It was billed as a debate over the size of government. But within the first few minutes Congressman Paul Ryan had changed the subject. Focusing "just on size entirely misses the point", he said, "We should not be asking how big should our government be, we should be asking what is our government for."
For Hayek: "the most desirable order of society one which which would choose if we knew that our initial position in it would be decided purely by chance". Like many liberals, he believed that the government’s role was to create a system that would enable each individual to achieve their own goals. As Ryan acknowledges, Hayek believed that government had an important role to play in addressing market failures and securing a minimum standard of living. He certainly didn’t believe that taxation is theft.
Will Wilkinson suggests that Hayek’s philosophical position is remarkably close to liberal philosopher John Rawls‘. Given the risk of ending up at the bottom of the social hierarchy if our initial position is determined by chance, Rawls argued that policy makers should pay particular attention to the wellbeing of the least well off. The same conclusion seems to follow from Hayek’s position.
If this is right, then the size of government question isn’t a moral question, it’s a practical one. We need to know whether cutting government spending can lift in economic growth in a way that makes those at the bottom better off than they are now. Or alternatively, whether the benefits of greater spending outweigh any negative impact on growth (and perhaps spending on things like early childhood education could actually boost growth).
Ryan’s recent debate with David Brooks at the American Enterprise Institute has attracted a lot of attention. He argues that while the size of government isn’t the only thing that matters, it does matter. In a speech last year he argued that Congress was adding new entitlement spending on top of a debt that was already spiraling out of control. And rather than raising taxes to plug the gap, Ryan wants to cut entitlement programs — particularly health care.
Ryan argues that government ought to be providing a basic safety net rather than creating huge entitlement programs that benefit the middle class and the wealthy. But the trouble is, America’s welfare system is not only underfunded, but poorly targeted. Entitlement programs are biased towards the well-off elderly and against the working age poor and their children.
As the University of Arizona’s Lane Kenworthy writes, "The United States spends more money on social protection than is often thought, yet that spending doesn’t do nearly as much to help America’s poor as we might like."
At Frum Forum, Noah Kristula-Green zeroes in on the political challenge involved in cutting the deficit without raising taxes: "The problem is that we have a hyper-generous welfare state for old people. Where exactly else does Ryan see the pernicious reach of government hand-outs?"
Many US political analysts regard entitlements to the elderly — particularly health care entitlements — as the third rail of American politics. But Ryan believes that the debt crisis has changed that. In an interview with the Christian Science Monitor he said: "what I’m basically saying is the third rail is not the third rail anymore. The political weaponization of entitlement reform is no longer as potent as it used to be."
Ryan’s plan — A Roadmap for America’s Future — proposed capping Medicare spending by moving from a system that pays health care providers directly to a voucher system that enables enrollees to purchase insurance. Supporters claim it would contain costs by making it more difficult for health care providers to lobby for increased spending. But there’s no getting around the fact that, compared with the current program, the Roadmap will reduce the quality and quantity of services that seniors receive (see the Congressional Budget Office’s analysis).
The trouble with Ryan’s arguments in the debate is that he never gets around to answering his own question — What is government for? True to his neo-conservative roots, Brooks argues that government ought to promote a virtuous citizenry. But Ryan simply asserts that Americans must choose between a European-style social democracy and a free market system that allows entrepreneurs to hang onto to more of their earnings. He doesn’t tell his audience how to choose.
Why, for example, shouldn’t Americans cut benefits to wealthy retirees and increase benefits to poor parents?
The choices are more complicated than Ryan makes out. There’s no single European model of social democracy. And as the Economist’s Schumpeter writes, Denmark and the Netherlands have both vibrant free markets and large welfare states. Neither resembles Greece. So clearly Americans have more options than Ryan allows for. Making a principled choice requires an answer to Ryan’s question — What is government for?
Update: Ryan might pay lip service to Friedrich Hayek, but at The New Republic Jonathan Chait argues that the major influence on his thinking is Ayn Rand. The overwhelming thrust of Ryan’s reforms is "in every way is to liberate the lucky and successful to enjoy their good fortune without burdening them with any responsibility for the welfare of their fellow citizens."
According to Chait:
The roadmap clarifies the essence of the Republican Party’s approach to domestic policy issues. The essence is opposition to the downward redistribution of income. The principle first emerged under Ronald Reagan, but only in fits and starts–Republican presidents agreed to a tax reform in 1986 and a deficit reduction in 1990 that did redistribute income from rich to poor. Over the last twenty years, though, opposition to downward redistribution has hardened into the sacred tenet of Republican policymaking. Ryan’s plan both codifies this principle and shows just how far the party is willing to go in its service.
Every major element of Ryan’s plan reflects this commitment.
In a later post, Chait adds that Ryan’s plan "would create a higher deficit than Obama’s plan for well more than a decade."