Why Liberals Like ObamaCare

Last week I picked up a copy of James C. Scott's Seeing Like a State on my way from Seattle to Ashland, Oregon.  It had been on my Amazon Wish List and so when I went into Powell's I was looking for it.



But how had it got on my Wish List?  I checked and I see it's because I read a piece by Jonah Goldberg back in April.  Now that I have read it, I can say that, like Jonah, Seeing Like a State has "left a lasting impression on me."



Let's have Jonah tell the story.

If there were one thing I could impress upon people about the nature of the state, it’s that governments by their very nature want to make their citizens “legible.”...



The premodern state was “blind” to its subjects. But the modern state was determined first to see them, and then organize them.

Sound familiar?  This legibility project involved a host of efforts, from mandatory surnames to changing land tenure from communal to freehold.  Why?  Because a person with a surname is easier to find.  A freehold is easier to tax than a village with a word-of-mouth understanding of who owns what and why.



At a basic level, the state need to be able to "see" its subjects in order to tax them and conscript them.  An Asian state with rice cultivation needs to identify and control the people working in the paddy fields.  A modern industrial state needs to know all about its economy so that it knows how much it can spend on buying peoples' votes, or how much national debt it can afford.



There is no end to this.  The state pretty soon decides it needs to run the education system so it can generate productive workers--and also make sure that they learn the right history.  It decides that it needs to vaccinate to control infectious diseases and know who has and who hasn't been vaccinated.  From there, it decides it needs to provide basic health care to keep its workforce (and possible soldiers) strong and healthy.



Pretty soon you get to Obamacare where the government wants to monitor and control everything about healthcare.  Here's what is in store for doctors under ObamaCare according to Daniel Henninger.

[It's the] Physician Quality Reporting System (PQRS), lodged in the Centers for Medicare and Medicaid.



Here's the Centers' own description of what PQRS does: "The program provides an incentive payment to practices with eligible professionals (identified on claims by their individual National Provider Identifier [NPI] and Tax Identification Number [TIN]) who satisfactorily report data on quality measures for covered Physician Fee Schedule (PFS) services furnished to Medicare Part B Fee-for-Service (FFS)."

See what is going on?  The physicians will be required to report their activities to the government so the government can figure out what is going on in healthcare--make it "legible"--and control it.



It is exactly as Scott writes in Seeing Like a State.  In Scott's view, the way this government imperative works in the modern state is that it wants to reduce everything to a rational system, like mass production in the industrial corporation.  Only, of course, these days the huge bureaucratic corporation is going out of style.  People talk of rapid-response, flexibility, print-on-demand, etc.  And there is F.A. Hayek who argued that big bureaucracy was inherently flawed because it could not know as much as thousands of workers or millions of consumers.



If the government is not to be all-seeing and all-powerful, then we need to restrict its right to know everything about us.  Our liberal friends talk a lot about "privacy," but they usually restrict it to sexual and political matters.  They don't want the government to know what they are doing in the bedroom or in the activist group.



But liberals don't care about privacy in economic matters.  That's why they support massive centralized systems to control pensions, healthcare, education, and welfare.  That's because liberals are the modern ruling class and that makes them "see like a state."



When conservatives call for strengthening civil society they are calling for reducing the legibility and visibility of individual citizens.  That's why Berger and Neuhaus wrote about "mediating structures" to shelter individuals from the "megastructures."   All they are proposing is to restore the protections that village communes and medieval guilds used to provide.  But the modern state did away with the old mediating structures precisely because they prevented the central government from knowing about individuals and controlling them.



Of course, the horse has left the barn on that, centuries ago.  But it is clear that individuals need to be protected from the power of the state.  What other way is there than a civil society that restricts the visibility of the individual to the state and restricts state control?



We also need to see that the market reduces the need for the state to make the individual visible and legible, because the market economy is a system where economic actors produce and serve and buy and sell.  We don't need to see inside the head of a trader, and we don't need to see inside the boundaries of a corporation.  We just need to be able to trust them.  In the market economy it is perfectly OK to have companies and corporations that throw a veil over many of their internal activities.  But certain facts need to be public, such as income, equity, debt, etc.



