Liberals Working for the Right

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Dean Baker

Dean Baker is co-director of the Center for Economic and Policy Research

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June 19th, 2012 11:38 AM

Liberals Working for the Right

Last week Washington Post blogger Greg Sargent picked up on a blogpost from Democracy editor Michael Tomasky about how liberals should be touting the merits of "government." That is a great idea, if the point is to advance the conservatives' agenda.

It is astounding how happy liberals are to work for the right by implying that conservatives somehow just want to leave markets to themselves whereas the liberals want to bring in the pointy-headed bureaucrats to tell people what they should do. This view is, of course, nonsense. Pick an issue, any issue, and you will almost invariably find the right actively pushing for a big role for government.

However, for conservatives the goal is not ensuring a decent standard of living for the bulk of the population. Rather the goal is ensuring that money is redistributed upward. And, of course, the conservatives are smart enough not to own up to their use of the government.

Just to take a few easy ones, why would any market-oriented opponent of big government support the existence of too-big-to-fail banks (TBTF)? These TBTF banks operate with an implicit subsidy from the government. Lenders expect the government to step in to back up these banks debt if they fail, as happened on a massive basis in 2008. As a result, TBTF banks can borrow money at lower interest rates than would be possible in a free market.

The amount of money at stake is substantial, possibly more than $60 billion a year. This is more money than is at issue with the Bush tax cuts to the wealthy. This $60 billion is money that is redistributed from the rest of us to the biggest banks in the country, their top executives and their shareholders, all courtesy of big government.

To take another easy example, drug patents raise the price of prescription drugs by close to $270 billion a year above their free market price. This is roughly five Bush tax cuts to the wealthy.

Patents are government-granted monopolies. Since prescription drugs often are necessary for a person's health or even life, people will pay almost anything for a drug if they can afford it or can get their insurance to pick up the tab.

Patents imply very big government since the government will imprison anyone who produces a drug without the patent holder's consent. In recent years the big government has been actively working to extend Pfizer and Merck's patent monopolies to the rest of the world through NAFTA, CAFTA and other recent trade deals.

Patents are currently used as a mechanism to finance prescription drug research. But there are other more efficient mechanisms, such as the prize system suggested by Nobel Prize-winning economist Joe Stiglitz. Alternatively, we could simply increase and redirect the $30 billion in public money that goes to support biomedical research each year through the National Institutes of Health.

To take one other example of big government that conservatives support, highly paid professionals (e.g. doctors, dentists and lawyers) use licensing restrictions to limit both foreign and domestic competition. While the government has been using the banner of "free trade" to drive down the wages of manufacturing workers, it has simultaneously been increasing the protection afforded doctors in order to prevent any similar downward pressure on their wages.

If doctors in the United States were paid the same as doctors in Western Europe, it would save us more than $80 billion a year. The big government subsidy to doctors alone is close to two times the money involved in Bush's tax cuts to the wealthy.

It is not difficult to find other examples where conservatives want a big role for the government. Of course conservatives are opposed to big government social programs. That is because their goal is redistributed income upward rather than ensuring a decent standard of living for the whole population. It's very good politics for the right to equate big government with big government social programs, and incredibly foolish for progressives to help them.

The issue here is not in any real sense the size of government or its impact on the economy. A government that diverts an extra $270 billion a year to the pharmaceutical industry by enforcing patent monopolies on prescription drugs is every bit as "big" as a government that taxes an additional $270 billion a year and hands it to the drug industry.

It is totally understandable that the right would try to conceal the massive extent to which it relies on government to redistribute income upward. It is very hard to figure out why the country's leading progressive thinkers want to help them.