Daily Scoop Xtra: Will conservatism bankrupt America?


A “Kinsley Gaffe,” named after the journalist Michael Kinsley, occurs when a politician accidentally blurts out what he really believes. Republican presidential candidate Mitt Romney recently committed a classic Kinsley gaffe when he criticized President Obama:  “He wants another stimulus, he wants to hire more government workers. He says we need more firemen, more policemen, more teachers. Did he not get the message of Wisconsin? The American people did. It’s time for us to cut back on government and help the American people.”

Romney blurted out the unstated premise of America’s anti-government conservatism:  many tasks of government could be performed more cheaply and efficiently by private firms competing in competitive markets.

The mainstream conservative argument for privatizing the provision of all merit goods is not moral, but practical. The Right claims that merit goods like education, health and housing can be provided more affordably if private providers, motivated by profit, are forced to compete for the patronage of citizens provided by the government with vouchers, in the form of tax credits.

If you provide citizens with vouchers to purchase merit goods from a naturally monopolistic or oligopolistic industry, competition will not work to keep prices down.  Instead, the producers are likely to hike their prices, by the amount of the voucher. That is essentially what has happened in higher education, health care and housing in the United States. Contrary to conservative theory, subsidizing the private purchase of these merit goods, without regulating the prices that producers charge, has allowed universities to increase their tuitions and doctors and hospitals to increase their fees without providing more or better health care. And housing as a share of middle-class budgets is higher now than it was in the 1950s and 1960s, defeating the purpose of housing subsidies.

If ever there were a real-world test of competing public policy models, it is found in the realm of merit goods in America. In the last half century, we have not seen out-of-control cost inflation in merit goods that are provided directly by government, like public K-12 schools and direct income maintenance payments to citizens like Social Security and unemployment insurance. Instead, the runaway costs have all come from merit goods like higher ed, health care and housing which follow the conservative model of subsidizing purchases of privately-provided goods.

And this is the failed, out-of-control, overly-expensive model that conservatives want to extend to all middle-class merit goods!

American progressives and centrists are missing a great opportunity to champion real and lasting budgetary savings by proposing the replacement of the unaffordable conservative voucher approach to all merit goods by two cheaper approaches, where competitive markets for merit goods cannot exist:  public provision or utility-style price regulation.

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