Back in the Soviet Union they pretty well destroyed the Russian peasant world in a crazed effort to make it organized and visible and to tax it with grain seizures to pay for its forced industrialization.  But many social activities just cannot flourish if they are organized like a bureaucracy and simplified down to one-size-fits-all.



If we learned anything from the Soviet Union it is that an individual that is completely visible to the state is an individual that is completely in the power of the state.



Conservatives have the answer, of course.  It is that the government welfare state should be broken up and returned to civil society institutions.  Government really shouldn't do anything unless it absolutely requires force: national defense and internal policing.  And when it sticks to that it doesn't need complete visibility and legibility, to know everything about every single individual.



The problem is how to persuade the American people, especially those hooked on "free stuff."  Which is just about all of us.

My Faith in America

When plotting to hoodwink White Snake's husband, after he has unfortunately seen White Snake in her true form, White Snake and Green Snake agree, in Mary Zimmerman's The White Snake, to tell him that he didn't see what he saw.  "Believing is seeing," they say.

So it is with these United States of America.  If you believe that "Life, Liberty, and the Pursuit of Happiness" is a good thing then you will look out at America and see that it it good.

Or you could believe that human Life is a disease on this fragile Earth, that Liberty is nothing but selfish individualism, and the Pursuit of Happiness is nothing but feckless hedonism.

The way you look at America depends on how you look at the world.

There are two modern beliefs that dominate men's minds today.  One is the Invisible Hand of Adam Smith.  It argues that, in order to meet our selfish needs, humans must work to satisfy the needs of others.  On this view the "inalienable rights" of Life, Liberty and the Pursuit of Happiness are mild and beneficial, for they urge us to cooperate with our fellow humans, but without the yoke of compulsion.

There is another modern faith; it is the Exploitation theory of the left.  On this view society is irretrievably broken.  The laborer cannot earn the full fruit of his labor because its full value is siphoned off by his employer and only a fraction returned to him in wages.  Workers are therefore coerced into working for others to stave off the pangs of hunger and experience their work as alienation from their true metier.

Notice how these two faiths essentially agree.  If you want to eat, you have to work.  The Invisible Hand idea says that this is a good thing, for it encourages selfish individuals to be social.  The Exploitation idea says it is a bad thing because it forces people into working for others.

So with the American troika of Life, Liberty, and the Pursuit of Happiness.  Human life is a blessing, according to Christians, or a curse, according to environmentalists.  Liberty is a blessing, according to libertarians, or a curse, according to socialists.  The Pursuit of Happiness is all-embracing, according to optimists, or narrowly selfish, according to pessimists.

But we Americans, those of us that believe in American exceptionalism, believe in Life, because that is what living things are for, to live life and produce new life.  We believe in Liberty, because Liberty is creative, expansive, generous and good, while compulsion is cramped, narrow, brutish, and short.  We believe in the Pursuit of Happiness, because that upward, hopeful gaze is the very essence of what it means to be human.

Arthur C. Brooks in The Road to Freedom argues, from modern social science, that the Pursuit of Happiness has two components.  The first is the pursuit of meaningful work and earned success.  Not just any success, for unearned success doesn't make us happy.  The other component is giving.  If you want to be happy then you have to give.  This is not new.  The Methodist creed was: Work all you can, save all you can, give all you can.

Now go back and look at the two modern world views: the Invisible Hand view and the Exploitation view.  What do you think?

Understanding the Intimidation of Justice Roberts

Whether or not Chief Justice Roberts changed his mind about ObamaCare because of liberal media intimidation doesn't change anything.

The fact is that all politics is civil war by other means.  Different groups have different power centers.  When you are fighting the political wars you cannot just do frontal assaults like World War I.

By the end of World War I the Germans figured out how to attack an entrenched line.  You divide up your assault force into small squads, each led by an NCO.  The job of the squads is to find the soft spots in the line, penetrate them, and then call for reinforcements.  You have to hit the enemy where he is weakest.  Otherwise you get defeated.

