Kilroy Was Here
April 18, 2004
Another Take on the Commanding Heights and the Liberal Vision
(The following was posted in response to Matt Yglesias's post on Tactics vs. Strategy)

Last week, I've just watched "The Commanding Heights", a documentary about the history of 21st century globalization, cast against the background of the economic arguments between central planning / regulatory pressures (Keynesian) and free markets
Hayek's theories).

One of the things I noticed is that, during the 90s, free market strategies won out. The Democratic Leadership (i.e. Clinton, Rubin, etc.) has given up on massive Keynesian programs to more free market based programs.

Even the so-called liberal Kerry campaign is consistently invoking the power of the markets. If you look at Kerry's performance on MTP this morning and if you look at many of Kerry's policies, you'll see him refering to using the power of the marketplace to make programs more efficient. (For example, the removal of incentives to move corporations overseas, see Tim Noah's take at Slate.)

In the last 30 years, Republicans have been trying to sell the Hayek based free market system under the slogan "Smaller Government. Lower Taxes."

(Unfortunately, I think many conservatives have bought into the slogan and forgotten the underlying goal. That is, free markets, amabandon wage and price controls, de-regulate government sponsored industries, such as communication, energy, coal mining in the UK, baseball, etc.)

Now that the conservatives have won this ideological contest and the Democrats have adopted the power of the free markets, both parties find themselves in deep water.

First, the Democrats are trying to enact a new vision of government that embraces more Hayek-like views of the economy while simultaneously educating their base that the downsides of free markets are far better than the downsides of central planning.

Second, the Republicans are continuing to "fight the last war" and pound lowering taxes and de-regulation. They haven't yet realized that they've won that battle, and need to come up with a new plan for government in the light of both parties adopting free market strategies.

My thoughts are that the new role of government in a society that, for the most part, universally accepts the free market strategy is the following:

1. Ensure that the markets remain efficient by eliminating corruption, streamlining tax codes, and enforcing transparency of information.

2. Prepare the citizenry for competition in the markets through effective education and efficient healthcare.

3. Protect the markets by implementing foreign policies that preserve free trade and prevent miltary and terrorist tactics from intefering with the liberty of the markets.

Given this view of the role of government, we could then discuss the best strategies for achieving it.

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