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The Metaphysics of the Debt Crisis

With considerable detail, on NRO, Tiffany Jones Miller explains the origins of the debt crisis in the Progressives' rejection of natural rights, which meant that the collective good obliterates individual rights.  

Our debt crisis, in sum, has everything to do with the transformation of morality and government effected by the late-19th- and early-20th-century Progressive movement. Far from being largely ineffectual reformers, the Progressive academics who articulated the new conception of Freedom and the "positive" State, outlined above, were also the initiators of the entitlement programs that lie at the core of our crisis today. 

Categories > Progressivism

Discussions - 8 Comments

Governments defaulted on their debts for centuries 'ere the Era of Ragtime.

But under Progressive programs, debt becomes a duty.

Nonsense. Financing public expenditure through bond issues is a policy choice, a policy choice driven by political calculation. Keynesian conceptions in economics (or, more precisely, Keynesian conceptions misapplied) gave cover for doing so. There is no logical inconsistency between advocating extensive state allocation of productive resources and paying for same through taxation. Frank Zeidler's administration in Milwaukee was notable for its balanced budgets.

Please note that during the period running from 1929 to 1953 the country suffered a hideous economic contraction, a banking crisis, years and years in which the country was producing as far below capacity as it ever has, a war of national mobilization, a severe economic contraction driven by conversion from military to civilian production, a regional war, and the construction of a large standing army and navy due to imperatives of international politics. Running large deficits in those sorts of circumstances is not all that surprising. Running chronic deficits without regard to external circumstances began not with the Progressive Era or the New Deal (both Truman and Eisenhower being quite resistant to deficit spending) but with the Kennedy Administration.

The big problem is politicians building constituencies and patron-client relations with public expenditure and the making the costs opaque. Social insurance programs have to be actuarially sound. You can evade the problem posed by actuarially unsound social insurance programs by not enacting social insurance programs. You can also enact and maintain such programs with a modicum of prudence and honesty.

The deficit of prudence and honesty is fairly ecumenical. During the Reagan Administration, the federal deficit ran at time to 6% of domestic product. The difference between the expenditure levels requested each year and those enacted by Congress was modest (Human Events and here I see an article by Grover Norquist promoting some piece of advertising gimmickry called the 'Taxpayer Protection Pledge'. No tax increases to contain the deficit, ever. Modification of the trajectory of expenditure on Social Security, Medicare, and public employees' pensions is very much in order, but it cannot happen on the time scale we need to evade a crisis in the bond market. The deficit currently amounts to about 40% of total federal expenditure. There is not enough discretionary expenditure to be able to effect a 40% reduction in total spending (absent reducing the military to a Canadian-size force).

For thirty years, Republican politics have been addled by this fixation on tax rates. Tax rates are a function of public expenditure. Make your case for the specific portfolio of programs you want, and live with the tax rate derived from that. The inability of characters like Reagan and Norquist to abandon deception and self-deception on these points cannot be laid at the door of either Roosevelt.

Or is it the contention of Prof. Tiffany Jones that deception and self-deception were innovations of the Progressive Era?

But aren't you making The Jones Miller point in another way: That the incentives are arrayed against responsibility. The exclusive strategies of either tax cuts or promiscuous spending share a common root in an atrophied view of public life that Progressivism promoted.

No, I am not. Irresponsiblity and self-deception are aspects of human behavior, not of a 'progressive' regime.

The signature programs of early-20th century progressives comprehended anti-trust legislation, health and safety regulation, urban planning, and anti-corruption measures. What this has to do with excessive reliance on public-sector borrowing is a mystery.

AD, you note specific Progressive programs but don't see the regime change Progressivism brought about. Constitutional forms altered, making "irresponsibility and self-deception" inherent in the regime, not just choices. Behind the complex of signature Progressive programs is a faith in science and a dynamic history that creates a new background for what were choices. Progressivism redefined the political game. Reagan came the closest to seeing this, but he had a Cold War to win and couldn't make the domestic changes necessary.

There was no regime change. Prior to 1929, the expenditures of the central government amounted to about 3% of domestic product. The specific programs in question concerned regulatory modifications which were modest and adaptive given the changes in the characteristics of commerce in the post-bellum period. Again, running public sector deficits without regard to external circumstances was a practice which appeared around about 1962. An argument which locates a cause in an intellectual genealogy the effects of which do not appear for fifty-odd years is not a sustainable argument. There are too many potentially confounding variables for it to be anything other than a mildly interesting hypothesis.

As for what Mr. Reagan saw or did not, David Stockman offered a priceless story of submitting to the president an exercise in which salient federal programs were listed line by line and the president could select from a number of standard options for expenditure reduction. The president was quite taken with the exercise and spent quite a number of hours on it over several days. Mr. Stockman tallied the results and informed the president that if he got all the reductions he wanted from Congress, the country would run $800 bn in deficits over the succeeding five fiscal years. He still could not persuade the president to consider acceding to a tax increase. Mr. Reagan made some good judgment calls, but often failed to recognize logical contradictions or disjunctions between expectations and consequences. He wasn't all that perceptive.

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