Saturday, 3 January 2009

A liberal Obama administration?

I have remarked in previous posts, that it is my view that President-elect Barack Obama's politics are more in the mould of British liberalism than social democracy. This could, of course, be a misinterpretation, misguided or seen as wishful thinking.

I have never gone into great detail about why I believe this. With only weeks before the inauguration it seemed like a good time to set out the case.

First off, why not simply say Obama is a liberal? In the US, the Republicans have framed the Democrats as liberals and equate the word with socialism. To European ears we hear something more like social democratic: tax and spending and belief in big government. Of course, some would argue that the British liberals are similar.

British liberalism takes in a wide spectrum of thinkers and activists: Adam Smith to John Maynard Keynes, John Locke to John Stuart Mill, Tom Paine to the Suffragettes, David Lloyd George to William Beveridge and many more. It is essentially a value system that believes in individual freedom, justice, equality before the law, the rule of law, property rights and that people should progress not go backwards. It doesn't have a systematic view of how society should function and certainly isn't Utopian although it is idealistic. Very importantly, it is suspicious of centres of power wherever they arise: hence embracing democracy but being wary of the tyranny of the majority.

It began with the Whigs and their commitment to freedom of the individual, free trade and open markets. John Stuart Mill and Keynes never abandoned their support for the market even though both have been described as socialists. It is true that Mill was happy to be seen within a coalition that included socialists, he began supporting the Independent Labour party later in life and combined liberal free market ideas with a belief that companies should be co-operatives. His major concern was whether capitalism in its late Victorian form was diminishing the individual and like Keynes was determined to make sure the system worked better.

Both men argued for government intervention when it was appropriate. But this was never a blank cheque for statist control of markets.

This is not to say all its advocates got everything right. Central to Mill's beliefs was that one needs to constantly review what you think and have your opponents analyse it thoroughly. However, taking this brief description of a political tradition that has been around for over three hundred years one can see certain trends: making sure people have control over their lives, a realistic approach to running things, government power checked but used to check the power of others and a government that is active and smart in what it does. To make this work one requires markets to be as open as possible but to operate within a legal system, government regulation to stop monopoly, a universal education system and policies to tackle injustice. Underpinning it all are the liberal values that help prevent excess of power or the breakdown of the rule of law. Without those values it is very easy to slip into policies that undermine the very things they are attempting to uphold.

Mill's educational policies provide a good example of the difference between liberalism and a statist social democrat approach. Mill believed that for a liberal society to thrive universal education was imperative. This would ensure an educated population who would be able to make decisions over their lives and engage in parliamentary democracy. To achieve this Mill was quite comfortable with the State meeting the cost of education but not being the sole provider. In fact, it might not provide any at all, simply pay the fees and legislate for minimum standards. This system would be paid for by taxes but like Gladstone and Hayek, Mill wasn't overly keen on income tax.

From classical liberalism to Keynes, poverty has been a major concern for those under the liberal banner. Even Hayek, a classical liberal, argued for a safety net. Hayek makes it clear that he abhorred the fact that people lived in deprivation and believed the State had a duty to step in. The liberalism government of Lloyd George was also disgusted by what poverty did to the human condition. Additionally, it saw poverty as something that gets in the way of people being able to control their lives. This does not mean that the philosophy is egalitarian. It isn't. But it can have an element of redistribution especially in a democratic society where there is a demand for such action. And here part of liberalism's pragmatism comes into play. If you want a liberal society to be successful, for markets and democracy to function you need people to be relatively well-off. People who are very poor can't buy things and are unlikely to vote.

Before we look at Obama, it is worth remembering that the Founding Fathers imported British Whig or liberal ideas to America. The revolution was not simply about throwing off the monarchy; it was about establishing a system of government based on liberal principles. This is very important in understanding American politics. The DNA of both political parties stems from a small l liberal approach to government and economics. This is why for all the accusations of socialism that the Republicans throw at the Democrats, there is something hollow about it. The Democrats are pursuing the American Dream just like the GOP, the difference is they believe government action can ensure more people get a shot at it.

So however distributionist and statist the Democrats are, they are still essentially a party committed to the free market. It is true they have tended towards a more social democratic position in the past but they have never had to go through a Clause 4 moment in the way that the British Labour party has.

Despite committing his administration to a big push from government to stimulate the economy and tackle the environmental challenges, Obama appears less statist than some. Here is why.

He has peppered his speeches with references to Lincoln, the man who led a liberal Republican party. He has said that he believes in smart government not big government. He has talked about things the State can't do. He has talked about things that people can do.

His opponents will dismiss this as empty rhetoric or worse: a man hiding behind words and planning on some grand central command and control State. We will only begin to know who is right when he gets into office. But aside from the speeches there has also been plenty of policy discussions.

Obama has said he will cut taxes for those on middle and incomes. He has recently talked of keeping the tax cuts for the rich until they expire. And when he begins to spend money to prevent a recession becoming a depression, he is talking of a statutory commitment to a 'pay-go' system to help restore fiscal responsibility. He is already talking to Republicans and listening to blue dog Democrats (fiscal conservatives). You can read all this in an article on the Washington Post's website.

As a parenthesis, if you compare key Obama policies on tax and the environment with the British Liberal Democrats, they are remarkably similar.

The Administration is going to embark on a fiscal stimulus and begin work on universal health care. As the past architects of both, Keynes and Beveridge, were liberals it will be fascinating to see how an American administration handles these policies. We should not forgot that in Britain we have only had Labour and Conservative governments implement these ideas. If one reads the Beveridge report it is quite clear that he was not proposing the type of Welfare State the UK became. Can an American government, with some Whig DNA still running through its veins, and a President who admires Lincoln do something different and dare one say it, more liberal?

Certainly, Obama is not suggesting the statist solution to health care that his new Secretary of State was proposing when her husband was President.

Then there is the environment. Whigs and liberals have always been keen on scientific discovery. Both Joseph Priestley and Mill expressed concerns about the environment and how we treat it. There is also a scepticism that runs through liberalism; a questioning of conventional wisdom. The libertarian right tend to dismiss climate change as a conspiracy designed to let in big government by the backdoor. Obama has made it clear he is on the side of the, at present, scientific majority. But will he bring a liberal scepticism to how the problem is tackled and harness the market in ways that the Republicans talked about but never appeared to do?

Of course, things might turn out differently. The social democrats might win out, events may cause a change in policies and Obama may prove to be less liberal than his speeches make out. There is one non-liberal policy that should be mentioned. Obama has flirted with protectionism and it is still unclear how much of a free trader he will be.

But if Obama goes some way to living up to the promise of those speeches, if he is more of a liberal than a big government tax and spender, then we may see a reawakening of a brand of liberalism that has been dormant for quite a while.

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