The Washington, D.C. Bubble

The Washington, D.C. Bubble

By Robert Tracinski - August 16, 2012

A long, brutal recession is prompting a certain degree of soul-searching and even philosophical debate in this election year. One example is a piece of honest introspection from a left-leaning commentator who stumbles upon an important truth while still showing us the cultural and philosophical blinders of the mainstream cultural elites.

The honest part is a sort of inadvertent admission of those blinders. In a piece mostly devoted to denouncing Federal Reserve Chairman Ben Bernanke for failing to print more money, Jonathan Chait ends up offering a poignant reflection on the distance between the cultural elites in Washington, DC--including himself--and those who are suffering in this economy.

"The political scientist Larry Bartels has found (and measured) that members of Congress respond much more strongly to the preferences of their affluent constituents than their poor ones. And for affluent people, there is essentially no recession. Unemployment for workers with a bachelors degree is 4 percent--boom times. Unemployment is also unusually low in the Washington, D.C., area, owing to our economy's reliance on federal spending, which has not had to impose the punishing austerity of so many state and local governments."

This is horrifically understated. Washington "has not had to impose austerity"? Well of course it hasn't! Washington has sucked an extra trillion dollars out of the economy and sent it through the conduits of the federal bureaucracy, employing tens of thousands of college-educated, middle-class functionaries to process all of the stimulus checks and write all of the new regulations. And an awful lot of those stimulus checks have been sent out through the local mail. A recent New York Times article crowing about the DC area's affluence reveals that "the District of Columbia [has] received more stimulus dollars per capita than any state."

So what Mr. Chait really should say is that he lives in a giant boomtown, as insulated from everyone else's misery as a courtier at Louis XIV's Versailles. But on some level he knows this, and here comes the real moment of candor, of admission against interest.

"I live in a Washington neighborhood almost entirely filled with college-educated professionals, and it occurred to me not long ago that, when my children grow up, they'll have no personal memory of having lived through the greatest economic crisis in eighty years. It is more akin to a famine in Africa. For millions and millions of Americans, the economic crisis is the worst event of their lives. They have lost jobs, homes, health insurance, opportunities for their children, seen their skills deteriorate, and lost their sense of self-worth. But from the perspective of those in a position to alleviate their suffering, the crisis is merely a sad and distant tragedy."

Here is what Mr. Chait has never asked himself. If all of this is true, if the elites in Washington are insulated from the rest of the country, don't grasp what is at stake for everyone else, and have no real incentive to act in those people's interests--then why on earth would we ever look to those elites for our salvation? Why should we give them vast and unprecedented power over the economy and depend on their stimulus money to put bread in our children's mouths?

What Mr. Chait doesn't realize is that he has stumbled across one of the central arguments against big government and the welfare state: the fact that big government tends to become its own entrenched interest, responding to the special pleading of its lobbyists and hangers-on, without being able or willing to respond to all of the needs and priorities of the millions of individuals outside the capital.

He doesn't see this because he's living in the real bubble that imprisons the mainstream cultural elites. It's not a bubble of complacent prosperity. It's an ideological bubble in which economic, political, and moral ideas outside the catechism of the bien-pensant liberal don't exist and need not be confronted. This is demonstrated by the first half of the piece, which basically accuses Republicans of callous disregard for the poor because they don't want another housing bailout and another Keynesian stimulus.

Surely, he must be aware that there is a whole school of free-market economics which regards all of this as a waste of money and a way of making the economy worse. If he doesn't know that, Arthur Laffer reminds him in the Wall Street Journal by making the case that everywhere it has been implemented, government "stimulus" has actually slowed down the economy. But this is outside the Keynesian mainstream and can simply be dismissed as an argument not worth taking seriously.

The reason why the ideological bubble of mainstream liberalism is so resistant to being punctured is that it is part of a moral bubble: an unchallenged belief in the morality of welfare-state altruism. In the altruist worldview, supporting yourself and providing for your own needs has no moral significance, but providing for the needs of others makes you virtuous. And the best position of all is to be the middleman distributing those handouts from the haves to the have-nots. It doesn't require you to sacrifice your own prosperity, but it still gives you the moral high ground of being the agent for the redistribution of wealth.

The welfare-state altruist thinks government is the answer to every problem because it follows this altruist model: a benevolent elite providing handouts to support the helpless little guy.

But Chait's own column gives a clue to the profound moral failure of this approach. It encourages the individual to outsource the responsibility for supporting his own life, waiting for largess from distant bureaucrats who are not necessarily benevolent. And precisely because these middlemen live off of an unlimited stream of free money--tax money taken from our paychecks, or dollars summoned out of thin air by the Federal Reserve--they continue to prosper and advance regardless of whether their vast federal projects actually help anyone.

This is the way the welfare-state altruist "cares." He cares about you in the impersonal way he cares about a famine in Africa. It's just another excuse to raise some money and send it off to be spent on a program that may or may not work (foreign aid is another great example of money spent with very little regard for results) and to skim off a comfortable salary made all the more comfortable by a smug sense of moral superiority.

Contrast this to a totally different moral and economic model: the individualist model of trade, production, and exchange. It is a system summed up in the famous line from Adam Smith: "It is not from the benevolence of the butcher, the brewer, or the baker, that we can expect our dinner, but from their regard to their own interest." Like Chait's neighbors, the businessman or investor may live in a comfortable suburb among upper-middle-class professionals and not really know or care what happens to you. The difference is that he doesn't have to care. All he has to do is follow his own interests. If he hires you, it is not because he was overcome by a momentary bout of guilt or compassion. It is because he thinks he can profit by expanding his business. If he reduces the price of the goods you buy, or if he creates some valuable new product or service, likewise it is out of the reliable motive of self-interest.

Smith's butcher, brewer, and baker may be portrayed as callous and indifferent, even cruel--but then again, they're not asking you to be dependent on their goodwill and spare change. They are asking you to stand on the more substantial ground of offering value for value.

If you want to know which system is actually cruel, think about this from the perspective of the person who looks to the elites in Washington, to Mr. Chait and his neighbors, to solve his problems. This is the cost of dependency: sitting around waiting for a bunch of millionaires and comfortable upper-middle-class types to feel sorry for you and enact a government program--rather than taking your fate into your own hands.

But to understand this, you need to be ready to drag yourself all the way out of the Washington bubble. 

Robert Tracinski is editor of The Tracinski Letter and a contributor to RealClearMarkets.

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