All or Nothing at All

We have just emerged from an election season during which, in addition to the usual (and bipartisan) charges, smears and indiscriminate insults, we were told that Barack Obama’s policies amounted to “socialism.”

Leaving aside the obvious—that most people engaging in these arguments on both sides used the terms “socialist” and “capitalist” very loosely, raising the question whether they really could define either system accurately—what struck me most about the debate was an unacknowledged premise, the assumption that America must choose between capitalism and socialism. The argument underscored the persistence of what I sometimes refer to as our bipolar political culture. Voters are either right or wrong, other countries are either friend or foe, policymakers and politicians are either sleaze-balls or valiant warriors for civic virtue.

Reality isn’t so neatly divided into “either-or” formulations. Sometimes we’re right, sometimes not. Our national interests may align on some measures with Country A, and diverge on others. Policymakers can be good people who are simply mistaken—or for that matter, they may be sleaze-balls who are on the right side of an argument. As I tell my students, reality is generally more complicated than we like to admit.

Which brings us back to that scary word, “socialism.” I happen to be a fairly rabid believer in markets and limited government. But markets only work when buyers and sellers operate in accordance with sound rules and with equal access to relevant information. Throughout our history, Republican and Democratic administrations alike have intervened when they believed particular markets weren’t working. Often that intervention was misguided. At other times, lack of intervention was the problem. Whether markets work in a particular economic area is—or should be—an empirical inquiry, not an ideological one.

There are different ways to “socialize” costs. Americans socialize risk using private markets when we purchase insurance.  We use government—through social security—to socialize the risks of poverty among the elderly. The real question is whether a particular endeavor should be left to the market, under fair but not excessive regulation, or whether there may be compelling reasons to have government handle it.

In fact, when you think about it, a decision to have government manage a particular task is a decision to “socialize” that task—to pool our resources in the form of taxes to provide a social good or service. Public safety is a good example—we have decided, as a society, that police protection should be “socialized” and available to all citizens, not just the ones who can afford private security.

Principled people can certainly disagree whether this or that service should be provided by government or by the market.  But it is unhelpful, to put it mildly, to substitute accusatory labels for thoughtful discussion of the pros and cons. It is worse than unhelpful to suggest that every government initiative is tantamount to turning the country socialist. America has been a mixed economy for a long time. The proper question is the appropriateness of the mix.