Letters from an Ohio Farmer

Democratic Government and Good Government

To My Fellow Citizens:

The American experiment, as these letters have argued (here and here), is a never ending
experiment. It is the experiment of every generation to prove again, as our Founders set out to prove, that democratic government can be good government.

Political philosophers have been debating the meaning of good government for centuries. It is safe to say that two requirements, defending against foreign aggressors and avoiding insolvency, are probably not sufficient for achieving good government but are absolutely necessary to any conception of it. No matter what else a government may achieve, if it allows the nation's subjugation or financial ruin it must be considered a failure.  

These elemental goals are especially difficult for democracies, however. For one thing, both require the majority of people to assent to managing public affairs by imposing tangible, short-term sacrifices for the sake of abstract, long-term benefits. This is exactly the maxim that the majority of people apply reluctantly and inconsistently to the management of their private affairs.

Moreover, even if a democracy's selected leaders succeed in persuading the nation that military preparedness or fiscal restraint is necessary in general, they will still face the problem of imposing the necessary sacrifices on particular citizens. That is, convincing people that soldiers should be conscripted, taxes raised, or subsidies cut is different, and easier, than responding to the "Yes, but" replies: Yes, we need more soldiers, but there are compelling reasons not to draft my kid. Yes, we need to balance the budget, but you should raise his taxes, not mine, and reduce their benefits, not ours.

Equality is democracy's fundamental principle, and majority rule is the obvious manifestation of that principle: If everyone's votes are equal, then the candidate or proposition that gets the most votes deserves to win. Majority rule would seem to equip democracies to impose sacrifices on minorities for the benefit of the whole society, perhaps in ways that lend themselves to the abuse of minorities.

Nonetheless, the history of democratic governance shows that minorities are often very successful at fending for themselves, despite majority rule. When, for example, the costs of a policy are borne by everyone, but are very slight, while the benefits are garnered by only a minority of the population, but a minority that is deeply committed to receiving and continuing those benefits, the correlation of democratic forces favors the minority over the majority. Federal price supports for farmers are an example of this phenomenon. Few citizens will vote against a politician because of a farm program that adds a few dollars a year to their tax bill or grocery bill, so no politician fears that supporting those programs will end his career. Many farmers, however, will vote against a politician who tries to end those programs, so politicians, especially from rural states and districts, have compelling reasons to perpetuate the subsidies.

In one respect, the democratic challenge of defending the nation is harder than preventing bankruptcy, since the sacrifices required by the latter expose no one to violent death or dismemberment. Viewed from another angle, however, this same distinction makes fiscal discipline the more difficult attainment. Washington, D.C., like every nation's capital, is crowded with statues of military heroes, whether generals mounted on horseback or enlisted men captured in a moment of valor, such as the Marines raising the flag on Iwo Jima. There are, by contrast, very few statues of Secretaries of the Treasury, and none showing a civil servant fearlessly subduing a spreadsheet.

The fact that keeping our national accounts in order is a permanent need, and a mundane one, means there will always be a gravitational pull in the direction of bigger deficits, growing debt, and increased borrowing. The historical record shows that there’s a further connection between martial and fiscal imperatives: big increases in the federal debt usually correspond to major wars. Thus, the federal debt, the total amount owed by the federal government to all lenders as a result of past borrowing not retired, increased from $65 million in 1860 to $2.77 billion in 1866, a factor of 43. It increased from $3.61 billion in 1916, the year before America entered World War I, to $25.95 billion in 1920, the fiscal year after the war ended. The debt then grew from $48.96 billion in 1941 to $258.29 billion in 1947.

