Commentary

Obama’s Stale New Deal

By Will Wilkinson
This article appeared on the American Spectator on June 29, 2005.
WASHINGTON — Barack Obama's rousing oration at the August 2004 Democratic convention established America's favorite son of a goatherd as the shining hope of his desperate party. After humiliating the hapless Alan Keyes in November, he took his seat in Washington as the junior Senator from Illinois and set himself immediately to the thankless service of the workingman. On June 4, Obama appeared in Galesburg to deliver a commencement address at Knox College that has liberal scribes writing love poems and doodling hearts inscribed “Obama 2008.”

In a valentine that appeared on the New Republic website, David Kusnet says that “All Obama did was make the best case for liberal politics in recent memory…” Jared Bernstein of the left-leaning Economic Policy Institute quotes Obama, and asks, “Did someone just open the window? Where's that breeze coming from?”

A quick whiff suggests that it is coming from 1935 or thereabouts, which approximates the “sell-by” date of Obama's vintage insights. Kusnet, alongside the New York Times, cheerily steps through Obama's window to the 20th Century, and quotes this passage with admiration:

There are those who believe… [t]hat the best idea is to give everyone one big refund on their government — divvy it up by individual portions, in the form of tax breaks, hand it out, and encourage everyone to use their share to go buy their own health care, their own retirement plan, their own child care, their own education, and so on.

In Washington, they call this the Ownership Society. But in our past there has been another term for it — Social Darwinism — every man or woman for him or herself.

So there you have it: larger tax-sheltered Health Savings Accounts are tantamount to leaving the hindmost to the wolves. Personal retirement accounts — over which workers rich and poor would gain genuine property rights, and a real stake in the growth of the economic system to which we owe our riches and security — are akin to shoving the elderly out to sea on an ice floe.

In a similar self-satirizing vein, political theorist Benjamin Barber argued in January that the Bush administration “is trying to seduce us back into the state of nature, where the strong dominate the weak and anarchy ultimately dominates the strong and the weak, undermining security for both.” Which raises the urgent question: do America's eminent political philosophers really believe there are mutual funds in the state of nature?

Seriously, Obama's equation of the American ideals of ownership, independence, and autonomy with “Social Darwinism,” Barber's charge that Social Security personal accounts are a ploy to reinstate Hobbesian chaos, these are signs of the sickness at the heart of contemporary liberalism: the inability or unwillingness to recognize the cooperative market order — our system of mutual benefit based on ownership and exchange — as the primary source of American prosperity, security, and solidarity.

WHAT IS OBAMA'S ALTERNATIVE to ownership? Taxing one citizen to pay another. Contemporary liberals have a bad habit of confusing social cohesion with the volume of government transfers, as if the coercive pattern of taking and giving was the measure of order and the test of our hearts. This is what leads Obama and Barber to so easily confuse ownership with anarchy, autonomy with chaos.

But here on Earth, where the United States is located, advanced market economies like ours function through immensely complex voluntary networks of interdependence and cooperation. To provide citizens with a bigger stake in the market through ownership is to integrate them more fully into a web of mutual support that is vastly more intricate and organic than the pattern of government transfers could ever be. People in societies like ours, who grow none of our own food, make none of our own clothes, and would not know how to build shelter if our lives depended on it, are truly “in this together.”

Modern market societies — ownership societies — are the paradigm of interdependent, mutually advantageous cooperation, and are as far as can be imagined from the society of atomistic predators Obama invokes to stir the disdain of the fresh-faced graduates of Knox. Market societies — ownership societies — are wealthy because they rely on and reinforce a high level of social trust and norms of cooperation.

This is not an ideological claim; it's a fact. Empirical studies find that the level of trust in a society is strongly positively correlated with its level of economic development. Wealthier societies are more trusting and cooperative. And societies with strong market institutions are wealthier. World Bank economists Stephen Knack and Philip Keefer find that “trust and norms of civic cooperation are stronger in countries with formal institutions that effectively protect property and contract rights.”

In a large cross-cultural experimental study, a team of anthropologists and economists recently found that “the higher the degree of market integration and the higher the payoffs to cooperation, the greater the level of prosociality found in experimental games.” Markets societies — ownership societies — promote the habits of the heart that create social solidarity and cohesion.

If Democrats like Obama can begin to reconcile themselves to the fact that it is ownership and the web cooperative exchange — not the pattern of coercive government transfers — that brings us economic security and ties our interest together, then they may hope to be a force of progress in the 21st Century. Until then, Democrats will continue to be embarrassed by the evidently plausible charge that they are out of ideas.

The New Deal, it is worth pointing out, has not been new for 70 years now. So the next time Obama opens a window, let's hope it's not another blast from the past. Nobody likes mothballs.

Will Wilkinson is a policy analyst for the Cato Institute, and author of the study, “Noble Lies, Liberal Purposes, and Personal Retirement Accounts,” Social Security Choice Paper no. 34.