texas, in 1993, that left 76 dead.
Hostility to government also ensures that health care is unnecessarily expensive. The average cost of American health care is $8,233 per person per year, the most expensive in the developed world. In comparable Western countries such as France, which has a private health insurance mandate administered by the state, it is $3,974. In Britain, which for 65 years has enjoyed a taxation-funded national health system, it is $3,433. As much as Americans may prefer to believe that they have a health care system second to none, there is little discernible difference between the quality of health care provided, nor the efficacy of the medicine administered in the three countries, while dealing with the health insurance bureaucracy here is considerably more time-wasting, expensive, and irritating.
Changes in demography, with Americans living longer and using more medical resources to enjoy a tolerable quality of life, mean that health care costs will continue to rise unless reforms are made. The easiest way to reduce American health care costs would be for the federal government to provide a “single payer” alternative to compete with the near-monopolistic private health insurance companies. But such a system is considered an abomination by absolutists who demand that the federal government should keep out of healthcare. The harsh alternative is to cut the amount of care the system provides to the elderly. Again, an unbending attitude to the government’s role and responsibilities comes at an exorbitant cost.
Conservative theologians have devoted themselves to explaining why government interference is a bad thing. For Milton Friedman, the American system of government was so monetized from the moment the Republic was founded, and so open to corruption, that he always advocated small government – at least in the United States. For the Austrian thinker Friedrich Hayek, writing in his influential masterwork The Road to Serfdom, a burgeoning state could lead to tyranny. To be fair to Hayek, who wrote his topical tract as World War Two was drawing to a close, he was principally concerned that free enterprise might continue to be stifled by the imperatives of the wartime command economy once peace was declared. In The Road to Serfdom, in a passage often ignored by contemporary conservatives, he insisted that all governments should provide a generous safety net for the needy, homes for the homeless, and universal health care.
Tea Party members owe less to conservative thinkers such as Friedman and Hayek than to uncompromising proponents of the untrammelled free market such as the libertarians Ayn Rand and Ron Paul. When the new Congress comes to head off another fiscal cliff crisis at the end of next month, it will take courage from the Republican leadership to keep their extreme wing in check. If they fail to do so and they demand too deep cuts to public spending too quickly, they will not only cause the American economy to return to recession but may find that the middle ground voters who decide elections will add together the vast cost of their allies’ absolutist intransigence and keep them in opposition forever.
Nicholas Wapshott’s Keynes Hayek: The Clash That Defined Modern Economics is published by W.W. Norton. Read extracts here.
PHOTO: A U.S. flag hangs over stockings left as a memorial for victims of the Sandy Hook Elementary School shooting, along a fence surrounding the Sandy Hook Cemetery in Newtown, Connecticut December 27, 2012. REUTERS/Adrees Latif