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3:14 am
Tue May 22, 2012

'Road To Freedom': Moral Debate For Free Enterprise

Originally published on Tue May 22, 2012 4:48 am



Economic issues are shaping this year's presidential campaign, as we're hearing in this morning's news. Arthur C. Brooks, of the American Enterprise Institute, says that debate involves more than money. It's a question of which economic policies are morally right.

ARTHUR C. BROOKS: This is one of the greatest weaknesses of people on the political right and free enterprise advocates in America today; is this inability or unwillingness to make moral arguments. People who are not especially sympathetic to the free enterprise system have very successfully been making moral arguments. The leitmotif of the 2012 campaign, it turns out, is going to be fairness, and that's a moral argument.

INSKEEP: Brooks tries to counter that with a moral argument for free enterprise. His new book, "The Road to Freedom," contends that people are happier with less government, which leads to another big question of 2012 - how much less government?

Help me define, as you see it, the responsibility of government - because as people who read this book will know, you're not an advocate of no government. You see a place, it seems, for a social safety net and so forth. So what are the limits?

BROOKS: The government should be doing two things, basically. The first is providing a minimum basic safety net for the truly indigent. That means enough food, enough housing, enough medical care. Today, the safety net we have in this country reaches all the way up into the middle class.

People who retire, middle-class people who retire, take three times as much out of the Social Security system they ever paid in. That's completely unsustainable, and it's not fair. And that's a really important thing to keep in mind.

We also have a social safety net that's trying to take the risks out of life, that's trying to achieve greater income equality. That's the wrong basis for a social safety net. Social safety net should be relieving the worst suffering.

After that, the second role of the government is to try to rectify cases where markets don't give us the best outcomes: monopolies, cases of pollution, crime, public goods like the army. These are things that are the proper role of government. Not picking winners, social engineering, stimulus, bailouts. These types of things are not the proper role of government and they're sending us in the wrong direction.

INSKEEP: Pollution, the government has a role to play in cleaning the environment.

BROOKS: Of course. Of course that's absolutely the case. I mean this is a canonical case of market failure, where individual firms in many cases can't be relied upon to take care of the environment outside of their basic business model.

INSKEEP: I may have missed it, but I don't recall seeing in the book a reference to global warming. Is there a free enterprise approach to dealing with global warming other than just saying it doesn't exist?

BROOKS: Oh, for sure. If you look at a lot of the work we've done at AEI, we've talked about adaptation. We've talked about geo-engineering solutions. In other words, it's - you don't have to decide unilaterally if you are a free market advocate that global warming doesn't exist.

INSKEEP: What about, you know, cap and trade, creating a market for carbon, that sort of thing? Is that...

BROOKS: The problem with cap and trade is it sounds great. I mean it sounds like a market. What it is is...

INSKEEP: It was developed by free enterprise advocates, sure.

BROOKS: It's an opening for abuse. One of the biggest problems that we have in this country today is not just statism. It is the co-dependent spouse of statism, which is corporate cronyism. This is something that the Occupy movement has exactly right, is that there are too many people with too many carve-outs and bailouts and loopholes and access to government.

That being the case, we have to look at where corporate cronyism is going to be most predatory. And you see it in systems like cap and trade, where they can get access to special favors. I mean this is the ultimate marriage of statism and corporate cronyism, is exactly what you'd see in that sort of system.

INSKEEP: This is a huge challenge for conservatives, though, isn't it? I mean, if you accept that global warming exists, if you accept what the overwhelming majority of scientists say, how do you go after that problem without massive government intervention?

BROOKS: You don't have to accept that it exists. You have to accept that there's a possibility that it exists, unless you're a scientist, unless you're a physicist. All of us who are responsible citizens have to be open to the fact that there are threats, and we don't understand the nature of all the threats. I'm not saying that there's no role for government.

What I'm saying is at AEI we're responsible for looking for the free market and the free enterprise solution. Somebody needs to do that. Others, I'll leave it to them to decide whether or not they think the burden of proof is such that we don't need to deal with it at the government level at all. But I don't feel like it's, it's - the evidence has been able to convince me one way or the other yet.

INSKEEP: I want to ask you about one other thing, because you talked about the way that so many entitlement programs and other government programs have ended up benefitting people in the middle class, or even upper income people rather than the poorest.

There was a really memorable New York Times article in the spring from a single county in Minnesota. And the two reporters interviewed a wide range of people who seemed philosophically to agree entirely with you. They believe in self-reliance. They believe in that American ideal of individualism.

And yet again and again these were people who were taking government assistance and seemed to need to take the Earned Income Tax Credit or various other benefits, because without them they would be in poverty. These would seem to be the things that were keeping them in the middle class, given the way the economy has been the last few decades. What would you say to somebody who's in that position?

BROOKS: This is happening all over the place. We have people who are protesting against large government programs, who want the government to step back, who think that it's tyranny what the government is doing, who at the same time are taking three times as much out of the Social Security system that they ever paid in. The right solution is not to go to them and say you're a welfare recipient, you're a moral reprobate. That's not the right thing to do.

When I was a kid growing up in Seattle, we knew people around us, a lot of people, even in our neighborhood, were on welfare. People referred to their welfare checks as their salaries. Well, it took a change in the moral contract. Not in the economic contract with people. We had to observe finally that the problem with the welfare system was that it was hurting the people that it was supposed to help.

That's the moral argument for a reformation. That's a moral argument for turning us more toward our free enterprise principles. Go to the guy in Minnesota the New York Times talked about and said you're on welfare. Hey buddy, you're off. Well, that's - you can't do that. But you can start to change our culture. You can start to change our systems.

INSKEEP: One of the things that I wondered as I read this article was what has happened to the American economy in the last few decades that the average hard-working guy who has a small business has to accept government benefits that he doesn't even like in order to stay in the middle class. He'd be a poor man without them or a poor woman.

BROOKS: One of the things that we don't know is whether or not that's true. In fact, there are so many more barriers to the success of that person because of the government itself: the regulatory barriers, the tax barriers, the labor market barriers, the environmental barriers. Who knows if we were to set him free or her free what we would need to do, what kind of incentives we would not need to give to that person.

INSKEEP: Do you feel like we're in a world where everyone agrees with you in the abstract, or almost everyone? Hardly anyone disagrees with the notion of free enterprise, of paying your own way, of keeping the government out of your affairs. And yet in practical terms, when it gets down to practicalities, you lose the argument with a lot of people.

BROOKS: Yeah, you do. And this is the biggest problem that we face, I believe. So there's a paradox, which is that, for example, 70 percent of Americans think that the free enterprise system is the best system for America's economy despite severe ups and downs. At the same time, something like 65 percent of Americans say that the government should pay for their health care. Now, you can't reconcile these two ideas.

So the paradox of government is basically that we say we want free enterprise in the abstract. We take more and more goodies in the specific from politicians, and this leads us down this road to serfdom. We know that's wrong. We need to do something differently, and really only an ethical argument is going to do the trick.

INSKEEP: Arthur C. Brooks is head of the American Enterprise Institute and author of "The Road to Freedom." Thanks for coming by.

BROOKS: Thanks, Steve. Transcript provided by NPR, Copyright NPR.

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