Few would argue, of course, that it would have been better if America had lost or never fought these wars rather than incur the expense and indebtedness necessary to win them. One noteworthy thing
about this historical pattern, however, is that the wartime increases define plateaus rather than peaks. After incurring huge loans to fight a war, the federal debt never gets much smaller than it was at the end of the war, and never gives the slightest indication of reverting to the levels seen before the start of the war. These plateaus seem to be only partly explained by the duration of the loans needed to build ships and planes. Another part of the explanation is that wartime borrowing shows what the market and the electorate will bear. Lenders offer to loan the government much more money than it had ever before tried to borrow, and voters learn to live with levels of debt that had previously been unimaginable.

According to the field of economics known as public choice theory, the wonder is not that our budget deficits aren’t smaller, but that they aren't much larger. Borrowing more money will always be the least unpopular option in a democratic contest where the alternatives are taxing more or spending less. Americans can look at Greece or Spain, however, to see the dangers of borrowing as much money as the world is willing to lend. The nations that try it routinely wind up borrowing more than the world is willing to lend, and are forced to pay a high premium to induce lenders to make loans to governments that can't be counted on to repay them. This course leads into a fiscal death spiral, where a national government is forced to borrow at high interest rates because its ability to repay is dubious, but the high interest rates put such a burden on its finances that its ability to service its loans is in fact diminished. If we have the sense to attend to its lessons, daily experience is teaching us what it has always taught: that America must find a way for its democratic government to be a good, fiscally disciplined government.

Ohio Farmer

The Distributive Constitution and the Election of 2012

To My Fellow Citizens:

In recent letters (here and here), I reflected on the views of some of our learned fellow citizens on the left.  According to one of them, a professor at a public university, democracy requires that citizens enjoy material security.  Without material security, no one has the independence to be a citizen.  Without such security, a citizen lacks the self-respect to stand up for his rights.  A market economy does not provide material security.  It is too unpredictable in its support and leaves citizens at the mercy of a corporate oligarchy.  Since material security is necessary for democracy to function, and since the market cannot provide it, government must do so.  To provide this security, to which every citizen has a right, the government should redistribute wealth.

In response, I argued that what the leftist professor approves in American life would have been impossible, if his argument were correct.  If less well off citizens could not function effectively in a democracy and the corporate oligarchy was all powerful, how did laws favorable to working men get passed and candidates favoring their interests get elected?  That such laws have passed and such candidates have succeeded is a sufficient refutation of the professor's views.  Material security is not necessary for democracy, because those who passed the laws and elected the candidates did not have this security.  But consider this further evidence of how wrong the professor's critique of our democracy is.  Although the left rails that unequal wealth corrupts democracy by giving some more power than others, no one who has studied the connection between money and elections has been able to show that money can buy an election.  Favored candidates attract more money, but more money does not buy favor. 

The professor's claims about what ails our democracy are all wrong.  His remedy, redistribution of wealth, is therefore unnecessary.  If carried out, it would be paradoxical and dreadful in its consequences.  A moment's reflection will assure us that no government, no power on earth, can provide the material security he insists must be considered a right.  Any government with the power and ambition to try would become tyrannical.  The effort to insure democracy through the power of government would paradoxically extinguish freedom.

Arguments like those the left makes about redistribution and democracy do not occur only in theoretical discussions.   They apply directly to political issues.  For example, one of the professor's equally learned colleagues, a distinguished academic, a former President of the American Political Science Association, has written recently that redistribution is central to Affordable Care, the health plan passed by the Obama administration.  She criticizes her fellow leftists for their tepid support of the President.  More needs to be done, she agrees, but then admonishes them that "Affordable Care . . . is a redistributive and regulatory breakthrough" that deserves their support. 

More is at stake, however, in the Affordable Care act, she argues, than just health care.   "Affordable Care, on top of Social Security, Medicare, and Medicaid, could strengthen the bond between middle class Americans and a national government that supports security for all."  The ultimate purpose of these distributive programs, then, is to bind Americans to the national government, to make them dependent on that government.           

