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12 February 2013

Slate’s Matt Yglesias Sings the Blue Model Blues

By Walter Russell Mead

Slate’s Matt Ygelsias is trying to start a small business by renting out a condo, and he’s finding out just how hard the blue model is on entrepreneurs. After detailing his personal battle with the DC bureaucracy for a single basic business license, travelling from office to office, filling out form after form, and losing precious time and money, Ygelsias reflects more broadly on the harms of red-tape hoop jumping:

Not that I expect your pity. I don’t even pity myself. Going through the process, I mostly felt lucky to be a fluent-English-speaking college graduate with a flexible work schedule. But the presence of a stray pamphlet offering translation into Spanish, Chinese, or Amharic seemed like it would be only marginally useful to an immigrant entrepreneur. A person who needs to be at her day job from 9 to 5 would have a huge problem even getting to these offices while they’re open …

Red tape, long lines, inconvenient office hours, and other logistical hassles probably won’t stop tomorrow’s super-genius from launching the next great billion-dollar company. But it’s a large and needless deterrent to the formation of the humble workaday firms that for many people are a path to autonomy and prosperity.

Here the liberal columnist encounters some basic truths we keep pounding home at VM. Heavy regulation plus bad governance hurts the poor and prevents jobs from being created in big blue cities where so many immigrants and minorities live. Those are exactly the people who most need the freedom to start businesses, and those are the businesses our existing blue model cities do so much to crush.

Many of these regulations and bureaucratic obstacles, moreover, serve no social purpose. As Yglesias’ experience shows, the move for government reform does not need to be an ideological or partisan issue: liberals should fight pointless, expensive, poor-exploiting and opportunity-killing regulation as hard as conservatives.

But it has, to some degree, become a partisan issue because upper middle class progressive intellectuals often know nothing about the real effect of the regulations they do so much to promote. The reason for this is simple: they are almost never in the position of running businesses. Without a grounding in how things actually work, our brilliantly educated lawyers and policy wonks and professors and pundits develop complex regulatory structures and systems that have unexpected impacts and unpredictable but very damaging side effects. They erect regulatory barriers with the same arrogant disregard for complex social systems that the Army Corps of Engineers exhibited toward natural ecosystems when the Corps was in the business of damming every river and paving every stream bed it could find. The environmental movement arose in reaction to arrogant bureaucratic technocrats; that same feeling is one of the wellsprings of the anti-regulatory movements of our time.

But the empire fights back. While the regulations that slowed down Yglesias’ quest to rent out a condo don’t help tenants in any way, they do help the people who have jobs administering them. Reforming these systems is difficult because entrenched interests—often public sector unions and big city political machines eager to find job slots that can go to deserving supporters—so warp the politics of the Democratic Party that it becomes a lobbying group for the producers of government services.

Political machines and unions aren’t the only forces holding up the pointless hoops Yglesias had to jump through: existing businesses often use tough regulatory regimes as a way to keep new competitors out of the market. Complicated administrative procedures serve as a barrier to entry, helping to make it possible for established businesses to charge higher prices. (Often, new regulations come with “grandfather” clauses that exempt existing facilities or operations from some of the most onerous features—another way in which existing interests use the regulatory state to fight off competition.) When well lawyered and well moneyed existing interests succeed in this effort (which is more often than not) the regulations end up hurting exactly the people—consumers—they were ostensibly intended to help. In one-party jurisdictions like DC, what you then get is a sick symbiosis between a business establishment that welcomes certain obstructionist regulations (and tolerates their byzantine enforcement and operation by large and incompetent bureaucracies) and political machines. Both welcome regulation, but neither is particularly interested in effective or fair regulation.

Many college students and academics like to think that the reason that these populations are often more liberal than the average American is that they are smarter and better educated. Yglesias’ experience with the deeply dysfunctional Washington DC bureaucracy and the shock and surprise his column expresses at this experience suggests another explanation: that progressive intellectuals, like academics, have less experience with the real world than other people, and don’t understand the social consequences and costs of the measures they so naively and impractically think will make life better for all. (UPDATE: Yglesias himself has made these points before and we don’t want to accuse him of ignoring the problem; but ignorance of the costs of blue governance is widespread among many of the blue model’s most enthusiastic backers.)

None of this means that we need to designate Ayn Rand the Minister of Commerce in Washington DC; but it does suggest that the transformation of governance is as urgent an issue today was it was when the Progressive Movement first sought to adapt American governance to the industrial age. A lighter, smarter state is better for the poor than a clumsy behemoth that strangles entrepreneurship, raises costs and favors existing interests. Somehow, though, it is considered a sign of being on the radical right fringe to point things like this out—just as it’s considered right wing and borderline racist to be filled with rage at the corrupt one party political machines that exploit, strangle, miseducate and otherwise cheat the poor in cities across this great nation.

At Via Meadia we call this kind of acquiescent, unreflective stand-pat liberalism “4.0.” It is a defensive ideology, tied to the preservation of an outdated status quo. It has high ideals and it is grounded in a genuinely progressive and positive social vision, but over the decades it has become less and less suitable as a guide for America’s future. America owes a lot to 4.0; Social Security, civil rights, mass access to higher ed and the list goes on.

But its best days are past. These days, too many “liberals” are baby-loathing bathwater hoarders. A powerful faction of the Democratic Party thinks it’s more important to preserve education bureaucracies and life tenure for bad teachers than to help poor kids get a good education. It is the poor, not the modern equivalent of Tammany Hall, whose interests the enlightened should defend. It is the future, not the past, that a pro-middle class American political movement should serve. It is the inner city entrepreneur, not the political machine we should care about.

There are plenty of people on the liberal Democratic side of politics who understand these realities, and as we’ve observed before especially on the school choice issue we’ve seen something approaching bipartisanship. But there is much more to be done.

Back when the Progressive movement, for all its faults and limits, really did represent the logical path forward for the United States, there were both Republican and Democratic versions of competing progressive visions. Back in the 1950s and 1960s, Republicans and Democrats both embraced some basic aspects of the New Deal state while giving competing ideas about how to administer, develop and restrict that state. Today, unfortunately, too many Democrats are bound to an outdated version of progressive ideology, while too many Republicans have jumped back even farther in time, arguing for a kind of pre-progressive 1890s style laissez-faire.

Matt Yglesias is a smart guy. We hope that his brief encounter with the overbuilt and underperforming reality of American blue governance will inspire the kind of reflection that can help this country develop policies and institutions that work.

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