The center cannot hold

Economist blogger E.G. wonders why Democrats/liberals are more apologetic and defensive about their beliefs than conservatives:

In broad strokes, Republicans, especially of the tea-party stripe, are typically proud, at least unapologetic, and sometimes belligerent about their beliefs. Democrats, in contrast, seem to adopt the defensive position by default...

Why are Democrats more anemic? One thought comes from the liberal journalist Thomas Frank. Writing in Harper's, Mr Frank argues that while Republicans respond to their base, Democrats have a misbegotten faith in a "Magic Middle" of centrist ideas that are tolerable, at least, to most Americans:

Democrats, for their part, tend to do the opposite, dreaming of bipartisanship and states neither red nor blue and of some reasonably-arrived-at consensus future in which the culture wars cease and everyone plays nicely forevermore under the smiling, benificent sun of free trade and the knowledge industries.

A couple of other theories: Democrats are constrained by their insecurities, a holdover from being made fun of by George W Bush and Fox News. Democrats are undermined by deeper, historical anxieties; with the Republicans having co-opted the rhetoric of being the "real America", Democrats feel that they have to explain themselves before they can proceed. Or, there's something cultural going on: there are temperamental traits that draw a person to the Democratic or Republican parties, and those same traits, aggregated, are manifested by the parties themselves.

To me, the phenomenon in question seems very real, and the explanation seems rather obvious. I'm not sure why E.G. didn't think of it.

Conservatives are less apologetic about their beliefs because conservative beliefs have a stronger base of support. Whereas 40% of Americans identify as conservatives, only 20% identify as liberals, with the rest identifying as moderates. These numbers have been very stable over the past two decades. That means that if you are a Republican, hoping to win in a Republican primary, you are appealing to a much more ideological median voter than your Democratic counterpart. And in the general election, trumpeting conservative beliefs will probably alienate fewer of those moderates than trumpeting liberal ones. Case closed.

The more interesting question, and the one E.G. should really be asking, is: why are more Americans conservative in the first place? Since people tend to define their ideology relative to the national average, you'd expect a symmetric distribution of ideology; instead, we have a rightward skewed distribution, with a "long tail" of right-wing conservatives and a short fat tail of liberal-leaning moderates.

My guess as to the reason for the skew is: tribalism. Politics is generally an exercise in coalition-building between tribal blocs who vote for their "team". The "team" can be determined in many ways - race, language, religion, region, or socioeconomic class - and people can identify more strongly or less strongly with any given team. Teams can also overlap. It is these divided loyalties, and the shifting and changing of the coalitions, that make politics so complex.

Who are the "teams" in America? Well, the Republicans are composed of the "white" team (not whites, but rather, people who think of whiteness as their key characteristic), the "Christian" team (again, not all Christians), the "Southern" team, and the "business class". The first three of these overlap a great deal, and those three are very strong affiliations with lots of members. Democrats, on the other hand, are a hodgepodge of disparate little groups and blocs - blacks, gays, union workers, Hispanics, intellectuals, Asians, Jews, schoolteachers, etc. While some of these factions are very strongly unified (blacks most of all), the interests of the various Democratic support groups diverge wildly.

Hence, while the Republican Party is basically a simple deal - deregulate the economy and lower taxes, in exchange for excluding and disenfranchising nonwhites and non-Christians - the Democratic Party has to strike a much more careful (and much more changeable) balance. This accounts for the "defensive" and apologetic tone that E.G. wondered about. The fact is, Democrats' hopes for victory rest on their ability to convince everyone-who's-not-a-Republican that together they form some sort of political "center", while Republicans' hopes for victory rest on their higher voter turnout and on the fragility of the Dems' coalition.

(Note that this entire dynamic can be understood by watching the movie "Revenge of the Nerds". The white jock fraternity loses out when they find they are outnumbered by the combined mass of nerds, blacks, gays, Asians, Jews, and traditionally excluded folks in general.)

The really interesting moment in American politics will come if and when the Republican base shrinks in relative size such that it is no longer big enough to win just by turning out in greater numbers. This will happen if/when immigration outpaces Republican efforts to convince Midwestern whites to act like Southern whites. On that day, the Republicans will have to either forge a new coalition - which will be hard, since they'll be so out of the habit - or try for a military coup. I wonder what they'll do.

