Thursday, February 5, 2015

Liberal Trilemma

The “new liberalism” of T.H. Green, Leonard Hobhouse and Herbert Croly (a co-founder of The New Republic) attacked the unbridled individualism of the market economist and looked instead to a social-welfare state. For Fawcett, the real legacy of the new liberals was their demolition of “polar thinking.” Individualism versus collectivism, market versus state, freedom versus intervention: none of these oppositions reflected reality. The new liberals tried to find a middle ground, but the question of who would pay for liberal democracy was never far from sight. Liberals faced a “taxation trilemma”: they could have free trade, low taxes and small government (the Gladstonian option); high tariffs, low taxes and big government (the option of Bismarck and American big business); or free trade, high taxes and big government (the option of European new liberals and American Progressives). Anything else would lead to unsustainable debt.


Consider this three-voter election:

Bismark Moe: High tariffs, low taxes, big government.
Progressive Curly: Low tariffs, high taxes, big government.
Gladstone Larry: Low tariffs, low taxes, small government.

Majorities of 2/3 pass: Low tariffs, low taxes, big government.
Note that this liberal trilemma is present Republican policy! 

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