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Michael Meeropol: Are Libertarian Polices A Good Alternative To Clinton's Or Trump's?

According to the polls, a high percentage of the population has negative views of both Donald Trump and Hillary Clinton.  As a result, the Libertarian candidates Gary Johnson and William Weld are getting a good look from many voters.   Though national polls have them well below the 15% threshold for the Presidential debates, they are polling over 30% among young voters.   (Jill Stein, the candidate from the Green Party is polling in the low single digits and has not generated anywhere near as much support.)   I want to focus this commentary on some of the substance of Libertarian Party proposals.

To begin, I want to say that I have some affection for Libertarians.  For years at Western New England University, we have had an annual lecture which features Libertarian economists debating either mainstream liberals or leftists.  The libertarians who came to these debates were sincere, consistent economists with whom I had a lot in common.   They opposed foreign interventions and the massive military spending that goes with it.   Their strong philosophical support for individual liberty leads them to support gay rights.   In lectures at Western New England, they have argued strongly and persuasively for open immigration.  Libertarians have consistently supported a woman’s right to choose and the legalization of marijuana.  

Unfortunately, libertarian consistency in opposing big government extends to the modern welfare state.   Gary Johnson, for example, is in favor of completely privatizing social security.  This issue warrants extended discussion.   If you believe that social security is simply life insurance, disability insurance and a pension plan, you can make the case that individuals should decide how much life insurance to buy, how much disability insurance to buy, and how much to save for retirement. 

However, as I made clear in a commentary years ago, our social security system is an example of what we call SOCIAL INSURANCE.   Social insurance is just what it sounds like --- We all pay in so that if and when we need it, we all benefit.  This is analogous to purchasing fire insurance.  We hope never to “win” with a fire thereby reaping a high rate of return on our so-called “investment.”   The insurance is there in case we need it.  All those who are unlucky enough to have their houses burn down are made whole again because we have all paid the premiums for many years. The lucky ones, by avoiding disaster, do not end up collecting anything.   Far from lamenting their zero rate of return, they are grateful they didn’t need to “win.”

There is a difference between fire insurance and social insurance and this is where libertarians come up short.  One can decide how much fire insurance to buy and if you don’t have a mortgage, you can in fact refuse to buy any fire insurance.   In the case of social insurance, everyone pays because without that enforced solidarity, it wouldn’t work.  Still, the desire not to “win” still applies to many aspects of social insurance – think unemployment compensation or social security survivors or disability benefits.  Just as we would just as soon not “win” by having our house burn down, we don’t want to “win” anything from those “investments.”   If I never see a penny of the money I paid into the social security disability fund over my 41 years of full time employment I will be happy.  The fact that my children did not have to collect survivors’ benefits from social security gives me pleasure not pain.  I will not lament my zero rate of return on my “investments” in the disability and survivors’ aspects of social security because they were NOT financial investments and were never meant to be.

The pension aspect of social security is a little more complicated.   Here the rationale is a combination of the hope that each generation will leave the economy more productive and wealthier than they found it.  In that circumstance, the working generation leaves their children the opportunities to gain more income than they did.  In return, the next generation pays part of their current income to, in effect, reward their elders for the new technologies, products, medical miracles and knowledge they have created for them.   The pension aspect of social security, therefore, is a compact between the working generation, their children and grandchildren.   By providing a pension floor under the retired generation, the accident of poverty and/or childlessness does not determine the standard of living of individual workers.   The success of the social security pension system in reducing elderly poverty is one of the great success stories of the American welfare state.   (For details, check out John Schwarz AMERICA’S HIDDEN SUCCESS, A REASSESSMENT OF PUBLIC POLICY FROM KENNEDY TO REAGAN, [1987]).   

Privatizing social security would destroy our system of social insurance – replacing many guarantees with lotteries.

