After more than a year of mediation and ugly public fights, Detroit is emerging from bankruptcy. Thanks to an extraordinary set of judicial proceedings and decisions, the city has restructured its unfunded pension liabilities, settled with its bondholders, and fixed its water authority. It has even managed to save its art museum. Despite its many peculiar circumstances, as the first great American city to declare bankruptcy, Detroit has much to teach other municipalities now struggling after decades of poor management.
The European-style welfare state has never quite fit with the American ethos. But something has changed over the last half-century, and today, despite the country's being wealthier than ever, more Americans than ever before are seeking out and accepting means-tested entitlement benefits. Of the many problems with America's welfare state, perhaps the most pernicious is the damage it is doing to the national character.
Not only establishment Republicans but also many well-meaning conservative reformers have at times viewed the Tea Party as tactically misguided, if not strategically counterproductive or lacking a governing vision. But these views demonstrate a reluctance to disrupt the status quo in Republican politics that can hardly serve the cause of shaking up the party's stale agenda. The changes reformers are after will be impossible without the kinds of confrontations that Tea Party activists and politicians are working to bring about.
The Federal Reserve's independence and its insulation from partisan politics has always been a great strength of our economic system. But Fed Chair Janet Yellen is jeopardizing that independence through her efforts to embrace a "macroprudential" approach to supervising the economy. By seeking a new, expanded regulatory role for the Fed, Yellen risks morphing the central bank into a central regulator — an essentially political institution that must be, and will be, accountable to elected officials.
Women’s work-force participation rates have been falling for the past decade and a half, and are now lower than they have been since the late 1980s. Some women are choosing to stay at home, of course, particularly to care for children. But many are forced to the sidelines by economic circumstances — from higher effective tax rates to lower wages, rising child-care costs, and a weak economy — that are undermining the rewards for women’s work. Rather than accept the left’s definition of "women’s issues," conservatives need to see that they are well positioned to offer these women relief, and a more promising path to economic opportunity.
Pharmaceutical companies are popular villains in our health-care debates, and the high costs of breakthrough drugs are often condemned as immoral profiteering. But calls for price controls ignore the real drivers of cost inflation in drugs, and such controls would only discourage the innovation crucial to the progress of medicine. Instead of punishing drug companies, policymakers should work to break regulatory bottlenecks and make the process of getting life-saving new treatments to market faster and easier.
Contrary to popular belief, taxpayers are not providing all public-school teachers with extravagant retirement pensions. Instead, the current pension systems take advantage of high teacher-attrition rates, and do not start rewarding teachers with retirement benefits until decades into their careers, when they suddenly start earning benefits very quickly. This leaves teachers who change jobs bereft of a meaningful retirement benefit, and so these systems are very poorly suited to today's highly mobile work force. Modernizing teacher pensions could help districts attract better teachers without increasing costs.
In their focus on helping the middle class pay for college, policymakers have failed to watch out for poor students, undermining federal programs for low-income students while greatly expanding those for wealthier families. To make matters worse, lawmakers have attempted to dismantle for-profit colleges which, though far from perfect, cater to the needs of low-income students. It's time we refocused our attention on the needs of the poorest students.
Taxpayer-funded vouchers have helped thousands of families escape failing public schools, but their structure limits their ability to create the kind of education market system that Milton Friedman advocated at the birth of the school-choice movement. Education savings accounts can give families access to the precise educational opportunities that are best for them, while creating a real market for education and avoiding the constitutional pitfalls that have plagued voucher programs.
Our market democracy pushes us toward uniformity — as citizens and consumers — and threatens to suffocate our individuality. How can we be free under such circumstances? Conservatives in particular have sought in vain for answers to this quandary in pedantic lectures about the need for virtue or in commitments to a variety of philosophical abstractions. They would do better to recover the personal in politics by reinforcing the personal in non-political human relationships — by building habits of liberty through the practice of the art of friendship.