It seems that the American Congress, dubbed the “greatest
deliberative body in history,” has suddenly become the greatest embarrassment
in the world. How did this happen? It happened because the growth in the economic
pie of America has slowed down to a crawl which means that the arguments that
were tossed back and forth were elegant academic arguments that had not met the
acid test. They have now, and the acid has worn off the elegance.
It is that slow growth or no growth has come to the American
economy in the same way that it did to many of the advanced economies. It is
here and will remain here for the long run if not for good, which makes it so
that rehashing the old arguments has ceased to hold water. Yet, the debaters
continue to use arguments that do not relate to real situations, and thus
unmask them as the fake arguments they have always been. The people who used
such arguments in the past got away with it because growth was hiding the
weakness in their logic. But now that growth has all but disappeared, the mask
that was hiding the quackery has dropped, and what used to sound like a great
deliberation has degenerated to become a big embarrassment.
To understand how the situation has evolved over time, we
must begin by probing the core arguments as they were at the start, and what
they have become. So let's say we have two sides arguing; one called the Left
side and one called the Right side. The Right says that the best incentive one
can have to remain aloft is to be faced with the choice of either staying in
flight or crashing. The Left says that people do not chose to crash but that
accidents do happen, and in a civilized society, a safety net must be provided
to catch those who fall.
That give-and-take led the discussion to move toward the
size of the safety net: how big and how robust should we make it? The Right
says society is as good as the individuals in it who create and produce the
goods and services that everyone enjoys in the end. Therefore, the safety net
must be as small as possible because the incentive to produce is inversely
proportional to the size of the net. And since the size of the net depends on
government, it follows that the government must be kept as small as possible.
The Left responds by saying that the safety net consists of
several programs, each designed to protect against a given risk, and this makes
it a network of insurance programs. And when you talk insurance – such as
health, old age, accident or unemployment insurance – you endeavor to bring as
many people as possible under coverage to spread the risk widely and lower the
premium for everyone. In turn, this means that the best insurance is the one
that brings the entire society into the program. And this can only be a government
program, which means that government has to be big enough to administer all the
programs which are required in a modern society.
So we now have two approaches to the organization of
society, each having great merit in solving the problem it chooses to address
but aggravating the problem that the other approach is addressing. In the eyes
of the Congress, it means that America can take one approach or the other but
not both. Thus, the debaters on both sides agree that the choice will have to
be a small government and a thriving economy or a comprehensive safety net and
a poorer economy.
But then, we cannot avoid asking the question as to whether
or not this is a real debate. The fact is that America is not the whole world;
there are a number of nations where they have managed to combine a thriving
economy and a large social safety net in a single system. The fact that the
American Congress boiled its own debate to an either/or situation says more
about the Congress than the reality of the situation.
The truth is that some nations have mastered the art of
running their economies evenly in good times and bad times. They do so by
letting the economy modulate the size of the safety net. Whereas the Americans
rely on the marketplace to regulate who gets what, those nations have a
system that determines how much each individual gets of what is available.
Thus in America, when times are bad and something comes in
short supply, the rich get what they want and the poor get the leftover, or get
nothing. And there are people who claim that this system is superior to what
goes on in the other nations because what they do there is ration what is
available so that everyone may share in it.
Can the American approach continue in a civilized society?
Or should the services and the entitlements be modulated to match availability?
This is the core issue the Americans must resolve before anything else.