Another problem with libertarian economics is the belief that because competition works in providing high quality restaurant meals, competition will also work in providing high quality medical care and K-12 education.   But when we consume a restaurant meal, we quickly can make a judgement as to whether we like it well enough or the value we get for what we paid is high enough to come back again.   Unless we get violently ill, our disappointment in what we buy will be minor.   In the case of education, we usually do not realize how “good” or “bad” it is until we (say as parents of a first, second or third grader) have “consumed” a good chunk of it.   In fact, many of us are incapable of realizing how “good” or “bad” the education our children are receiving because we haven’t got the time or skills to judge as it is happening.    The current attempt to create metrics of measurement via high stakes testing has actually done great harm to the content of education in schools where high percentages of students really need high quality education to compensate for the deficiencies in the education they are receiving at home.  The idea that introducing competition into the provision of education assumes that the “consumers” will be able to make the same kind of instant judgement that patrons in restaurants do.

Gary Johnson, true to his philosophy, proposed a voucher system for the “consumption” of K-12 education when he was Governor of New Mexico.   In order to make sure that it did not drain public schools, he proposed that the voucher not reduce the per pupil state appropriations.   The problem of course is that is NOT how a voucher program works in practice.  No State Legislature would permit a school district that loses a student to keep the money appropriated for that student’s education.   IN practice, vouchers drain dollars from public schools just as Charter Schools drain resources from traditional public schools.   This approach is detrimental to the goal of creating a fully educated citizenry.  No matter how successful individual private or charter schools are, the vast majority of American students will continue to be educated in traditional public schools.  Draining resources from them to “reward” a handful of successes is not a solution because the children left in the traditional public schools will also grow up and society will need them to be productive workers and taxpayers.

In the case of medical care, the “consumer” model is even less appropriate.   That is why every other advanced country has some form of national health program to guarantee health care to the entire population.   Leaving the purchase of health insurance and/or health care to the “magic of the market” is a recipe for denial of coverage and rapidly escalating prices.   (The one departure from the free market is the patent system for prescription drugs which creates the ability for pharmaceutical companies to hold patients hostage until they pay exorbitant ransoms for life-saving drugs.   Patents are usually defended as essential to encourage research into new drugs but in fact there are much better ways to encourage invention and creativity than life-long monopoly privileges.)

One final issue:  The Johnson-Weld platform accepts the fact that global warming is real and human activity causes it but argues that the market will solve it.   They cite the example of natural gas replacing coal as a source of energy.  It is true that natural gas emits less carbon than does coal.  However, even in the case of natural gas, its price does not reflect the damage the released carbon will continue to do to our planet.   Modern industrial society has created global warming by permitting the market for fossil fuels to function without correcting the price of the various fuels for the damage done by emitting carbon into the atmosphere.  It is true that before the 1970s we didn’t realize the long term damage we might do.   It is also true that it took decades of research to truly nail down the problem.   But once the science became clear there needed to be concerted efforts to transform our energy system from one dependent on fossil fuels to one utilizing sustainable sources of energy.  The late Barry Commoner wrote The Poverty of Power:  Energy and the Economic Crisis in 1976 (NY:  Random House) in which he argued that it was possible to replace fossil fuels with various forms of solar energy.   He followed that up in 1979 with The Politics of Energy (NY:   Knopf) in which he criticized the Carter Administration’s energy proposals and argued that it was possible to make “the solar transition.”   His final book (1990) was entitled Making Peace with the Planet (NY:  Pantheon).   His work was just one of many interventions by scientists into the arena of public policy attempting to persuade the general public that changes to rules and policies were essential if we were to stop the damage to the eco-system that our society was creating.   By the 1990s, the dangers of global warming were apparent to the vast majority of scientists.  Unfortunately, the institutions that benefited from a fossil fuel based economy fought back with mis-information amplified by very deep pockets.   The result is that in the US, we have one major political party committed to doing nothing to reverse global warming.   Unfortunately, the Libertarians, though acknowledging the science, refuse to accept the economics.   They still believe that government intervention to reverse global warming will do more harm than good.   Because of this single-minded commitment to that particular model of how the economy works, their refusal to countenance collective action to save the planet disqualifies them as serious alternatives in the current Presidential election.

Michael Meeropol is professor emeritus of Economics at Western New England University. He is the author (with Howard Sherman) of Principles of Macroeconomics: Activist vs. Austerity Policies.

 
The views expressed by commentators are solely those of the authors. They do not necessarily reflect the views of this station or its management.

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