Matt Yglesias and the statist mindset

Matt Yglesias, who for some bizarre reason is treated as a serious voice in the economic blogosphere, has a new column in The Nation which provides some useful insight into the statist mindset. Yglesias begins:

For all the disastrousness of the current recession in the developed world, examined more broadly the early twenty-first century has been one of the greatest times to be alive in the history of mankind. The cause is the enormous improvement in living standards of the people in China, India, Brazil and other large developing nations. On the moral balance sheet, this betterment of some of the globe's poorest people more than outweighs the continued stagnation of middle-class wages in the United States.

Yglesias's reference to stagnating middle class wages is deceptive, as it is a poor metric for evaluating the welfare of the middle class. It's a common tactic used by those who seek to decry our system as unfair to workers. Much better, and far more relevant, is total compensation, which includes items such as health insurance, vacation time, tuition reimbursement, etc. As Paul Krugman notes, total compensation has been rising. Workers today are better off than ever before. Furthermore, if boosting wages is the goal, there is a simple means of achieving this -- end the tax deduction for health insurance. This will prompt employers to stop offering this benefit and instead compensate employees with higher wages.

Yglesias continues:

But the fact remains that here, in what's still the wealthiest large nation on earth, things have not been improving in a nearly commensurate manner. And yet it's not as if global economic growth has passed the country by. Instead, a wildly disproportionate share of the material gains of recent technological progress and economic globalization has been captured by a tiny, already rich slice of the population.

Is this really true? That a "wildly disproportionate share of recent technological progress" have been captured by a "tiny" slice of the population? In fact, the benefits are so dispersed that they have become commonplace and deemed unremarkable. Cell phones, which during the 1980s were only used by the elite, are now ubiquitous (Even the cashier at the Safeway I was at the other day had a new iPhone 4). In the mid-1990s rappers used to brag about having televisions with 50" screens and paying $2,000 phone bills. Now a 50" high-def TV can be had for $1,000 and $2,000 phone bills are unheard of because domestic long-distance is usually an included feature in cell phone plans. Jetting around the world, previously another exclusive province of the rich, is now available at low cost. Other examples abound.

Moving along:

The causes of this are complicated and controversial, and the solutions can be complicated if we want; but they can also be simple—the government can and should deploy its tax authority to capture a larger share of this wealth and spend it on useful services for the broad public.

Higher taxes to finance more and better public services is not the only conceivable method of curbing inequality, but it is the best one because it directly tackles the most objectionable aspect of high inequality in the economy—its tendency to perpetuate itself in the form of unequal access to basic social goods and unequal access to opportunities in the next generation.

But why should inequality be viewed as a problem which needs to be solved? In a world with differing cultural values, behaviors and aptitudes among individuals, different outcomes -- even wildly different ones -- are inevitable. This is essentially nothing less than Yglesias expressing his desire to reorganize society itself, social engineering on a vast scale in pursuit of what Thomas Sowell terms cosmic justice. Far more important are not relative outcomes, but absolute outcomes. If inequality corresponds with improved conditions from an absolute sense, what is the problem?

Other questions readily spring to mind. Is this why we have government? Is reducing inequality mentioned by the Founding Fathers in the Declaration of Independence, the Constitution or Federalist Papers? How is the government confiscating yet more income from its citizens to be spent on various new programs administrated by vast bureaucracies a "simple" solution? When did government become an exercise in simplicity? And what reason is there to think that more money would result in better results? This certainly hasn't been the case in education or almost any other area of federal purview. Did something suddenly change to make the government more competent?

The goal should be a country where every neighborhood features safe, well-paved streets, excellent schools, functioning mass transit and a healthy environment. Families should have equal access to medical treatment if they fall ill, to preschool and to decent nutrition for their children, and to a secure retirement after a few decades in the workforce. Those with skills that are more highly valued in the marketplace would still have fancier cars, larger televisions, more upscale clothing. But the main conditions for human flourishing would be available across the board, and no family would need to worry that broadening America's circle of social and economic opportunity by allowing foreigners to move here or sell goods across national borders imperils their fundamental interests.

An expanded government is unnecessary to achieve any of this. With revenues of nearly $2.4 trillion, the federal government already possesses sufficient funds to pave streets and oversee environmental regulation. Medical treatment, nutrition, retirement and education, meanwhile, are all individual responsibilities that government is ill-suited to assist with. Indeed, to the extent that problems exist in these sectors -- health care and education in particular -- they are typically a result of misguided government interventions.

For all of the rhetoric about reducing inequality and equalizing opportunity, it is worth noting that statists such as Yglesias are typically opposed to voucher plans which would enable poor children to attend private schools currently only available to the better off (where a slavish devotion to the welfare of teacher's unions trumps affording opportunities to children of the less fortunate). On the retirement front we have all been compelled by government to participate in a retirement savings program, Social Security, which has been looted by politicians and is headed for insolvency. Food, meanwhile, is both cheap and plentiful.

Vast government is not required to "create the main conditions for human flourishing." Indeed, the opposite is true as big government typically produces stagnation by stifling human creativity through confiscatory taxation levels and reams of regulations which chip away at our freedoms. Let us remember that government cannot create new wealth or resources, but only redistribute them. If we are to achieve improved outcomes among our citizens, with improved medical care, education, nutrition, retirement savings, etc. they will have to be produced by the private sector, whose performance is restricted by the growth of government. This is a point that Yglesias implicitly admits later in the column when he states:

For the moment, however, fighting the recession must be the top priority, so tax increases should be deferred.

Thus, Yglesias acknowledges that higher taxes have a detrimental impact on the private sector, which is the best mechanism for raising the country's overall standard of living.

More Yglesias:

To get from here to there is going to be a difficult task in a country where the public is averse to any increase in taxation on the nonrich and where elites are equally hostile to the hiking of taxes on the wealthiest. Ultimately, doing some of both will be essential. That's because it's important to conceive of future expansion in public services in terms similar to those of our existing and highly successful insurance programs for retirees, Social Security and Medicare.

Social Security and Medicare are highly successful? Maybe Matt has somehow missed it, but Social Security is headed for insolvency while Medicare is a fiscal mess plagued by vast levels of fraud which doctors are abandoning.

When even such miserable failures are declared to be shining successes, one begins to understand that Yglesias and his fellow travelers on the political left are engaged in an ideological crusade impervious to reason or established facts. Big government is the goal, the rich are the means, and good intentions rather than actual outcomes the metric for evaluating success. This is the statist agenda baring its soul.