Same thing goes for conservative politics.  We cannot expect to win with a frontal assault on liberalism in the Supreme Court.  That's because the present ruling class is not a landed ruling class or a business ruling class; it is an educated ruling class.  If the Supreme Court ruled against ObamaCare 5-4 the educated ruling class would combine to utterly destroy the intellectual basis of the ruling.  It wouldn't matter how specious and mendacious the attacks would be.  The conservative court would just get overwhelmed.  And then where would we be?

Whatever the strength of conservatism, it cannot concentrate in the intellectual strongholds of the educated elite.  It has to concentrate elsewhere and then storm the liberal strongholds.

The overriding goal of the conservative movement is to overthrow the current regime of big-government hegemony, the "internal colonialism" of a wise and beneficent Oz that knows better than the people how to organize life in this advanced and complicated world, a world too complex and too bewildering for ordinary people to navigate without expert supervision.  Colonialism is colonialism, whether conducted by the British in India, local strongmen in Africa, or liberals in the United States federal government.

There is a role for experts in our modern society.  But the lesson of the 20th century is that you don't want the experts in an unholy coalition with the politicians.  Why is that?  Because when you build anything, from a building to a social program, you will probably build it wrong and have to change it.  Government is singularly ineffective at responding to problems with timely solutions.  There is a simple reason for this.  Government is force; it can only deal with problems that have got beyond mere disagreement.  It is the agency for imposing solutions, not working them out.

Modern conservatism has build an intellectual system that experiences government as a force that needs to be limited to the problems that really need force, like Commies on a world-wide expansion or single young men on an urban rampage.  But liberals won't listen to us.

So what do we do?

First of all, there is good news on the ideas front. In the last 50 years, many left-wing writers have given us ideas that confirm and validate our conservative instincts.  Horkheimer and Adorno said that the much vaunted Reason of the Enlightenment is a force for domination of Nature and other men.  Juergen Habermas has extended their analysis and called for the development of the person-to-person "lifeworld" of communicative discourse as against the dominative "system" world of instrumental reason.  Now we have professors like James C. Scott taking the ideas of Michel Foucault--originally intended as a critique of bourgeois capitalism--and applying them to "high modernism," the rigid bureaucratic systems of Le Courbusier and Lenin.  We have Jonathan Haidt discussing the various different ways in which moral discourse is developed and how liberals are deficient.  We have the Relational Model of sociality developed by Alan Fiske and the ideas of civil society developed by Lawrence E. Cahoone.  They all show how the bureaucratic centralism of the welfare state is ineffective and fails to conform to mankind's nature of social animals, and they are all ready to blossom when we get into a situation where the Liberal Ascendancy starts to totter.  These thinkers tend to be "esoteric" in the Straussian sense.  They are careful not to offend the educated ruling class, but anyone can take their ideas and apply them directly at the cruelty and injustice of the liberal welfare state.  

Meanwhile we have the conservative movements of resistance.  The notion of "resistance" is another left-wing concept, usually applied to their favorite victims and as often as not used to describe movements that are not movements at all but AstroTurf rent-a-mobs organized by community organizers.  The other day I wrote quickly about three conservative movements of resistance: the pro-life movement, the Second Amendment movement, and the Tea Party.  You will notice that these are all movements that are actively scorned and marginalized by our liberal friends.

But there are other movements of resistance.  There is the home-school movement.  There is the anti-global-warming movement.  What do these movements have in common?  They are all focused in different ways on resisting the centralizing power of the educated ruling class.

A friend once asked why Americans were anti-intellectual.  The answer is that Americans dislike the power of the intellectual ruling class.  They understand that the the intellectual ruling class is a force opposed to them and their way of life.  So they know they must fight it.  Nothing personal, of course..

The Problem with Helping the Little People

It's a wonderful notion, using the power of government to help the little people. Think of the long ages of Man, and how all the time the rich got richer and the poor got poorer. (Actually, everyone below the firstborn rich son got poorer).



