Call it the golden mean or the vital center, Mother Jones blogger Kevin Drum is for it with regard to economic systems. Drum contended in a Tuesday post that “the mixed economy is the only way to run a modern country” since the other choices, a “pure free market” and “socialism,” have unacceptable consequences.
One major shortcoming of the free market, Drum commented, is that it tends to yield negative externalities. (A negative externality is “a cost that is suffered by a third party as a result of an economic transaction” -- italics in original.) Environmental pollution is an oft-cited negative externality, and Drum, who has a longstanding interest in the behavioral impact of emissions from vehicles that used leaded gasoline, has written that “gasoline lead is responsible for a good share of the rise and fall of violent crime over the past half century.”
“It was government regulation, in response to research results that were largely government-funded, that got rid of lead in gasoline,” stated Drum. “That's the mixed economy at work: private buyers and sellers created the basic market, with the government stepping in to regulate it for the common good. The result is better than a pure free market (which produces lead-poisoned kids) and better than socialism (which likely produces shortages of gasoline)…But beginning in the 1980s, American conservatism took a turn away from paying even lip service to the mixed economy.”
From Drum’s post (bolding added):
Private actors had no particular reason to remove lead from gasoline, and market forces alone probably would never have eliminated it. It was government regulation, in response to research results that were largely government-funded, that got rid of lead in gasoline. That's the mixed economy at work: private buyers and sellers created the basic market, with the government stepping in to regulate it for the common good. The result is better than a pure free market (which produces lead-poisoned kids) and better than socialism (which likely produces shortages of gasoline). For most of the 20th century, the mixed economy was a pillar of all advanced economies, including ours.
But beginning in the 1980s, American conservatism took a turn away from paying even lip service to the mixed economy. [Conservatives argued that] the less that government was involved in the economy, the faster the country would grow, benefiting everyone.
Everyone who gets rich from an untrammeled economy, anyway. The rest of us get lead in our gasoline, pathogens in our food, the most expensive health care in the world, and a financial system so imperious that it can produce an economic collapse and then demand that it get bailed out…
…In the United States, it wasn't until the Robber Baron era of the late 19th century that underregulation became a serious issue. The backlash against the Morgans and the Rockefellers eventually produced the modern mixed economy, which served the country well for the rest of the century. But now…a lot of Americans have forgotten both the bad old days and the government actions that made them better. All that's left is a seething anger—stoked by a modern GOP dedicated to corporations and the rich—toward jack-booted government bureaucrats who prevent the economy from taking flight. Get rid of the regulators, and all will be well again.
That might be true if we could also return to the America of the 1830s. But we can't. The United States is bigger, more complex, and far more technologically advanced than it was two centuries ago, and there's simply no plausible counterweight to powerful corporate rent-seekers other than government regulation. Like it or not, the mixed economy is the only way to run a modern country.
