Where Liberals Failed

“To those who charge that liberalism has been tried and found wanting, I answer that the failure is not in the idea but in the course of recent history”—former Sen. George McGovern, (defeated) Democratic presidential candidate, 1972.

Liberalism has two big problems: It hasn’t worked for a long time, and people know it.

The conservative ascent of the last three decades came in the wake of liberalism’s failures. The philosophy of big government and the welfare state reigned supreme from the first administration of Franklin D. Roosevelt in 1933 through the Great Society of Lyndon B. Johnson, whose presidency ended in the jungles of Vietnam. Except for the two terms of Dwight Eisenhower, the archetypical moderate Republican, that represented more than three decades of liberal Democratic rule.

Even Richard Nixon, liberals’ arch-enemy, expanded government as much as any Democratic president had: The late Democratic Sen. Daniel Patrick Moynihan called his administration “the most progressive of the postwar era.” In 1971, President Nixon himself declared: “I am now a Keynesian.”

That was bad timing, because the 1970s were Keynesianism’s last gasp—until the recent financial crisis. The inflation of the 1970s came in large part because of the Federal Reserve’s loose monetary policy and uncontrolled spending on wars like Vietnam and expanded domestic programs. The two oil price shocks of the 1970s and unions’ demands for higher wages to keep up with inflation only fueled the fires.

Like conservatism, liberalism brought in many great advances: unemployment insurance; social security; financial reforms like the securities acts and the original Glass-Steagall Act; Medicare; expanded educational opportunities; programs to ameliorate the worst conditions of poverty, and environmental protection laws.

But liberalism’s fatal flaw was that it ultimately did believe government could and should solve society’s major problems, and liberals pushed for more welfare state solutions—and more spending–as the answer to everything,  just as conservatives saw tax cuts as a cure for everything from cancer to the common cold.

Unfortunately, government is by nature wasteful because it lacks the private sector’s incentive to be efficient, and recipients of government largesse can become dependent on it.  Also, liberals either forget or ignore that free-market capitalism produces the wealth that funds the programs they support.

Lately, the chickens have come home to roost. The imminent retirement of the baby boomers has made programs like Medicare, Medicaid, and social security unaffordable for the long run.

A key liberal and Democratic constituency, public labor unions, also negotiated generous benefits over the years from sympathetic (or craven) politicians. That has put many state and local governments deep in a hole just as tax revenues plummet and other constituencies—like parents of school-age children—are making heavy demands for services.

In this context, and in the wake of a severe financial crisis and near-Depression, President Obama’s sweeping health care reform bill was a massive overreach. Not surprisingly the reaction was sharp and dramatic, effectively ending the liberal phase of his presidency.

Though the president and Congress actually did set up ways to fund this plan (unlike President Bush with the Medicare prescription-drug benefit), Democrats overall have not addressed how to pay for services to which their constituents have come to feel entitled. Until they realize there’s not a bottomless pit of money in “rich” people’s pockets—and that companies and wealthy individuals have choices about where they live and do business–they won’t be able to offer real solutions to our real problems.

To paraphrase former British Prime Minister Margaret Thatcher, the trouble with liberalism is that at some point you run out of other people’s money. That time may be now.

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