The Conservative Way of Economic Interventionism

Matt rightly notes—and the recent stimulus debate supports his observation—that the progressive economic narrative needs work. I'm skeptical, however, that characterizing the progressive approach as hands-on and the conservative approach as hands-off will do the trick. As Dean Baker persuasively argues in The Conservative Nanny State, both progressives and conservatives are hands-on when it comes to the economy. The real difference involves who they want to give a hand to—progressives want to help ordinary people and promote an economy that works for all Americans, while conservatives are focused on regressive redistribution.

Political debates in the United States are routinely framed as a battle between conservatives who favor market outcomes, whatever they may be, against liberals who prefer government intervention to ensure that families have decent standards-of-living. This description of the two poles is inaccurate; both conservatives and liberals want government intervention. The difference between them is the goal of government intervention, and the fact that conservatives are smart enough to conceal their dependence on the government.

Conservatives want to use the government to distribute income upward to higher paid workers, business owners, and investors. They support the establishment of rules and structures that have this effect. First and foremost, conservatives support nanny state policies that have the effect of increasing the supply of less-skilled workers (thereby lowering their wages), while at the same time restricting the supply of more highly educated professional employees (thereby raising their wages).

This isn't inconsistent with the Wellstone/Bernstein "You're on Your Own" framing of conservative economics. Even though conservatives favor an interventionist approach, they're not all that interested in intervening on behalf of you.