A virtue of academics is that they will say clearly what politicians will obscure.  And so our learned friends on the left have posed the issue before us clearly.  For about 100 years, we have sought ways to manage the changes wrought by industrialization.  Those on the left have argued that the concentration of power in corporations brought about by industrialization requires a second revolution, a movement away from the principles of the first American Revolution, a movement away from individuals relying on themselves, their families, friends, and communities, to individuals depending on the government.  Politicians on the left have tended to shy away from talk of revolution, fearing perhaps to associate themselves with such a radical change.  Instead, they and their supporters have focused on specific changes, on Social Security, Medicare, Medicaid, and Affordable Care, for example, not the principle behind such programs, which academic leftists have candidly articulated. 

The piecemeal political approach to revolution worked for a long time.  The real costs were in the future and did not have to be faced.  But now the bills for a system of government dependence are mounting and coming due.  More important, as the pieces of the revolution come together, its character is harder to hide.  It is increasingly evident that it aims to transfer power from the people to the government, so the government can transfer wealth from those it supposes have too much to those it supposes have too little.   The revolution is necessary, the left tells us, to save our independence.  But we see ever more clearly that it aims to makes us dependent on the government.  We see ever more clearly that in the name of saving democracy it will destroy democracy.

As what is at stake becomes clear, it affects our politics.  We currently suffer from political paralysis and bitter political infighting not because of our system or the influence of the media or for any of the other reasons typically offered.  We suffer from paralysis because compromising will no longer work.  Lurking behind the compromises was a fundamental disagreement.  As long as we could afford to, we avoided facing that disagreement.  But as our finances grow threadbare and the threat to free government becomes more evident, the disagreement becomes more obvious, a choice less avoidable.  The learned left is clear again about this too.  "The stakes in 2012 are as high as in any pivotal election in U.S. history (except 1860)" one of them has recently written.

The importance of the election of 2012 is one thing on which we and the left agree.  But we hope its outcome will be a turn away from the distributive constitution toward free government.

Ohio Farmer

Rule by Experts

To the Members of the 112^th Congress:

Progressives originally wanted more democracy; now they’d like less of it, if you don't mind.

We have had occasion in these letters to mention President Obama's former director of the Office of Management and Budget, Peter Orszag. Orszag left the administration last year for the more lucrative position of Citigroup's vice chairman of global banking.

During moments of leisure from tightening the shackles forged by international capitalism, Orszag enjoys writing articles in his capacity as an adjunct senior fellow of the Council on Foreign Relations. We know of nothing that will oblige our grandchildren to remember Mr. Orszag, but we call him to your attention because in a recent article he has had the candor to express openly a significant and troubling inclination of American progressives.

In his words, the time has come "to counter the gridlock of our political institutions by making them a bit less democratic."  The problem is not that our politicians are ignoring the views of the people who elect them, but that they reflect those views all too reliably.  More and more Americans inhabit political cocoons, he writes.  They get their news and opinions exclusively from congenial sources – Democrats watch MSNBC and Republicans watch Fox – and even reside in towns and counties that are vividly red or blue, rather than in the purple jurisdictions more common a generation ago. 

The upshot is that elected representatives get to Congress and have no latitude to compromise, since their constituents demand absolute adherence to a rigid political ideology.  The polarization and gridlock that result could be surmounted if the electorate broke decisively in one direction or the other, electing a president and congressional majorities committed to a common agenda and viewpoint.  Democrats like Orszag wanted to believe that this was what happened in 2006 and 2008, but the 2010 midterm elections demonstrated that America remains, politically, a nation closely divided, one where neither party gets the upper hand in a decisive way for a prolonged period.

Believing that polarization is here to stay, Orszag wants to find a way for government to work despite it.  Getting government to "work," however, sounds remarkably similar to getting it to enact the unimplemented parts of the Obama agenda.  He cites the need for a climate change policy, and asserts that "virtually all responsible economists" agree with him that we need a bigger federal deficit for the next two years in order to stimulate the economy and lay the groundwork for policies that will reduce the deficit in conveniently distant decades. 