Now with beneficial progressive legislation, we can help the little people.



Only the trouble with big government programs is that you always seem to end up benefiting the big boys as well.  Take state government pensions, as described by Walter Russell Mead.

The biggest scam going in American financial life may be the collusive effort by Wall Street, the political class, and public sector unions to use union retirement money to prop up Wall Street speculation.

Come again?  Here's how it works.  Government pension plans assume high returns:  Some states assume as much as 8.5 percent.  Well you can't do that with bonds, so the pension funds hire Wall Street managers to invest in risky hedge funds for a higher return.  And that means that the Wall Street guys charge higher fees.



Unfortunately the Wall Street hot-shots are not bringing in hot-shot returns.  Calpers, the California state pension fund has only delivered 3.4 percent return over the last 5 years.



But the state isn't off the hook, of course.  It is still obligated to pay the pensions.  Only now it doesn't have any money.  So it will raise taxes or cut services. Or both.



See how the little guy does in all this.  Government employees are already well paid, usually earning 25 to 50 percent more than equivalent workers in the private sector.  Then they have almost guaranteed lifetime employment.  The politicians benefit because they get to collect campaign contributions from the grateful government employee unions.



But the little guy, the guy without the bulletproof government job and lifetime job security:  he's the chap supposed to pay for this.  And he is the guy that has to do with less government services when the cuts come.



Then there is Medicare that goes to the richest Americans, and Social Security that goes to middle-class Americans like me that ought to fund their own pensions out of their own savings.  There is university education that is a gigantic middle-class subsidy--both for the middle-class students and the middle-class professors that get to do cool stuff courtesy of the average taxpayer, and the middle-class administrators that direct traffic to achieve nebulous diversity goals.



The problem with government is that, however it starts out, it always ends up tipping cash into the pockets of the powerful.  That's because the powerful have the money to get the attention of the politicians, and money is the mother's milk of politics.



It's such a blooming shame.

How the Left Screws the Poor

The Left is always saying "It's the right thing to do," writes Michael Walsh.  But what does it mean?  Usually, it just means that the Left wants it.

[T]here is in fact no moral basis for the Left’s bogus morality; it’s just its usual lust for power dressed up in Judeo-Christian trappings in order to seduce the gullible, the devotional, and the feeble-minded.

Actually, he's wrong.  The Left does have a moral basis for its program.  It is what I have called the Exploitation narrative.  In the general case, it says that because there is inequality there must be injustice, and the government must act to mitigate the inequality and the injustice.  In the specific case, it says that some people can't afford health insurance, so we must force everyone into a one-size-fits-all government program to ensure that everyone can afford health care.  It's the right thing to do.



On the other hand, he's right.  If you are a political activist with a lust for power, the Exploitation narrative gives you a carte blanche to rage against almost anything and propose an increase in government power as a solution.  You can't really tell whether the lefty in question is really fired by a rage for justice or a rage for power.  He would be saying the same things in either case.



The problem is that the Exploitation narrative doesn't lead to justice.  It leads to ObamaCare.  You may say that you want to help the people who can't afford health care, but you end up with Springtime for the Special Interests.  Jay Cost:

[T]he individual mandate represents an enormous transfer of wealth, completely independent of income or social status. It transfers resources from the healthy to the sick, from the young to the old, without regard to who has more money to begin with.

On top of that, the Obamis, in building support for ObamaCare have had to buy off a whole rainbow of special interests from the docs to the nurses to Big Pharma.

Medicare is like Obamacare too.  It takes money from the workers and gives it to the seniors, irregardless of wealth.  Some seniors are poor, but most seniors have carefully saved for their retirement, and are much richer than the young folks that pay the payroll taxes.

Then there is government education.  Guess which schools are the worst in the nation: the ones that serve the poor.  Guess who don't send their kids to the local schools: middle-class inner-city teachers.





You may start your fight against inequality with the best of intentions, but you end up servicing the special interests.