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Self-guarding guardians

Plato (inventor of the plate!) suggested that society's safety and virtue be preserved by a class of powerful "guardians," enlightened souls entrusted with a monopoly on violence. "But," someone asks, "Who will guard the guardians?" Plato's answer was that the guardians will guard themselves, being persons of superior moral fiber. This, incidentally, was Confucius' answer to the same question.

James Madison begged to differ. In The Federalist #51, he argued that self-interest was too powerful a force for virtue to overcome. This may be because power corrupts, or because power attracts the already-corrupt, or simply because the corrupt are more aggressive about pursuing their self-interest. Madison suggests a new solution: checks and balances. Through good institutional design, different self-interested individuals could be pitted against each other; these individuals, working within the system, would balance each other out to approximately represent the will of the nation at large. Thus, we have democratic elections; we have a division of powers between levels of government; we have the three branches of the federal government; etc.

Modern political theorists have offered many similar takes on the problem. Bruce Bueno de Mesquita's models of political power struggles conclude that institutional design is very important; democracy and separation of powers increase the degree to which competing political factions are forced to provide for the public good in order to maintain power. Many others believe that it is no accident that the rich countries of the world are almost all democracies.

Some American libertarians, however, take issue with Madison's solution to the guardian-guarding problem. One of these skeptics is Will Wilkinson:

We are constantly exploited by the tools meant to foil our exploitation...So it's no surprise that progressives would rather worry over trivialities such as campaign finance reform than dwell on the paradoxes of political power. But it really isn't the Citizens United decision [that allows government officials to get cushy jobs in the finance industry]...Well-connected wonks can get rich on Wall Street only because Washington power is now so unconstrained...So, what is to be done? Summon a self-bottling genie-bottling genie?

The [libertarian] answer is to make government less powerful. The monstrous offspring of entangled markets and states can be defeated only by the most thorough possible separation.

For Will, checks and balances are not enough. Institutional design cannot create a self-bottling genie-bottler (or a self-guarding guardian); the government must be shrunk as much as possible without destabilizing markets to the point of ruin.

I find this notion highly objectionable. In a way, it is a cop-out worthy of Plato and Confucius; libertarians throw up their hands and say "Just get rid of the damn guardians!" But this begs the question of who will toss out the guardians, and who will guard against the guardians' return. Presumably, the guardians will be ejected by a wave of individuals inculcated with strong personal libertarian values...and hey, we're back to calling for personal virtue.

So much for the American experiment.

James Madison, and most or all of our Founding Fathers - the libertarians of their day - would almost certainly disagree with the modern variety. They had just seen 3000 years of attempts to elevate virtuous individuals to positions of power. It was called the "dynastic cycle," and it was decidedly suboptimal. They knew that if they played the part of the Virtuous Men of their day, and overthrew government in the name of liberty, a new government would simply rise in the future and undo all their efforts. And so they saw only one way out of this trap: the design of self-sustaining political institutions that would maximize effective liberty. Only government can guard against government power, they realized; to let the perfect be the enemy of the good would simply mean the return of the despots.

So, tweaks like campaign finance reform might be small potatoes compared to the vast amount of corruption that still exists in the system, but they represent progress toward greater liberty, which libertarian admonishments to "just shrink the government" do not.

This is just one more instance of modern libertarianism's fatal flaw. When they come to a Gordian Knot of a problem (optimal public good provision, for example, or optimal institutional design), they reach for a sword. They want to hack through thorny engineering questions with the pure, clean, steel of unwavering ideology. That their solutions are unworkable is hardly a deterrent; ideological self-consistency takes precedence over real-world consequences. Hard problems, it seems, are just too hard.

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Why we run deficits

Writing in Mother Jones, Kevin Drum notes that liberals have been far more willing to cut the deficit than conservatives over the past 30 years:

At the federal level, center-left types fought an entire national election in 2000 based largely on the idea that times were good and the federal government should be accumulating surpluses. It was a pretty big deal, and as you'll recall, we center-lefties lost that election and George Bush proceeded to piss away the surplus and run up more debt than any president in history. On the spending side, center lefties recently passed a big healthcare overhaul that was largely funded by cuts in Medicare spending, and instead of applause for their fiscal sobriety they got hammered for it by Republicans during the 2010 midterms. In other words, on the federal level center-left types have proven over and over that they are willing to be pretty responsible on spending and budgetary issues despite getting clobbered for it. But the opposite isn't true of conservatives and taxes. One need look no further than the national-level dogfight going on right now over the expiration of the deficit-busting tax cuts that originally got George Bush into the White House. No conservative who wants to win reelection even dares consider taking a responsible position on this.