Orszag is not the only Democrat disaffected from democracy.  Governor Beverly Perdue of North Carolina recently suggested suspending congressional elections for two years as a way for voters to convey to congressmen that whatever decisions they make to effect economic recovery are ones "we won't hold … against them."  The governor's spokeswoman hastened to insist that her boss was "obviously using hyperbole" to draw attention to the "serious problem" of "politicians who focus on their own election instead of what's best for the people they serve."

Well, it's good to be reassured that the banana-republic step of suspending the people's ability to hold the legislature to account does not appear to be a Democrat project, but isn't it a bit discouraging to see prominent members of that party holding the incapacity of the people to govern themselves to be a self-evident truth?  To say that politicians face the mutually exclusive option of getting elected or doing what's best for the people means that the people are too ill-informed, short-sighted, or weak-minded to make wise governance an unassailable electoral advantage rather than a handicap.

Orszag is not using hyperbole, and his ideas about making our institutions "a bit" less democratic sound like they would leave them a lot less democratic.  He wants the Independent Payment Advisory Board (IPAB), the central reform mechanism of Obamacare (the Patient Protection and Affordable Care Act), to be the new template for governance generally.  Readers will recall that IPAB is, in Orszag's words, "an independent panel of medical experts" whose recommendations on controlling health care costs become law unless Congress and the president explicitly countermand them.  According to Obamacare, Congress cannot dismantle IPAB, no matter how much the medical experts outrage mere citizens, except in the distant future and by following an elaborate procedure that has no authority in a Constitution that vests "all legislative powers" in the elected national legislature.

IPAB has not even come on line yet and Orszag is already so pleased with it as an improvement on representative democracy that he would like to see new, IPAB-like commissions empowered to set federal policy in such obscure and insignificant areas as infrastructure and taxation.  He allows that government by commission would "reduce the power of elected officials and therefore make our government somewhat less accountable to voters."  But, darn it, since no one else has "come up with a practical proposal" to "circumvent legislative gridlock," Orszag sees no alternative to turning all the important questions facing the government over to panels of experts, and keeping Congress around only to intercede if the commissions come up with measures the people absolutely deplore.

Orszag repudiates a straw man when he urges Americans "to jettison the Civics 101 fairy tale about pure representative democracy" and embrace government by commission.  The logic of our constitutional system recognizes that while popular government can be rash, stubborn, or petty, any political architecture that protects against these tendencies by conferring autonomous power on a small minority purportedly blessed with exceptional wisdom or virtue sets up the temptation and probability of tyranny.  Thus, the Constitution's goal is to secure "a republican remedy for the diseases most incident to republican government," as Federalist 10 contended. 

This Madisonian approach is certainly aware of the need for "experts" in a well governed republic, but it seeks to improve democracy by elevating and refining it.  It creates a government in which all political power derives from and must answer to the people, but where the structure of the government and the national union is designed to give the nation every opportunity to embrace policies that are wise and not merely popular.  Presidential elections, for example, are held every four years rather than every four months, so that a president has the constitutional space to make decisions that contradict the people's momentary preferences, but which might be vindicated in the months or years before the next election is scheduled. 

Orszagian government, by contrast, seeks to improve upon democracy by constraining and circumventing it.   It is based on the belief that the most acute problem with American government is that experts lack the power their expertise deserves.  He advocates a constitutional system where rule by experts is the default option, saving us from having commissions whose recommendations "sit on a shelf collecting dust."

One reason to prefer Madison's solution to the problem of making democracy work over Orszag's is that it displays an astute sense that the abuse of power is an endemic political problem, one so old it's often rendered in Juvenal's Latin: Quis custodiet ipsos custodes?  Who will guard the guardians themselves?  If Orszag gets his way we will be forced to ask, where will we find the experts who know how to protect us from the experts?

Ohio Farmer