Austrian/Niskanen Debates: What's Missing?

It's not easy in the U.S. to take what is now a political "road less traveled". Plus, the road of the moderate has become so ill defined as to resemble a disappearing path in the landscape. Are moderate policy efforts little more than a "sell out" to the political enemy? For some it seems that way. Of course, trying to legislate rigid rules of any kind for a diverse population of more than three hundred million, is no walk in the park. Since a political middle is mostly MIA, groups such as Niskanen face an uphill struggle, in their efforts to contribute to the national conversation.

Nevertheless, they deserve credit for trying, given the present dialogue of partisan outrage. Last year, Samuel Hammond penned an essay for Niskanen titled "The Free-Market Welfare State: Preserving Dynamism in a Volatile World". Interestingly enough, Hammond referenced Arnold Kling in the footnotes, prompting Kling to ask recently, "Am I a Welfare State Advocate?" Kling's post also highlighted a response to Samuel Hammond from Kai Weiss: "No Such Thing as a Free-Market Welfare State"

Instead, advocates of the free market should look to a strengthening of civil society, combined with a job-rich economy, to help those left behind. In the end, responding to skepticism about the role of free markets by arguing for more statism might be an oxymoron after all.

In fairness to Niskanen voices, their arguments are more nuanced than Weiss implies. And the "strengthening of civil society", a volunteerism which Weiss understandably promotes, is - alas - not so simple anymore. Yes, once the U.S. had a civil society which contributed greatly to the bottom line in terms of well being and a social safety net. However, that earlier reality also included citizens who could freely practice what were the medium and even high skill activities of their time. Yet much that contributed to well being which involved interchange with others, has since been made either illegal, or at the very least, limited to those who undertake extensive formal education.

This loss of production rights included economic factors to some degree (such as alternative healthcare practitioners), alongside the voluntary level of what citizens once freely provided for one another. How does one argue for a restoration of civil society, knowing that many earlier knowledge and skill production rights which were beneficial for social interaction, have long since been withdrawn?

Some Austrians come across a bit flippant as well, in reminding us how healthcare is not a right. This makes me want to pull my hair out, of course healthcare is not a right! However, it's a crying shame this fact of life didn't get stressed in the historical moments that really mattered for U.S. citizens. If everyone basically understood they wouldn't have healthcare rights, how would governments and private associations have gotten the chance to sway citizens to give up their own rights of healing, which contributed so to mutual assistance and a natural form of safety net? What was really gained for that extensive loss of freedom?

Worse, those now exclusive production rights went to limited sets of healthcare practitioners with extensive time scarcities and severe geographic constraints. Basically we're talking about what eventually became the loss of millions of practical, sometimes necessary aspects of healing, in everyday life. Why was a mere fraction of the population given the keys to such basic forms of knowledge production, to the detriment of everyone else? Are not Austrians major supporters of human freedom? If we all believe civil society needs strengthening, why can't we find ways to prove it?

Meanwhile, extensive supply side limits in healthcare practice, have also translated into overhead institutional costs which make it impossible for any level of taxation and redistribution to get to the heart of what matters for a public safety net. If and when governments become subject to austerity, much of our public or private non tradable sector activity is hardly positioned to take up the slack.

From time to time, people across the political spectrum (including individuals at Niskanen) have in fact attempted to deal with pressing supply side structural limitations. One reason this process has borne little fruit, is the fact a full frontal assault on general equilibrium settings for applied knowledge - especially in a large nation - is impractical. It can't work in part because high income skills arbitrage value is indirectly responsible for extensive valuations throughout the economy.

Yet high powered skills arbitrage in aggregate, also accounts for the extensive loss of time value on the part of millions, which is expressed in the trillions of debt we collectively owe in terms of national budget obligations. And why have governments still not realized that time based product, regardless of its marketplace value, can only scale up through increased supply side participation? Non tradable sector private interests know it, even if it isn't in their best interest to share this crucial understanding with their government benefactors.

Nevertheless, a structural approach for production reform, needs to occur in ways which won't undermine the overall wealth framing of general equilibrium. Most long term solutions actually lie outside of today's existing systems of structural organization. And the costs of living today, are such that citizens can't be expected to resume earlier societal safety net obligations on non economic terms.

To sum up, it's really misleading to argue that if government would only get out of the way, private markets would get along just fine. Today's private sectors include extensive non tradable sector organizational patterns which are compromised so as to inhibit dynamism and long term growth. These markets are so distorted that no amount of taxation or redistribution could provide sufficient remedy, regardless of the tax burdens that will soon fall on the shoulders of citizens. Let's face our structural problems for what they actually are. Publicly despising "wrong" political viewpoints as an institutional main course of action, is simply the wrong approach.