Home > economics, politics, regulation > Reconciling Free Markets and the Welfare State

Reconciling Free Markets and the Welfare State

A proponent of both free markets and a robust welfare state, E.D. Kain explains his self described ‘market liberalism’:

Either way, my advocacy for the working classes is part and parcel with my advocacy for free trade, globalism, and the importance of economic liberalism generally. My belief in a robust welfare state in no way reflects a distaste for commerce. These things work together in the real world, not at odds.

[…]

[M]arket liberalism as I see it is an acceptance that there are roles for both the free market and for government in our society, and that these roles are best kept as separate as possible to avoid cronyism.

As I’ve said before, I think access to universal healthcare would give both businesses and workers a great deal more flexibility and competitiveness globally; public education helps create an educated workforce and is worthy of the tax dollar investment it requires. The public and private sector works together in this way, not through elaborate faux-privatization schemes.

Markets and entrepreneurial capitalism aren’t the problem. When we look at Occupy Wall Street we should see it as a reaction to a failure of policy. But that failure is not merely a failure to “let markets work” either. Government has set aside an important role in mitigating the unpleasant side-effects of capitalism. Market failure is key to a functioning market but it inevitably hurts workers. Government has failed to step in to help workers and the middle class. This has led to increased volatility, uncertainty and a demand crisis. In other words, it’s been bad for business.

While we may differ on a few points like public education or what government can do to help the middle class, there’s certainly a lot to like about what Kain is describing here. And I definitely agree that some type of social insurance program is not at odds with free markets (see Denmark and Sweden).

Image via flickr user jpellgen

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