Now I feel personally that the Exploitation narrative has been rather overdone, certainly where it is invoked to de-legitimize the workings of the free market.  The free market is like democracy.  It is the worst system of economic cooperation you can imagine, except for the alternatives.  The free market is a mess, but it eventually works things out.  Even lefty Juergen Habermas in The Theory of Communicative Action agrees:

The market is one of those systemic mechanisms that stabilize nonintended interconnections of action by way of functionally intermeshing action <i>consequences</i>[.]

If the market will work things out, then we should be careful about applying the Exploitation narrative.  The Exploitation narrative should only be applied to the grossest kinds of exploitation, like slavery and serfdom. 



Once you start applying the Exploitation narrative to affordable housing and affordable health care, you enter a wilderness of mirrors, and you will probably end up comforting the comfortable and afflicting the afflicted.  Guess who made out like bandits in the affordable housing mania?  Wall Street, with big bonuses and bail-outs.  Guess who lost their shirts?  Ordinary American underwater homeowners.



Let's sharpen this idea further.  You should only apply the Exploitation narrative to naked injustice due to direct government policy.  Things like slavery, racism, monopolies, subsidies.  There may be reasons to help people with government programs, but the rectification of inequality is not a good reason.  That's not because inequality isn't a shame, and isn't unjust.  It's just that the record of government on inequality is miserable; it almost always gets it wrong and gets captured by special interests.



On the other hand there is the competing narrative of the Invisible Hand.  Since Adam Smith invented the concept, average daily per-capita income in the developed West has gone from $1-3 per day to $120 per day and more.  What about the US?  According to usgovernmentspending.com, GDP in 2011 was $15.6 trillion and population was 314 million.  That's $136 per person per day.



President Obama is conducting a national experiment to demonstrate what happens when you concentrate on the "the right thing to do" according to the Exploitation narrative and ignore the Invisible Hand narrative.  



What a surprise.  You get a stagnant economy and huge deficits that lead to sovereign default.  And guess what happens then?

It's the same the whole world over

It's the poor what gets the blame

It's the rich what gets the pleasure

Ain't it all a bloomin' shame?

Pity about that. 

After Obama, A New Birth of Freedom

President Obama famously declared that he wanted to "fundamentally transform" America.  That is, of course, the eternal revolutionary's creed.  But a famous football coach said that when you go to pass the ball, one of three things could happen, and two of them are bad.

In other words, when you go for the long ball, as when you choose a decisive battle, you are opting for a decisive win or a decisive loss.  I am starting to think that President Obama is heading for a decisive loss in November, one that will fundamentally transform US politics and complete the Reagan revolution.

For I believe that the fundamental fact of US politics since 1989 is that liberals have refused to concede the Reagan victory.  They have refused to concede its economic aspect, that low tax rates and sound money and limited regulation are the foundation of a healthy economy.  And they have refused to admit the social aspect, that the social safety net should not be an iron rice bowl of universal big government programs, but a flexible web of associations and charities anchored on the assurance of government help in an emergency.

In my view our liberal friends are about to receive a terrible blow, right in the solar plexus: a Republican president with decent majorities in both houses of Congress.  The last time this happened was in 1928, for the great Reagan era featured a Republican Senate for the first six years and a Democratic House throughout.

The challenge for the future is to establish a new national myth, a convincing "story so far" about what happened in the big-government era, why it was wrong, and what we must to do to restore America to its greatness.

The first thing to establish is what went wrong.  The answer is fairly simple.  We abandoned the idea of the strong society and replaced it with idea of the strong state.  Society is the net effect of humans cooperating as social animals in their millions of social relations and combinations.  When that is replaced by rigid, mechanical government bureaucracy, something dies.  That something is the social instinct to share and reciprocate.  Big government reduces everything to rigid rule and compulsion.

The second thing to establish is what has worked.  We have just come off two centuries in which daily income went from $1-3 per person per day to $120 per person per day.  And violent death in the West since about 1300 CE has gone from about 50 deaths per year per 100,000 population to about 5 deaths per year.  Think of that: prosperity has increased by two orders of magnitude and violence has decreased by one order of magnitude.  How great is that?