But how are things at the state level? What happens when center-lefties try to restrain spending and build up surpluses during good times? They very quickly learn a harsh lesson: if you accumulate money in a rainy-day fund, conservatives will promptly demand that it be "returned to the taxpayers." That happened here in California as far back as 1978 and was a big reason for the passage of Proposition 13. And if you allow a temporary tax cut to expire, your career might be over. This happened here in California as recently as 2003, when Gray Davis got tossed out on his ear for allowing the car license fee to automatically revert to its old level when the state budget got out of balance.

Nobody is an angel in this fight, and certainly liberals could do a better job of speaking out for spending restraint during boom times. But conservatives have made it largely pointless to build up federal surpluses or state rainy day funds even when lefties are feeling in a responsible mood. At the same time, conservatives have also made it career-threateningly dangerous to allow even temporary tax cuts to expire. It's true that there's always a steady hum of background pressure from interest groups to maintain spending levels, much of it from the left, but for the most part the really pointed incentives come from the conservative side and simply aren't symmetrical: they always run in favor of tax cuts and against spending restraint.

The whole idea of trying to balance budgets over the business cycle is practically a center-left platitude. The fact that it doesn't happen very often is attributable in small part to basic human nature (nobody likes to restrain spending when money is available) and in very large part to the fact that conservatives flatly won't let it happen.

This is very true. But Drum ignores the question of why. Do conservatives support big deficits because the conservative philosophy of government says deficits are good? Is it because naturally irresponsible human beings are drawn to the Republican party? Or is it because the outcome of some political bargaining game (the "two Santas" theory) forces Republicans to promise more goodies than Democrats?

I'm not sure, but here is an important point that many Americans fail to realize: All rich countries have run huge deficits in the past 30 years, from socialist France to conservative Japan. The U.S. is in no way unique. There appear to be no fiscal hawks in power anywhere in the developed world.

To me, this is a signal that the root cause of rich-world deficits goes far deeper than the vagaries of a single nation's politics or the ideology of any one faction. Something happened to the world that made it impossible for rich-world governments to balance their budgets. That something, I am guessing, is capital mobility.

In the branch of economics called "public choice theory," a well-known result is that there are only two ways to pay for public services (i.e. public goods whose costs depend on the number of people using the good): 1) make the rich people pay more than they'd offer to pay, or 2) run a big deficit. This is called the "Groves-Clarke" result. When a government pays for its services by holding a gun to rich people's heads, it's called an "AGV mechanism," and when it runs a deficit, it's called a "Groves-Clarke mechanism". See here for the math if you're interested.

Before 1980, we basically held a gun to our rich people's heads and said "Pay up." Top marginal tax rates were over 90%. Corporate taxes were high. This situation was essentially the same in Europe and Japan. But around 1980, something big changed: capital mobility. Global rules changed, and financial markets opened, allowing rich people to move their money wherever they saw fit. This basically gave rich folks an outside option; if taxes were too high, they could move their money elsewhere.

If the rich people have an outside option, AGV doesn't work - the only way to pay for government is to run deficits (Groves-Clarke). Thus, when world capital markets opened, deficits appeared in all rich countries and have persisted ever since. Naturally, this is a problem, since it logically ends in all rich countries defaulting on their debts, after which they will either drastically slash government services ("austerity") or close their capital markets and go back to forcing the rich people to fork over the loot.

This is a rather depressing explanation for why rich countries run big deficits, but I think it is the right one. Republicans have been more willing to run deficits, but that is probably just because they represent the rich people who will move their money out of the country if taxes are raised to balance the budget. We probably confront a devil's choice between closing our capital markets (and thus hurting international trade) or deeply cutting public services like roads and schools - things that are a net positive for the country, but that aren't worth the price to the rich.

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