Liberalism Ascending
New Jersey's December 2007 abolition of the death penalty is a remarkable signal that the political pendulum is swinging toward liberalism
December 1, 2008
Fred Foldvary, Ph.D.

The political pendulum in the United States swung towards conservativism starting in the late 1970s, but with the election of 2006, the political mood is now swinging back to liberalism. The elections in 2008 will accelerate the trend towards liberal policies.

The death penalty is a litmus test of the conservative-liberal divide, a canary in the mine of politics. The conservative position is in favor of capital punishment as seemingly tough on crime and as a cherished tradition, but it has been costly and ineffective. On December 2007 New Jersey abolished the death penalty. Its abolition is a remarkable signal of change.

Statist liberal policies of the 1960s and early 1970s brought high inflation, recessions, big government, and bungled war. President Nixon, although a Republican, enacted big-government price controls and expanded the welfare state. The liberally inflationary policies of the 1970s brought inflation rather than growth.

Conservative deregulation began in the late 1970s, and the election of Ronald Reagan confirmed the conservative swing. The conservative monetary policy of the 1980s reduced inflation, and conservative military policy greatly increased spending for the cold war. Conservative anti-communism included the promotion of the contra-war against the regime in Nicaragua.

The Clinton presidency did not bring back liberal policies, as the spirit of the times rejected an expansion of socialized medicine. Government spending was conservatively restrained and the federal budget had a rare surplus (if one includes Social Security).

Conservativism increases its grip after the 9/11 attack as nationalist government power escalated with the war on terror. The government’s conservative war on free expression became hysterical as it imposed huge fines on tiny flashes of body shown on broadcast television.

Now many Americans are disgusted with nationalist-conservative policies, which have brought corruption, incompetence, and hypocrisy to new heights. The assassination of Benazir Bhutto in Pakistan underscores the failure of conservative foreign policy to eradicate the terrorists. Politicians who flapped their right wings and cried cock-a-doodle-do for “family values” have been exposed as sexual deviants. The conservative war on homosexuality was lost as gays and lesbians beamed mainstream on television shows.

Nationalist tradition-bound conservativism began to be challenged after the 2006 elections. Most Republican-party candidates are still competing to see who is the most socially conservative, but this appeals to a shrinking and ever more skeptical political audience. In the general election, the two establishment candidates will veer sharply leftwards.

The housing collapse and bad economy will push candidates even more towards liberal welfare-state responses. As the real estate bubble crumbles and the financial system cracks, there will be greater government controls over those industries, as welfare-state-liberal government typically reacts to control symptoms rather than eliminate causes.

The spirit of the times calls for a foreign policy of more negotiation and less confrontation, as it is already happening under the guidance of Secretary of State Condoleezza Rice, who is promoting the liberal agenda of peace talks for the Israeli-Palestinian conflict. The pendulum swing towards liberalism will not bring us full civil liberties, but will decelerate the conservative push towards ever greater censorship. There will be less repression of homosexuality, such as in the military, where much needed medics and translators have been stupidly fired.

Ascending liberalism will greatly accelerate movement on climate change. The spirit of the times is green. Unfortunately, rather then enact an efficient green-tax shift, statist liberals will tighten restrictive regulations, push fraud-laden permit trading and carbon offsets, and continue the corny subsidy of ethanol.

Probably the worst damage that the newly empowered liberals will commit will be on medical care. The single-payer nationalized medical system that all the Democratic party candidates seek will crush medical progress, although it will take time to fully wreak medical productivity. Single payer implies monopsony, a single buyer of a service, and that leads to gross waste and restricted services, as without a real market, optimal prices and quantities become unknowable.

Communists used to say that they want the whole word to be state-socialist, except for New Zealand. They recognized that they needed one country with a market economy so that the socialist central planners would be able to observe the optimal prices for goods.

Those who cock-a-doodle-do for socialized medicine point to all the other countries of the world that have it, with the USA as the major exception. But the USA has been the New Zealand of medical economics. Its remnant of market-based medical goods has been able to calculate scarcity and demand, and use the calculation of cost and profit to invest in medical technology. When the USA is fully medically socialized, it will no longer serve as an economic New Zealand to perform market-based economic calculation.

You have to not only be an economist but one infused with Austrian-school Misesian understanding to appreciate the need for genuine markets to perform economic calculation. One also needs a Hayekian understanding of how profits and prices generate economic knowledge that is too fleeting, tacit, and decentralized to be collected by the central planners.

However, liberal medical centralization is where the pendulum is swinging, and voters will never learn by applying logic and past evidence, but only through hard recent experience, so we will just have to suffer through the new statist liberalism of ineffective environmental policies and the madness of medical monopsony. Policies must fail before people learn they don’t work.

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Fred Foldvary, Ph.D.

FRED E. FOLDVARY, Ph.D., (May 11, 1946 — June 5, 2021) was an economist who wrote weekly editorials for since 1997. Foldvary’s commentaries are well respected for their currency, sound logic, wit, and consistent devotion to human freedom. He received his B.A. in economics from the University of California at Berkeley, and his M.A. and Ph.D. in economics from George Mason University. He taught economics at Virginia Tech, John F. Kennedy University, Santa Clara University, and San Jose State University.

Foldvary is the author of The Soul of LibertyPublic Goods and Private Communities, and Dictionary of Free Market Economics. He edited and contributed to Beyond Neoclassical Economics and, with Dan Klein, The Half-Life of Policy Rationales. Foldvary’s areas of research included public finance, governance, ethical philosophy, and land economics.

Foldvary is notably known for going on record in the American Journal of Economics and Sociology in 1997 to predict the exact timing of the 2008 economic depression—eleven years before the event occurred. He was able to do so due to his extensive knowledge of the real-estate cycle.