In his Friday column David Brooks (TimesSelect) offers an 800-word “Hamiltonian” manifesto. It starts with this typology of current schools of thought:
First, there are the limited government conservatives, who think taxes should be low and the state should be as small as possible. Second, there are the Hamiltonians, who believe in free market capitalism but think government should help people get the tools they need to compete in it.
Third, there are the mainstream liberals, who think government should intervene in small ways throughout the economy to soften the effects of creative destruction. Fourth, there are the populists, who believe the benefits of the global economy are going to the rich and we need to fundamentally rewrite the rules.
So where do I fit in? Obviously, as a Cato Institute libertarian, I can claim membership in the limited government conservative club. Meanwhile, though, in an article for The New Republic, I proposed a “liberaltarian” alliance between pro-market liberals and pragmatic libertarians on the following terms: “On the one hand, restrictions on competition and burdens on private initiative would be lifted to encourage vigorous economic growth and development. At the same time, some of the resulting wealth-creation would be used to improve safety-net policies that help those at the bottom and ameliorate the hardships inflicted by economic change.” So while I’m clearly not a mainstream liberal, I’m at least open to doing business with people of that description.
What I want to do here is assess my Hamiltonian credentials. According to Brooks, “We Hamiltonians disagree with the limited government conservatives because, on its own, the market is failing to supply enough human capital. Despite all the incentives, 30 percent of kids drop out of high school and the college graduation rate has been flat for a generation.”
I accept the main thrust of this Hamiltonian critique of the status quo. The market currently provides big incentives for getting a college degree (the so-called “college wage premium”) — and big disincentives for dropping out of high school (virtually a guarantee of socioeconomic failure). But as I wrote in my book:
For while economic incentives matter, sometimes culture matters more. And many Americans have been raised in a working-class culture that does not sufficiently encourage education or long-term planning. As a result, they lack the skills that are now so highly rewarded — and what is worse, they lack the capacity to develop those skills.
I expanded on this point here:
Today many people do not live as fully as they might. It has always been thus. Formerly, though, the fact was an unavoidable corollary of scarcity: the division of labor was too crude to allow any but a small minority to develop their intellectual capacities. Today the main problem is the comparatively much more tractable problem of cultural lag. The division of labor has now attained such a level of complexity that there are more openings for people with high skills than there are people to fill them. At present, then, the primary obstacle that prevents more people from living better is the persistence of cultures maladapted to current circumstances. Working-class culture has become, to a significant extent, obsolete: it does not raise people to develop the planning, networking, and analytical skills that are the admission ticket to the golden circle. Underclass culture, meanwhile, has been dysfunctional since its inception.
For more about the cultural divide, I recommend reading Annette Lareau.
Brooks and I agree, then, at least on this diagnosis: one of the major challenges facing the country is devising public policies more conducive to a culture of human capital development. But what’s the right prescription?
In his column Brooks endorses a grab bag of nostrums: bigger child tax credits, upping the earned income tax credit and extending it to single men, sending nurse practitioners to assist single-parent families, subsidizing quality preschools, encouraging quality teachers through merit pay and changed certification rules, senior citizen mentor programs, national service, portable pensions and health insurance, an immigration system that better rewards skills, and increased government funding for basic research.
I’m not going to take the time to go through these in detail. Of the lot, expanding the EITC strikes me as the activist measure most likely to do some good (in terms of encouraging labor force participation and thereby combating underclass pathologies). Some of Brooks’s proposals seem like Clintonesque microprograms that are really more about symbolism than actually making a cognizable difference (nurse practitioners, senior citizen mentors). And I’m not at all clear how national service, portable pensions and health insurance, and more basic research funding — regardless of what I think of them on their own merits (I’m against, for, and undecided, respectively) — are supposed to encourage poor and working-class young people to develop marketable skills.
The data suggest that early, intensive, and sustained intervention in kids’ lives is necessary to make any kind of difference. But what makes anyone think that the educational establishment that so egregiously fails to serve poor kids today can take on such an ambitious mission?
Number one on my own human capital agenda would be something missing from Brooks’s list: expanding educational competition any way you can (tax credits, vouchers, fewer regulatory obstacles for home schooling and charter schools, per-student funding). I don’t see how you can be serious about upgrading human capital without taking on the fundamental systemic flaw in the current educational system.
Put me down, then, as someone who supports libertarian means for Hamiltonian ends.
I’ll be the first to admit, though, that educational reform is no silver bullet. Cultural pluralism is and will be an unavoidable fact of American life. This is especially true given the large inflows of low-skilled immigrants from Mexico and Central America — and neither Brooks nor I favor Canute-like measures to sweep back that tide.
On this important and divisive issue, then, both Brooks and I agree that libertarian ends trump Hamiltonian ones.