Policies come and go, and so do arguments for and against them.
From the mid-19th century on down through the Cold War and beyond, conservatives in Europe and the United States made a series of arguments against what Americans like to call “big government.” In a recent New York Times column, conservative Bret Stephens made one of them: Joe Biden’s massive spending proposals may be appealing in certain ways, but there’s always a catch, always a trade-off, and never a free lunch. The creation of large and expensive new social-welfare programs is bound to diminish economic growth and dynamism, “transforming America into a kinder, gentler place of permanent decline.”
I’m not as concerned about this fate as Stephens is, mostly because I think the evidence he marshals for his case is pretty thin and mostly drawn from the single example of France. Lots of liberal democracies around the world have for many decades had stronger social safety nets than the U.S., and they haven’t all been in a state of continual decline. That implies that economic growth and government’s allocation of social goods can be compatible, at least in some times and places.
Though that disagreement isn’t why I think the column is noteworthy. It’s noteworthy because the kind of argument Stephens is making — based on the assumption of finite material goods, inevitable trade-offs among higher goods, and the unavoidability of having to cover costs and make sacrifices and face consequences — is rapidly becoming less salient in our public life. Some conservatives still fret about inflation. Others worry that specific policies will incentivize bad behavior, or that they will force a discrete trade-off that harms a certain segment of the electorate. Still others rail against taxes and regulations for constraining freedom.
But the idea that as a society we can’t have guns and butter and universal childcare and revamped infrastructure and child-benefit payments and “free” community college and robust economic growth leading to full employment and rising wages — the idea that some of those things crowd out or conflict with other of those things — is fading away. Which means that the conservatism of limits that Stephens articulates in his column is well on its way to becoming an ideological endangered species.
Either/or is out. Both/and is in. And maybe there’s a free lunch after all.
The question is why we’re coming to think so — and the answer has both a speculative, sociological dimension and a narrower one rooted in the recent experience of deficit spending.
On the more speculative side, consider those of us who think about politics and policy for a living. Back in the 1970s, sociologists began to describe such workers as “symbolic analysts” — people whose jobs involve creating, thinking about, and manipulating ideas, including lawyers, teachers, scholars, policymakers, journalists, and many other occupations, especially those populated by college graduates and those with advanced degrees. What made symbolic analysts distinct as a class of workers is that they dealt not with material, concrete things, either directly (like a plumber or factory worker) or indirectly (like an office manager reviewing inventory or an accountant overseeing the books), but with symbols — words, ideas, concepts — that are highly malleable and manipulable.
In the years since sociologists began talking about symbolic analysts, they have proliferated throughout the economy and society, as advances in computing and the creation of the internet have produced a vast virtual online world where growing numbers of people work and play. Though we don’t all work with ideas, most of us spend a good part of our lives doing the work of symbolic analysis in digital spaces. This means that most of us spend a good part of our lives in a mental world where malleability and manipulability are perfectly normal and taken for granted.
That has an effect on how we view the world around us when we’re not online. We’re used to constructing and deconstructing digital edifices at will, so when we turn to what was once presumed to be a recalcitrant world that resists our efforts at manipulation and control, we see something different. We see a world that, to a greater degree than people used to presume, can be analyzed, broken down, and built back up according to our wishes. What once appeared to be insurmountable obstacles are now merely challenges to be overcome.
To the symbolic analyst, limits are for losers — and that inclines some of us, at least, to magical thinking.
Which brings us to the federal budget. Until as recently as 15 years ago, congressional leaders and presidents of both parties treated fiscal issues as roughly akin to household budgeting. Yes, the federal government has fewer constraints than a household, and it can increase and decrease spending in order to try to soften and steer the business cycle. But the government still ideally aims for a balanced budget, accepts deficits reluctantly, and treats a surplus as evidence of prudent good sense and a job well done. This thinking tended to constrain what the federal government could do, since increases in spending implied the need to raise taxes or increase the deficit (and add to the national debt), both of which could be economically and politically damaging.
But then in the opening years of Barack Obama’s presidency, the government ran huge deficits in response to the financial crisis of 2008 without significantly raising taxes — and nothing bad happened. (The Federal Reserve under Ben Bernanke also engaged in multiple rounds of quantitative easing without it sparking the runaway inflation that some economists warned about.) Then Donald Trump came into office well into a period of post-recession growth and put his foot firmly on the gas by cutting corporate taxes, increasing spending, and browbeating Jerome Powell at the Fed to keep interest rates low. The result? Full employment, rising wages, and no inflation.
Combine that bracing experience with the rise of new heterodox ideas in macroeconomics, the proliferation of social media, and a pandemic plunging much of the locked-down country even deeper into online life — and we’re left with a world that has come to seem more “symbolic” than ever before, and more amenable to manipulation by planners of all kinds. With champions of Modern Monetary Theory, a Universal Basic Income, Bitcoin and other cryptocurrencies all jostling about and rubbing shoulders on Twitter and digital news sites with a political flim-flam man in the White House spewing lies like Old Faithful and willing to try anything, everything, and their reverse six times by supper in order to gain an advantage over his enemies, many found themselves through 2020 swept up by a sense of infinite possibility.
The result has been a sea-change in thinking about what government can do. A Republican president and a divided Congress enacted roughly $3 trillion in pandemic relief in 2020, and they did so without any talk of tax hikes or budget cuts to cover the cost. Just a few weeks later, a Democratic president and Congress approved another $1.9 trillion in relief, bringing the 12-month total to roughly $5 trillion. This has been followed by more head-spinning numbers from Joe Biden: a $1.5 trillion nondefense domestic spending proposal (which represents a huge 16 percent increase over this year), plus another $2.3 trillion for infrastructure (broadly defined) and $1.8 trillion for a range of new social programs.
It would be wrong to suggest that the emerging consensus rejects any thought about limits at all. It’s just that both parties now appear to believe that those limits are much further out than we’ve traditionally believed. Exactly where isn’t clear — and that’s a scary thought. But until we stumble on those limits, it’s free lunches for everyone.
In such an unbounded world, it’s possible to spend massively on social services without worrying about it producing economic decline — because the government (including the Fed) can always step in to pick up the private sector by spending (or buying) even more. We can have the best of all worlds, with robust growth producing a rising standard of living and a much more generous safety net softening the blows from economic downturns, the creative destruction of the market, and bouts of bad luck.
Too good to be true? Sure sounds like it to me — and I bet it does to Bret Stephens as well. But right now, we both appear to be out of step with the conventional wisdom of our moment.
Rarely has it been less trendy to insist that someone will have to pay for lunch eventually.