There are two great competing narratives about why this happened.  One narrative is the Invisible Hand  argument of Adam Smith, that people naturally serve others in order to serve themselves.  The more that people stop fighting for plunder and start working to serve other people, the more prosperity you will get and the less suffering.  The other is the Exploitation argument of the international Left, that social relations are blighted by exploitation and oppression unless corrected by idealistic activists.  Things get better only if good people take a committed stand against injustice and violence.

As a conservative, I'm partial to the Panglossian Invisible Hand world view.  But I also accept the need for the Exploitation world view.  We are talking about the fight against slavery, against racism, and ruthless industrial discipline.

It is important, I think, to recognize that the real and authentic experience of different people will prompt them to take different views of the two great arguments.  If you are a competent middle-class person, you will likely think that the world is a friendly place and that hard work will lead to a life of reasonable prosperity and happiness.  But if you are a recent immigrant to the city you will likely experience the world as a dangerous and oppressive place.  You will feel that you are barely hanging on against brutal economic forces and see the need to be ready to fight against the powerful at any time; you will probably find yourself a powerful patron to fight at your side.

If you believe that the Invisible Hand argument is central, then you will think that the government does not need to be very big or very powerful.  If you believe that the Exploitation argument is central, then you will think that you need a powerful government to fight on your side and end the history of exploitation and oppression.

This brings us to the need to get it right.  The astonishing increase in prosperity in the lands that have practiced the Invisible Hand doctrine is surely an argument that the Invisible Hand works.  The end of slavery, of racism, and of grueling manual labor surely means that the application of the Exploitation doctrine has worked and that the remaining oppressions--such as gay marriage--are much less urgent than the old evils of slavery and satanic mills.  Yes: for some people this is still a cruel and heartless world.  But overall, things have got remarkably better.  The takeaway?  We need much less social compulsion in our society.  Since government is the principal agent of compulsion, that means that we need much less government.

Let's come right out and say it.  It's time to say: "no more victims!"  The notion of humans as social animals means that we are all social beings and we should all be active in societal interaction and cooperation--even the poor who are so often cast in the role of helpless victims in our modern political dramas.  There is a lot of modern commentary--from writers like James Tooley and Sudhir Alladi Venkatesh--that shows the urban underclass poor to be energetic and resourceful.  They scrape up the money to send their kids to private school in cities like Hyderabad and they figure out how to run off-the-books businesses.  They even figure out how to manage and save money in the chaotic world of the urban slum.  Let's stop treating them like helpless victims!

That leads us to the idea that everyone can and should contribute.  It has been well said by Mark Steyn that the problem with the welfare state is that it makes everyone into teenagers.  We get to decide what cellphone to use and what car to drive, but every other decision is made for us.  That's the difference between teenagers and adults: adults have responsibilities.  The modern welfare state attenuates the responsibilities of citizens and collapses citizen responsibilities into government programs and bureaucracies; it turns adults into teenagers.  But Arthur C. Brooks in The Road to Freedom argues that people need two things to be happy.  They need to work at something they love and achieve earned success.  And they need to give.  The more they give, the happier they will be and the less envious they will be.

You can see what this means.  It means that if individuals are to be happy they must stop being teenagers and become adults, with responsible work and active engagement in their community where they give time and money to others.

It is obvious that the only way this can happen is if big bureaucracy, corporate and governmental, takes a big dive.  It's hard to feel your work is meaningful when you work in a big bureaucracy.  And it's hard to give to the community if the government has scarfed up all the social tasks of helping others and relieving the poor.

But golly.  Lookee here.  We've just finished up two centuries in which the low-compulsion Invisible Hand society has performed wonders in lifting everyone up from poverty.  And we've already cleared away the great evils of slavery and racial discrimination.

So the stage is set for a new era of freedom and cooperation, a culture of involvement, from the foundation president to the neighborhood mama, with a lot less governmental coercion.

