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David Frum: Two Cheers for the Welfare State

David Frum:

Two Cheers for the Welfare State | FrumForum: In the interval since I started this response to Yuval Levin... the Ryan budget plan has been approved by the House of Representatives.... Ideas like those endorsed by Yuval Levin are now the formal position of the Republican party. My guess is that the party’s presidential nominee will attempt to tip-toe away from that position in 2012, but who knows? Anyway, it will not matter. President Obama’s billion-dollar campaign will ensure that Republicans are thoroughly identified with it. So Yuval Levin’s proposition is the proposition that Republicans will take to the country. Perhaps that is as it should be. Since the economic and electoral disasters of 2006-2009, Republicans have veered in a sharply libertarian direction. Why not put that new direction to the test of democracy? Perhaps Paul Ryan is right, and Americans (or anyway: voting Americans) have abruptly changed their minds during this economic crisis about their expectations from government.

I’ll admit: I’ve also changed my mind during this crisis, but in the opposite direction....

The radical free-market economics I embraced in the late 1970s offered a trade: Yes, there would be less social provision. In return, Americans would receive an economy that was simultaneously more dynamic and also more stable.... Some of the terms of that trade were honored. From 1983 through 2008, the US enjoyed a quarter-century of economic expansion, punctuated by only two relatively mild recessions.... New industries were born, new jobs created on an epic scale, incomes did improve, and the urban poor were drawn into the working economy. But of course, other terms of the trade were not honored. Especially after 2000, incomes did not much improve for middle-class Americans. The promise of macroeconomic stability proved a mirage.... [T]he crisis originated in the malfunctioning of an under-regulated financial sector, not in government overspending or government over-generosity to less affluent homebuyers. Fannie Mae and Freddie Mac were bad actors, yes, but they could not have capsized the world economy by themselves. It took Goldman Sachs, Merrill Lynch, AIG, and — maybe above all — Standard & Poor’s and Moody’s to do that....

GK Chesterton once wrote that we should never tear down a fence until we knew why it had been built. In the calamity after 2008, we rediscovered why the fences of the old social insurance state had been built.... I cannot take seriously the idea that the worst thing that has happened in the past three years is that government got bigger. Or that money was borrowed. Or that the number of people on food stamps and unemployment insurance and Medicaid increased. The worst thing was that tens of millions of Americans – and not only Americans – were plunged into unemployment, foreclosure, poverty....

I strongly suspect that today’s Ayn Rand moment will end in frustration or worse for Republicans.... We can fulminate against unchangeable realities, alienate ourselves from a country.... Or we can go back to work on the core questions facing all center right parties in the advanced economies since World War II: how do we champion entrepreneurship and individualism within the context of a social insurance state? Those are words I would not have written 15 years ago. I write them now, conscious that I am very far from the first person to write them.... Yuval Levin knew this truth when I did not. I’ll preserve it here in safe keeping for him and all his friends until they are ready to remember it again.

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