We support centrist public policy positions that are economically efficient, fair, respect personal freedom, and have a reasonable chance of being adopted. Once you understand what we mean by those principles you should be able to predict our position on most issues. In this section, we attempt to explain those principles in detail.
The policy positions are based on four key, and sometimes conflicting, principles:
Equity or Fairness
Personal Freedom or Autonomy
The Economic Efficiency Principle
The Economic Efficiency Principle recognizes that the size of the economic pie matters. It also recognizes that we get the kind of society for which we provide incentives. If we provide incentives for work and investment, we get more of them and therefore, a larger economic pie to work with. The most efficient economic system will, by definition, produce the greatest average wealth and income for society. In general, absent market failures such as those described below, we believe that a free market based system will be the most efficient.
The Economic Efficiency Principle suggests public policy solutions that emphasize a reliance on free markets unless there are substantial market failures in the form of externalities, public goods, or anti-competitive behavior.
Externalities are situations where one person’s consumption or production of a good or service affects other unrelated parties. Pollution is the classic example of a negative externality. Vaccine usage is an example of a positive externality.
Public goods are those where one person’s consumption of the good does not diminish the amount of the good available for others to consume or where others cannot be kept from consuming the good without paying for it. National defense is the classic example of a public good. Basic scientific research also falls under this category.
Anti-competitive behavior, in the form of monopolies or monopolistic behavior, is controlled by the Justice Department using the Clayton Act and the Sherman Act, and by the Federal Trade Commission. The problem for these regulators and the courts is distinguishing between monopolistic behavior and market success. The classic examples of monopolistic behavior were the oil, banking and railroad trusts that were the motivation for much of the legislation mentioned above. In recent years there has been a tendency to ignore anti-competitive behavior unless it affects consumers by raising prices. In the digital age this point of view has become increasingly shortsighted. The “price” consumers pay for digital services often takes the form of the information they knowingly or unknowingly share with the provider of the service.
When these market failures are identified they have to be substantial in order to justify government intervention because, inevitably, the government intervention will also be inefficient and because government intervention is inherently coercive.
Finally, the method for intervention should be as market-like as possible. Therefore, we favor requirements for disclosure and taxes over direct regulation and we favor government subsidized services over government provided services.
The Equity or Fairness Principle
The Equity, or fairness, Principle recognizes that for a variety of reasons, not the least of which is securing the consent of the governed, we care about the distribution of wealth and income. We also care about equality of opportunity; social mobility; the extent to which people are rewarded for their industriousness, forbearance, and risk taking; and the extent to which people bear responsibility for the consequences of their own actions. All of these factors are, in our minds, aspects of equity or fairness and governments that fail to take them all into account risk losing the consent of the governed.
The philosopher John Rawls provided an interesting way to measure a just society. He suggested, in a variation of the golden rule, that a just society would be the kind of society we would design if we had no idea where in that society we would be placed.
Despite what some think, the ideal Rawlsian society is not likely to be a society with total income and wealth equality. As a consequence of removing all incentives for work and investment, such a society would be desperately poor. It would also lack those other aspects of fairness mentioned above such as reward for individual effort and sacrifice and personal responsibility.
The perfect Rawlsian society is, also, not likely to be the kind of society generated by a totally free market, in which generations of people would be condemned to poverty because of the poverty of their parents. Even if this society produced the highest average wealth, it would be unacceptably inequitable. This kind of society fails across many of the above definitions of equity or fairness.
Our support for equity and fairness leads us to support progressive income taxation, estate taxes, and publicly supported education and health care. It leads us to support free trade agreements with developing countries as the fastest and most effective way to reduce poverty worldwide. It also leads us to oppose the excessive taxation of work and investment, since these taxes deprive people of the fruits of their labor, their forbearance, and their willingness to accept risk.
Clearly, even ignoring the impacts of tax policy on efficiency and therefore total wealth, concern for equity and fairness can lead to conflicting policy conclusions. The policy proposals recommended here recognize these internal conflicts and try to strike a compromise.
The Personal Freedom or Autonomy Principle
The Personal Freedom Principle recognizes that Americans value personal freedom for its own sake. As a consequence, Americans would reject an alternative that promised maximum total wealth and total income equality, even if that were possible, if it required surrendering control of our lives to a totalitarian state. Concern for personal freedom leads us towards a bias against government intervention, unless the case for intervention is compelling. It also suggests using policy solutions that maximize the degree of personal choice such as taxing rather than prohibiting certain kinds of behavior and using vouchers or credits to subsidize certain services rather than providing them publicly.
In applying the Personal Freedom Principle it is important to remember that there are limits. If the exercise of personal freedom has a significant adverse effect on others, for example by spreading a deadly communicable disease or degrading the environment, society has a legitimate right to limit personal freedom.
The Political Realism Principle
The Political Realism Principle recognizes that we don’t make our decisions based on Rawlsian principles. Geography, time, greed and envy matter. In Rawls’ ideal world, we would care as much for the citizens of other countries as we would for those of our own. While many Americans, perhaps because of our history as immigrants from every corner of the world, do empathize with those in other countries, most nevertheless value the lives and prosperity of Americans above those of people in other countries. Similarly, future generations do not have votes in America. No matter how much some may care about future generations, inevitably, most Americans care more about the present. Greed will lead some to want more, no matter how well off they are, and envy will lead some to want those better off than themselves to have less, even if, in the process, they impoverish everyone.
The policy positions presented here seek to balance the first three principles, mindful that we are constrained by the fourth.