Monday, January 3, 2011

A Case for "Cushioned Capitalism" or "Libertarian Socialism"

I end each of my radio shows by saying: "We find comfort among those who agree with us; growth among those who don't."

In my own effort to keep growing, I thought that I--who lean libertarian--would do a thought experiment: make the best case I can for socialism.

When I was younger, I believed that one pretty much gets what one deserves. Now I believe that luck plays a large role in one's success. For example, I'd be far less successful if:
  • I were born to retarded parents in Bangladesh, or
  • I inherited genes predisposing me to low intelligence, laziness, and poor impulse control, or
  • I inherited a horrible disease, or
  • I inherited an unattractive face or propensity toward obesity. Alas, study after study shows that attractive, slim people derive career and personal advantages.
Then there's the luck of being at the right place at the right time:
  • You met someone who gave you a great job.
  • You happened upon someone who gave you a suggestion that turned your moribund idea into a successful invention.
  • You happened upon someone who turned out to the perfect spouse and cheerleader for you, enabling you to be far more successful than you otherwise would have been.
Then there's the luck of being in the wrong place at the wrong time:
  • Getting crippled by a car that ran a red light.
  • You entered nursing school because the government projected high demand for nurses but by the time you graduated, the market had become saturated.
If I suffered even one of those pieces of bad luck, I would not have been as successful as I've been, no matter how hard I worked. From a cosmic justice perspective, it strikes me as unfair that because of something beyond one's control, they should suffer such diminished potential for success and contribution.

Therefore it seems appropriate that government help compensate for the unfairnesses that accrue to the winners and losers in the genetic and environmental lotteries. Socialism does that: everyone gets paid, gets the same benefits, etc.

But you say, "If everyone gets the same pay, benefits, etc., what incentive is there for people to work hard?" Of course, external incentives matter but I wonder if they matter as much as pure capitalists claim. Studies find that most, though certainly not all, people are motivated to work less by cash than by praise, wanting to a good job for its own sake, etc.

Whatever decrement in motivation would accrue from eliminating dollar incentives for quality work could at least in part be compensated for by a more concerted effort by parents, schools colleges, and media to emphasize the primacy of productivity and contribution to society.

Any residual decrement in productivity would be outweighed by everyone having a humane level of housing, food, health care, etc. From the aforementioned cosmic perspective, there's something wrong about a society in which some people have mansions and optimal health care while others are homeless and have minimal health care. Socialism addresses that.

That said, I'm not completely convinced that socialism is, net, better than capitalism. After all, I am well aware of how grossly inefficient and wasteful government is, and that many people are motivated to work harder and longer by money and competition. But I can't with utter confidence assert that pure capitalism is the wise way.

Perhaps the answer is an amalgam of socialism and libertarianism. In what I'm calling libertarian socialism, the government would pass a law mandating that all people get roughly equal pay, health care, housing, etc. but leave how that all would be accomplished to the private sector.

Or perhaps the right approach is America's status quo: what I call cushioned capitalism, capitalism with a humane safety net for the many people with the cards stacked against them in capitalism's ever more fierce competition.

Dear readers, your thoughts?

16 comments:

DaveinHackensack said...

What you're groping toward here is essentially the theory of justice articulated by the philosopher John Rawls forty years ago; his work has been a touchstone of liberalism ever since (so much so that he was even name-checked in a West Wing episode).

Marty Nemko said...

Dave,

That's the first time I've ever been accused of groping!

Marty

DaveinHackensack said...

LOL -- So you say!

Jeff Jones said...

Wow, Marty, you really hit a topic that I have been thinking about myself lately.

I have been politically liberal for the better part of a decade. The main reason is, as you said, I am aware of how much luck factors into any success story. The fact that I am writing these words is a side effect of where I was born, the fact that my parents were also literate, I was able to get an education, etc. It had nothing to do with me being "worthy" or "a nice guy".

Yet, lately, I find myself persuaded by many Libertarian arguments. Mainly because I have seen that while redistribution looks good on paper, it never quite works out the way it is supposed to when actual humans do the redistributing. Someone in power always gets to make a judgment of "who is worthy". I also see that capitalism often has a lot more potential to help the less fortunate than even the most well meaning programs. A lot of countries with great social programs are also going bankrupt, potentially causing more poverty and misery down the road.

I also was just listening to Michael Sandel's Harvard lecture on John Rawls the other night!

I don't really have the answer, I'll admit that. The only two conclusions I've reached are:

1- Life is not fair. We obviously don't all start from the same place. So much of who we are is genetics, chance, location, etc.
All attempts to "make life fair" are flawed, because who decides who is deserving and who is undeserving? The best answer is voluntary charity... we need more of that.

2- Maybe the American system is OK after all because, as you said, it balances pure capitalism with a bit of redistributive justice, which at least attempts to balance out the unfairness and give people a chance in the game. As I don't have the ultimate answer, it makes me cautious as far as advocating one worldview only and totally excluding the other. What if I choose one and I'm wrong?

I think the main point is that we basically all have to do the best we have with the cards we were dealt. In a weird way, it IS fair because it's a lottery for all of us. The majority of people, for better or worse, are worried about their own life. Maybe the best thing we can all do is use our natural abilities the best we can, and try to make life easier for others along the way when possible.

But I think the flaw in a lot of liberal arguments is that we can somehow make life totally fair. As I get older, that argument seems less convincing.

Jeff Jones said...

Wow, Marty, you really hit a topic that I have been thinking about myself lately.

I have been politically liberal for the better part of a decade. The main reason is, as you said, I am aware of how much luck factors into any success story. The fact that I am writing these words is a side effect of where I was born, the fact that my parents were also literate, I was able to get an education, etc. It had nothing to do with me being "worthy" or "a nice guy".

