Looking Beyond the Hill
Presented at the Reason Foundation Policy Breakfast, Washington, D.C.
Since a Washington Post news story last June equated libertarians with paranoids, you might not be surprised if I tell you that I'm not exactly in tune with the prevailing Beltway culture. And though I've been in Washington almost four-and-a-half years, every time I think I've seen it all, a surprise comes along. I had two last week. The April 15 Washington Post printed a guest column by the distingished historian James MacGregor Burns, author of The American Experiment . On tax-filing day, Prof. Burns defended the current tax code. Critics of the graduated-tax system, he noted, contend that ever-escalating tax rates penalize people from producing more. "Quite the opposite, in my case," he writes. "The more I'm taxed, the harder I work to maintain my income. A flat tax would merely flatten my incentive. Its un-flatness, indeed, is what I like about my federal tax….[The] redistribution [of income graduated-tax rates entail] draws me into a process that goes beyond getting and giving money. It draws me into the world of common citizenship–into a civic culture that transcends markets." Adam Smith, call your office.
Two days later I attended a policy forum at the Cato Institute on the future of the Federal Communications Commission in the wake of the recently signed telecommunications bill. Greg Simon, Vice President Gore's chief domestic policy adviser, defended the administration's proposal to force broadcasters to set aside several hours a week for "childrens educational programming," asking who in the private sector would provide quality programming for children if the government didn't force them to do so?
What about PBS, the Disney Channel, and Nickelodeon, which face no FCC content requirements? And should we feel better because a panel of bureaucrats in Washington will spend time and tax dollars deciding whether the Smurfs or the Flintstones are education?
Tom Hazlett, REASON's back page columnist and the former chief economist at the FCC, was sitting beside me and asked those questions to Mr. Simon. Not good enough, was his response. He said most "childrens programming" was just that, programming children to become hapless pawns in consumer society. The unregulated private market could not be trusted.
I found both of the experiences startling, but all-too-common here in Washington, where policy makers and commentators, regardless of ideology or party affiliation, tend to get stuck in a conceptual box in which everything that matters in today's society results from some law or regulation handed down from our benevolent rulers in D.C. This view is so pervasive that it causes otherwise honorable and intelligent people to sound pretty doggone silly. A distinguished historian like Professor Burns argues that the yardstick for measuring good citizenship is your capacity to navigate the depreciation schedules. And a top-ranking policy adviser like Mr. Simon states that he can't imagine providers of television programming would find any enticement–not even the almighty dollar– to create top-flight shows for children unless some commisar in Washington forced them.
In the June REASON's lead editorial, Virginia Postrel cites another example in which the opinion elite were stuck in the box. One month ago today, former Sen. Edmund Muskie and Hewlett-Packard co-founder David Packard died. Muskie's obituary took up 82 column inches in The Washington Post, 84 in TheNew York Times . By contrast, Packard's obituary received less than half as much space–28 inches in the Post and 40 in the Times. Virginia writes, "the day he died, the only American politician who could rival [Packard] in real-world importance was Ronald Reagan." But the papers didn't see it that way.
The garage where he and Bill Hewlett founded H-P is a state landmark, called "the birthplace of Silicon Valley." Packard's management philosophies and organizational innovations include profit sharing, flex time, management by walking around, sales force automation, and cafeteria-style benefit plans. They have improved the lives of millions of people who may never work in any high-tech industry or buy one of H-P's remarkable products. But the policy culture of Washington and the opinion elite who live along the Boston-to-D.C. corridor can't appreciate a man like Packard because his world was not defined by continuing resolutions or appropriations riders or even presidential campaigns.
The world "outside the box" is the realm of commerce and entrepreneurship, of art, music, and literature, of church picnics and pick-up basketball games–it's the often misunderstood realm of civil society. I hesitate using that term, because it's been so abused by the area's policy elite. Much like the term "competitiveness," which Labor Secretary Robert Reich said "has…gone directly from obscurity to meaninglessness without any intervening period of coherence," legislators and policy mavens have done their best to denigrate civil society as a useful concept.
Take Sen. Dan Coats, a Republican from Indiana, who is the co-creator of something called the Project for American Renewal. He's decided the U.S. Congress can restore civil society with new legislation, and has introduced a series of laws with such names as The Character Development Act, The Responsible Parenthood Act, and The Neighborhood Security Act. I'm not making this up. Sen. Coats apparently believes that the way to reinvigorate the ethic of American voluntarism is to, among other things, have the federal treasury pay churches to offer welfare services, much as those in the communitarian movement hint that citizens build character by standing in line at the DMV.
True voluntarism can't be nurtured with government subsidies or mandatory community service; it can, however, be assisted by giving individuals control of their own destinies and letting them keep more of what they earn. That's the main reason the volatile issue of Social Security privatization is so important–and has been, until now, outside the box.
It is possible to make Social Security fiscally solvent without privatizing it. For instance, increasing the retirement age gradually but steadily–say, two or three months a year–would have no impact on current retirees and would inconvenience those about to retire very little. But it would save hundreds of billions of dollars over time. A two-month-per-year increase in the retirement age would eliminate about half of Social Security's long-term deficit. Some modest reductions in cost-of-living adjustments and in the way benefit increases are calculated would also make Social Security more financially viable.
So why is privatization important? The current system discourages thrift, encourages dependency, and even undermines families by breaking the economic bonds between generations. Privatizing Social Security would give every working person a stake in the success of the American economy and a property right in the fruits of his or her labor. As former Wyoming Sen. Malcolm Wallop pointed out in an interview with me nine months ago, if you die before retirement age, you have no legal claim on your Social Security payroll taxes. As he said, when you die, "you can't leave that money to your [spouse], you can't leave it to your children, you can't retire early and enjoy the fruits of your labor."
This concept of property rights in retirement benefits is way outside of the box. Monday I performed a Nexis search–the last refuge of a lazy journalist–and found 444 newspaper and magazine stories cross-referencing "Social Security and privatization or privatize" that have been published since January 1. Of those, only two mentioned property rights–one story about the Senate Republican primary debate in Colorado, where property rights were mentioned only as a land-use issue, and a story that appeared in REASON, written by me.
When Virginia pointed out to me that property rights is a term clearly inside the libertarian box, she suggested a search cross-referencing " Social Security privatization and ownership or own." There were 198 of those stories. A few dozen mentioned that privatization would let individuals manage their own portfolios, which is important. But only 14 talked about giving people a legal claim to their retirement money, and four of them were quoting Steve Forbes on the campaign trail.
Unfortunately, Washington's intellectual and policy elites often act as if the world outside the box encompassed a tiny segment of human activity. In crassly economic terms, however, federal, state, and local governments soak up about 40 percent of our national income. So 60 percent of our financial transactions take place in the voluntary sector. Add in the noneconomic realm–personal relationships, leisure activities, religious participation, name your dimension–and you'll find plenty of interesting and important things outside the box worth considering.
Today we're asking if Washington is becoming irrelevant. The fact that we have to ask the question indicates that the federal government remains quite relevant. But much of REASON magazine, and the Reason Foundation's organizational mission consists of nurturing an environment in which Washington becomes less relevant because everyday people start demanding less from it.
