Blackadder’s Lair

The home of many a cunning plan

A Case for Libertarian Progressivism

Writing at the New York Times blog Economix, Ed Glaser argues for a “small-government egalitarian” plan for economic stimulus:

Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Was the Interstate Highway System such a boon for the urban poor? Has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America.

Current American political discourse labels people as either anti-government or pro-equality, but wanting to help the poor should not require the abandonment of sensible skepticism about expanding the size of the state. Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous checks to the poor hurt by the storm than to spend billions rebuilding the city, because those rebuilding efforts would inevitably help connected contractors more than ordinary people.

Today, the New Deal’s heirs are vociferously arguing that more of the stimulus package needs to be spent on public works rather than tax cuts. The big-government skeptics point out that the government can’t spend hundreds of billions of dollars on infrastructure projects both wisely and quickly. Good infrastructure spending doesn’t happen on a dime, and applying a “use-it-or-lose-it” rule to speed up spending will lead to a lot of waste. The country could certainly invest more, in both human and physical capital, but that spending should follow the rule that benefits must exceed costs. Good investments need plenty of time to plan and implement, which pretty much rules them out as good fiscal stimulus. Moreover, since many of these projects will disproportionately benefit the prosperous, many of them can be financed with user charges.

Targeted tax aid for poorer Americans would be far more egalitarian than most kinds of infrastructure spending, like broadband technology. Sensible infrastructure projects wouldn’t disproportionately employ the least-skilled Americans. Forgoing the payroll tax for households earning less than $75,000 a year is surer progressivism than bridge-building.

Economics has little say about how egalitarian society should be. That is a question for moral philosophers and the democratic process. However, economics does tell us to choose efficient means of redistribution, and cash transfers almost always involve less waste than the alternatives. Reducing the payroll tax not only avoids the problems inherent in trying to spend infrastructure money quickly, but it can also directly target aid to the poor, who need help more and will spend the cash more quickly.

For what it’s worth, Singapore uses a similar method of dealing with recessions, which seems to work pretty well.

(HT: Ross Douthat)

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January 23, 2009 - Posted by | Economy, Government, Libertarianism

1 Comment »

  1. I undersdtand that you’re something of a fixed mind type of creature … nevertheless, I must inform you that you posted the same article twice … could you please delete one of them … !!!?

    Comment by Gilmour Poincaree | January 23, 2009 | Reply


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