Yet, lately, I find myself persuaded by many Libertarian arguments. Mainly because I have seen that while redistribution looks good on paper, it never quite works out the way it is supposed to when actual humans do the redistributing. Someone in power always gets to make a judgment of "who is worthy". I also see that capitalism often has a lot more potential to help the less fortunate than even the most well meaning programs. A lot of countries with great social programs are also going bankrupt, potentially causing more poverty and misery down the road.

I also was just listening to Michael Sandel's Harvard lecture on John Rawls the other night!

I don't really have the answer, I'll admit that. The only two conclusions I've reached are:

1- Life is not fair. We obviously don't all start from the same place. So much of who we are is genetics, chance, location, etc.
All attempts to "make life fair" are flawed, because who decides who is deserving and who is undeserving? The best answer is voluntary charity... we need more of that.

2- Maybe the American system is OK after all because, as you said, it balances pure capitalism with a bit of redistributive justice, which at least attempts to balance out the unfairness and give people a chance in the game. As I don't have the ultimate answer, it makes me cautious as far as advocating one worldview only and totally excluding the other. What if I choose one and I'm wrong?

Marty Nemko said...

Thanks for the thoughtful comment, Jeff. My reaction to it is that while we can't perfectly determine who is and isn't worthy of how much "redistributive justice," it seems better to try than to simply throw our hands up.

Anonymous said...

The big lie of socialism is that it evens things out and makes everybody "more equal." In fact, it does exactly the opposite, concentrating wealth and power in a very few who have the necessary arrogance and aggression to manipulate the system for selfish ends.

In comparison, capitalism is much more democratic. Not perfect, but it gives people a chance, even if you're disadvantaged in some way. And who isn't disadvantaged in some way?

Lightning Bug's Butt said...

I agree that life is unfair, that much of life is luck.

But when you charge the government with deciding what is fair and then forcing the playing field back to level, you destroy more fairness than you create.

I don't want a government that can't balance a budget philosophizing on the nature and means of fairness. God help us.

Serge said...

I wonder what is a difference between a person disabled by a criminal and compensated by State's Victims Compensation Fund (which Conservatives favor) and a person disabled by a workplace injury and compensated by State's Disability Fund (which many Conservatives abhor).

Both are mostly bad luck, partly State's fault, and partly Individual's fault.

Regarding charitable giving, I am skeptical of it. While I would pay for example, 1% of income for orphanages, as part of my income, or property taxes, as long as most people pay that too (I.e. Don’t cheat). I will not just donate those money, if there are tons of other people who don’t.

While I believe in social contract, I also believe that selfishness is NOT a vice (maybe even a virtue). So I am not going to give away my hard earned money to charity, but will be happy to pay them in taxes, because it's much harder to avoid giving your fair share in taxes, than charity.

So when I vote to pass an initiative to raise my property taxes and support local schools, I know everyone will pay. But I wouldn't give a penny to support my local schools as part of charity, because of the problem with the "free riders"

Serge said...

Oh, and one way to make EVERYONE to give to charity is to make it MANDATORY.

For example, 1% of income taxes, can be diverted to any charity ranked by Charity Navigator at 4 Stars (I.e. Efficient) . It is the same idea as the "$3 towards Presidential Fund", only "on steroids" . And we should eliminate charity deduction to pay for this.

Anonymous said...

Marty,

In your blogs addressing the pros and cons of the U.S. Govt, you tend to neglect its worst predation: regularly slaughtering countless innocent foreigners.

This overshadows all the good (and bad)it otherwise is responsible for. It's worth mentioning, don't you think?

Michael R. Edelstein
www.ThreeMinuteTherapy.com

Marty Nemko said...

Michael, I agree we've been hubristic to think we can win wars in Afghanistan, Iraq, and Viet Nam, let alone to believe the human and dollar costs were worth it. But we must not paint in too broad a brush. You've told me you would have opposed even the U.S.'s fighting the Nazis in WWII. We differ there: I do believe it was worth the U.S. fighting the Nazis, although, of course, not H-bombing Hiroshima and Nagasaki.

Marty Nemko said...

Yes, Jeff, probably in this case, Aristotle's Golden Mean is probably a good place to be: cushioned capitalism or private-market-driven socialism.

Anonymous said...

Even in countries that have a socialist system there are the “haves” and “have nots”. Often it has to do with who is well connected to the in-crowd and who gets preferential treatment. I would like to see more fairness in all types of economic systems but I am a big believer in the social safety net.

Anonymous said...

Marty,

I appreciate your response.

I hope it means when you blog in the future on the pros and cons of the contemporary U.S. Govt, you will include in the latter category U.S. empire building and the military's legalized mass murder abroad.

Michael R. Edelstein
www.ThreeMinuteTherapy.com

Doug S. said...

My opinion is that the safety net in the U.S. is too weak (especially in the matter of health care), and that Sweden is currently much closer to the "Aristotelian golden mean" than the United States is.

And it's also interesting to note that a strong safety net can actually encourage entrepreneurship - people will be less risk-averse in their their careers and business ventures if there's less penalty for failure. (On the other hand, "less penalty for failure" can also lead to too little risk aversion, as demonstrated recently by the finance industry.)

The optimum form and strength of the "social safety net" is to a great degree an empirical question that can't be settled by armchair debate. Just what would happen if we abandoned private insurance and instituted socialized firefighting, anyway?

I don't see anything wrong with people being wealthy, as long as nobody's too poor. Maybe people shouldn't be required to work to get life's "necessities", however defined, if it only takes a small fraction of the population to produce those necessities and there are plenty of people willing to work in order to buy more than that?

 

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