Sunday, October 19, 2008

Liberty and Collectivism - The Obama Equation

If Obama is elected president, judging by what he has revealed of his true beliefs, it appears that America will start going in a new direction in terms of collective solutions. Obama believes that healthcare is a right, he believes in an altered income distribution and he believes in public infrastructure. Philosophically speaking, America has gone down the anarcho-capitalist path since the election of Ronald Reagan, but it appears that this social experiment is now over.

Anarcho-capitalism is a philosophy that is advocated by radical philosophers such as Rothbard and Rand, which dictates complete freedom for the capitalist forces and the complete absence of government intervention in all aspects of life. In practical terms, when policies are actually implemented, that means: extremely low taxes that are not progressive, dismantling of social programs, privatization of public infrastructure and a complete de-regulation of financial markets. In addition, it involves a heavy reliance on charity as a way of dealing with poverty. Alan Greenspan is a follower of this philosophy. There are very few examples of anarcho-capitalist experiments in the history of the world, and I would argue that America represents the only true one. The anarcho-capitalist experiment has led to the creation of a vast proletarian underclass, and a concentration of wealth that is almost unparalleled in history. In other words, America is presently very similar to a western society typical of the eighteen hundreds.

The Wall Street crisis has exposed the workings of American society, and that has turned public opinion against anarcho-capitalism. Talk of freedom of entrepreneurial opportunity, trickle-down wealth and less government spending is clearly not resonating with the American public at the moment. That is why they have turned to Obama. I believe that Obama’s true beliefs are more similar to those of European social liberal movements, such as the Labour party in Great Britain (in its present incarnation), or various liberal parties in continental Europe. These movements believe that every citizen has a right to a certain standard of living across the board, which is a thought that is barely represented in Washington today. However, I also believe that moving in this direction may present a big problem in American political life, mainly due to the very different historical contexts in which our different political cultures were established.

At the time of the establishment of free elections in Europe, the population of most countries on that continent had been living for centuries under the control of what we today would refer to as hereditary dictatorships, also known as royal families. These dictatorships were no better than such dictatorships of today, as they involved vast amounts of oppression, inhumane treatment and just about every imaginable abuse of power. The populations of Europe were suffering, and they had no influence on the making of decisions that affected them. When the peoples of Europe finally broke free of dictatorship, they were able to provide for themselves both liberty and an improved social situation at the same time. They were able to spend the country’s money on themselves, rather than on what pleased the dictator. From the perspective of the common people, these new solutions were obviously a lot more popular than the types of projects that the old regimes had prioritized. For example, the provision of public healthcare was usually more popular than the construction of a monument to the king. This process legitimized collective solutions, and made those the preferred way of solving problems, and in particular social problems, throughout Europe. The peoples of Europe felt that they had been provided with liberty AND prosperity by turning the page on the old regime.

On the other hand, the creation of American society was, although similar in some ways, very different. It was similar in that it was born out of the rebellion against a king, but that rebellion was started against a king who was perceived to be “foreign”. It was different in the sense that it was not started in order to switch the government from one thing to another, but to create an entirely new government in a new location. Liberty and self-governance were the driving forces behind the American revolution, and social rights played only a small role in the process. In essence, the American revolution, and the consequent creation of the constitution, was about the freedom to be left alone, as opposed to the perceived right to a better life that was the driving force behind revolutions in Europe. Through the American revolution, the American population were given liberty, but not necessarily prosperity. The constitution then cemented into place a system that was, and still is, inherently very conservative and difficult to change. At the time of the European societal changes (early nineteen hundreds) that created liberty and social rights, such as labor rights, pensions and so on, America already had liberty in society.

To a much greater degree than in Europe, many elements of society would have to give up resources and influence, in order for social rights to provided across the board in America. That ultimately made it impossible for this to happen, and unlike every other western society, there has never been a successful labor movement in America. In other words, America was way ahead of the curve in the provision of liberty, and as a result, the provision of social rights was made impossible by resistance of the elite.

The American political system is a two-party, center-right, presidential system. In Europe, the Democratic Party would be described as a conservative party. The Republican Party would be described as an anarcho-capitalist party. The president in America has, in theory and sometimes in practice, far more power than heads of states in Europe. Because of this, and because there are only ever in reality just two parties to choose from when voting, the American political system is best described as a semi-democratic, authoritarian system. This fact has vast implications on the political process, and makes wholesale collective solutions almost impossible. What necessarily takes the place of wholesale collective solutions when such solutions are needed, in the provision of infrastructure and healthcare for instance, is a series of band-aid solutions. This is evident in Obama’s healthcare proposals, tax proposals and views on the financing of public infrastructure. Even if Obama believes that wholesale collective solutions are necessary, it would be political suicide for him to suggest them openly.

I believe that Obama believes in the social rights that have reached their fulfillments in laws across Europe, but that he cannot politically realize these beliefs. America will completely depart from anarcho-capitalism under an Obama administration, but the country will do so by way of a series of semi-effective band-aid solutions that will in the best-case scenario lead to a watered-down version of a society with a social safety net.


Writing Frontier said...

What the heck. Read this.

Lisa said...

Really enjoy your articles Jacob. I'm not any sort of expert on the economy but it seems to me we are due for a complete restructuring of our system in order to address the factors that contributed to our banking system failures, our skyrocketing health care costs, and just the decline of the middle class in general.

As to Obama's health care proposals, it always seemed he was forced to adopt (for political purposes) a similar plan to Hillary Clinton's, even though she had had a shot at implementing such a plan back in the 90s and failed completely (people strangely seemed able to forget all about that). I know that you're pretty good with numbers -- doesn't it make much more sense for Health Care to be completely socialized? Why should profit-taking insurance companies even be involved?

Obama's health care plan sounds over-complicated and sort of like a disastrous joining of free market capitalism and government beurocracy. What do you think? I have heard that Health care is completely socialized in Canada and most parts of Europe and it works fairly well. What country do you think might provide the best health care model for us?

Jacob said...


sick people are not profitable, and that's the only explanation you need to understand why private companies should never be involved in the provision of healthcare. I believe that Obama sees his plan as a first step that is actually possible to realize in this political climate, but that maybe Congress can take it further in the future.

The question of which country's healthcare system is the best is tricky, but I believe the Scandinavian system makes the most sense. The British system is inadequate, as is the Canadian. The German and French systems are too expensive and are now going towards insolvency. The Scandinavian system is pay-as-you-go for the most part. Medical school is always completely free for everyone. All resources are allocated in the system according to severity and amount of impact on public health, which means that cardio-vascular diseases and cancer get the most resources, whereas you may have to wait for a while to have procedures of a more cosmetic nature done. In any case, healthcare and drugs are almost completely free for everyone, all the time. Yes, you pay higher taxes, but not if you're a low-wage earner. This is a complicated subject, and I had a professor once who dedicated his entire career to "comparative international healthcare studies".

Max said...


In response to Krugman's "Real Plumbers" article, you had wondered why the low wage earners supported what is not in their interest?

Here is my answer:
Part of the economic appeal of the Republicans to "Joe the plumber" was that the tax cuts would make his employer stronger; and then Joe can keep his job. Even though that claim was always dubious, it is totally invalid today. Back in early days of Reagan, this country had a largely self contained and national economy. Today, there is no guarantee that the employer keeps his windfall of low taxes to hire Americans. As a matter of fact it is quite unlikely that he would do that. There is no longer an incentive for Joe to support the Republicans. That is why McCain and Palin are resorting to all the foolish jingoisms to keep him in their camp.