But there is someone standing in the courthouse door, bellowing: Progressivism today, Progressivism tomorrow, Progressivism forever! It is your neighborhood liberal. America cannot move forward until liberals step back, stop insisting that the US is an evil, oppressive nation, and relax their death-grip on the levers of political and cultural power.

That is why the election of Barack Obama in 2008 was a good thing, and the defeat of President Obama in 2012 will be just as beneficial.  The election of Obama in 2008 proved that the US had got beyond slavery and racism.  The rejection of Obama in 2012 will prove that the US utterly rejects the canard that the US remains an oppressive nation that needs gigantic government to force it into the ways of virtue.

The election and the rejection of Obama will clear the public square of all the dirt and dross of a century of big government; it will demoralize the liberal ruling class that has spent the last generation refusing to learn the lesson of Reagan.  It will create the space for a new birth of freedom and cooperation.

Is this a great country or what?

Broken Models, Bad Faith

The upshot of the Great Recession, according to Robert Samuelson, is that the economic models are broken.  In the case of the US, the broken model is "consumer-led growth."

From the early 1980s until the mid-2000s, what propelled the economy was rising wealth - stocks, bonds, real estate - that encouraged households to spend and borrow more. Feeling richer, people traded up for better cars, homes and vacations. Everyone could afford or aspire to "luxury." Businesses responded by investing in more malls, restaurants, hotels, factories and start-ups.

Hmm.  I'd say that the story of the last 30 years has been two duelling models: the supply-side model of sound money and low marginal tax rates, and the demand-side Keynesian model of cheap money and big government stimulus.



Then there's the European Euro model, writes Samuelson.  It rested on two assumptions.

First, the success of the euro - the single currency used by 17 countries - would continue. The euro had delivered low interest rates in the countries that used it, causing housing and consumption booms in Ireland, Greece, Spain and elsewhere. These in turn fed the demand for exports from Germany and other countries. Everyone benefited.



Second, slow but steady economic growth sufficed to support generous welfare states. Tax revenue kept budget deficits at manageable levels.

So much for that model.



But I think that Samuelson is missing the point.  The economic models he is talking about are not really attempts to understand the economic system.  They are attempts to game the system.



The Keynesian demand-side model originated as an attempt to cut short the process of the liquidation of the malinvestments of the 1920s boom.  A little bit of inflation and a little bit of debt from excess government spending would be enough to re-prime the economic system.  It didn't work in the 1930s, probably because in addition to the inflationism, governments were anti-business, actively wrecking the economy.



The Euro model was an attempt by the European ruling class to nudge their individual governments into one central, sensible economic policy without going through the trouble of educating each electorate and reforming each big-government patronage system.  It didn't work.



It is only the supply-side model that doesn't try to game the system.  That is why is was such a success in 1981.  It assumes that the economy is a self-regulating system that will deliver growth, employment, and wealth if it is left to itself.



But people do not go into politics to leave things alone.  So they bend economics to their political will.  They get economists to gin up complicated ways of exploiting the economic system for political ends.



So we get the subsidy for mortgage credit in the US, to which the politicians added a twist, forcing bankers to lend to people without proper credit or equity.  We get the single currency in Europe, which would work fine if nobody cheated.



Half a century ago and more, Ludwig von Mises taught that cheap money always led to the crack-up boom.  F.A. Hayek taught that the government couldn't run the economy because it couldn't have enough information.  It was a "Fatal Conceit" to think that it could.



But liberals refused to listen.  Now they have wrecked the western welfare state economic model and it serves them right.



Unfortunately it is not liberals that will suffer most.  The people that will suffer most are the people that have built their lives on welfare-state benefits.  Because those benefits are going down in the future.  In some places they will go down a little; in other places they will go down a lot.



What we need is reform.  We need reform that will change the welfare state model to a welfare society model.  Instead of being passive recipients of welfare state benefits, counting only what they receive, citizens should become active participants in the creation of social capital, counting what they give.



State welfare is not social welfare.  State welfare is the government handout taken from taxpayers.  Social welfare is the freely given and freely received action of humans acting in social cooperation and assistance.



Is America ready for a social welfare society?