Saturday, March 27, 2021

The Best Opening for a New Third Party is the Liberal Center


Writing for the New York Times, Bret Stephens tells us  why the new party that 62 percent of Americans say we need must be a centrist one, and why it must be liberal. Not “liberal” as used in the United States to describe progressive populism, but liberal in the classical sense of support for democracy, the rule of law, and the Bill of Rights. That, he says, is the neglected territory of American politics. It’s the place he thinks most Americans still are, temperamentally and morally, and might yet return to if given the choice.

He is right about all that. But then he almost spoils it with one churlish phrase: “By ‘liberal,’” he says, “I don’t mean big-state welfarism.” Perhaps that is just a sop to his conservative fans, but to me it suggests a misunderstanding of the type of governments and social policies that underpin the freedom and prosperity of the world’s other liberal democracies.

If you favor liberal democracy, focus on the quality, not the size of government

Stevens yearns for a party anchored in the liberal values of freedom, democracy, and the rule of law. The best book about liberalism that I have read recently is Kevin Vallier’s Trust in a Polarized Age. Vallier is a pragmatist, less interested in ideology than in what he calls liberal rights practices, the actual nuts and bolts that make freedom and democracy work. He identifies five of these: freedom of association, markets and private property rights, democratic constitutionalism, electoral democracy, and social welfare programs. Setting social welfare programs aside for a moment, let’s look at the relationship between the size of government and Vallier’s other four liberal rights practices in countries around the world. 

Figure 1 charts the strength of liberal rights practices (excluding social policy) and size of government for 164 countries. The score for liberal rights practices that I use summarizes data on personal freedoms, quality of government, and procedural democracy. Quality of government, in turn, is a summary measure of liberal traits such as protection of property rights, rule of law, government integrity. The horizontal axis uses standardized values to show how far above or below the mean each country scores on liberal rights practices. Size of government is measured on the vertical axis by government expenditures as a percentage of GDP. (See here and here for details on data sources and methodology.)

The red dots represent 33 “highly liberal” countries that score in the top quartile for each of the three major components of liberal rights practices. Those countries cluster in the upper-right-hand quadrant of the diagram. The United States is close to the center of the highly liberal group in terms of quality of government, personal freedoms, and procedural democracy. The size of government in the U.S. is a little smaller than would be expected for its degree of liberalism, but it not really very far below the trend lines for the world as a whole (blue) or the highly liberal club (red). Only two countries, Switzerland and Ireland, have both higher scores for liberalism and smaller governments.

The lesson? If you want to build a new party around the classical liberal rights practices of freedom, and democracy and quality of government, be realistic about the size of government you need to get those things. The world may be full of big, bad governments, but small, good governments are a rarity.

Better social policy should be a key promise of any liberal third party

Let’s turn now to Vallier’s fifth liberal rights practice, social policy. Later in the same paragraph that begins with his sour reference to “welfarism,” Stephens softens his tone. He proposes that his proposed liberal third party should support “Respect for the free market, bracketed by sensible regulation and cushioned by social support.” He is right about that.

I don’t have a simple measure of the amount of cushioning that each country’s social support system does, but I do have one of the need for such cushioning. Figure 2 shows liberal rights practices vs. Gini indexes of income inequality. The Gini index has a range from 0 to 1, with lower values showing greater equality, higher values greater inequality.



If a country has a high Gini index before any remedial actions are undertaken, that shows a need for social policy. If it still has a high Gini index after social policies are enacted, that means those policies aren’t working. This chart shows the latter. The fact that the United States has the second-highest Gini index among its highly liberal peers shows that its social policies aren’t working. But we knew that, didn’t we?

Advocacy for better social policy has been at the center of Niskanen Center’s mission since its founding. If you want to see what an effective social policy for the United States would look like, one that is respectful of the free market and backed by sensible regulations, read what my colleagues Brink Lindsey and Sam Hammond write in Faster Growth, Fairer Growth. The new child benefits in the just-enacted American Rescue Plan, which Niskanen Center has vigorously backed, are a good illustration of what a centrist liberal party might push for.

Must better social policy mean bigger government?

Let’s put the pieces together now. The United States has an exceptionally small government among the thirty-three-nation liberal elite shown in the charts. It also has exceptionally weak social policy. Does that mean that a better social policy would necessarily cause government spending to soar?

Not necessarily. The central pillars of U.S. social policy are not really too small, in terms of the amount of tax dollars spent on them. The problem is more that they are too fragmented and that they let too many people fall through the cracks. Our healthcare problems don’t stem from too little government spending, but from fact that despite spending more than any other major country, we still leave millions of people without affordable access to medical services.

Theoretically, we could do better in both areas even within the limits of current spending. I have spelled out at length how that could be done, with universal catastrophic coverage for healthcare and integrated cash assistance for social support. The catch is that those proposals require not just adding new programs on top of what we have, but completely clearing the slate and starting over from scratch.

Realistically, given the way American democracy works, that is not going to happen. Even with Stephen’s new centrist liberal party in full control of the House, the Senate, and the White House, we would be much more likely to get piecemeal reforms, like the new child benefits. The sum of such reforms, even if the most dysfunctional parts of current policies were replaced, could very well mean pushing the size of the U.S. government up toward the median for the world’s highly liberal democracies. If some hedge fund managers lose their treasured carried-interest deductions in the process, so be it.

The bottom line: Bret Stephens is right to say that the place we most need a third party is at the neglected center of American politics. That is where the voters are. That is where the ideas are. The moderate wings of the existing Democratic and Republican parties both overlap that center, but neither party is really equipped, either philosophically or organizationally, to actually occupy the territory.

Previously posted at Photo courtesy of Pixabay

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