The End of the Blue Social Model

Over at The American Interest, Walter Russell Mead, Professor of Foreign Affairs and Humanities at Bard College, has been writing a series on the collapse of the blue state social model.  The excerpt below gives a flavor for his thesis and explains why the crisis is arriving first at the state, rather than the federal level.  The essays critique current Democratic and Republican ways of thinking about this crisis (see, for instance, As Blue Dies, What Happens to the Jobs?) and Mead notes that the solutions are coming across party lines, with some of the most radical rethinking happening in blue states like Rhode Island along with states like Wisconsin.  Even in New York, Gov. Cuomo has been taking steps that would have been unthinkable (and were not taken by the last Republican governor).  Other states, like California and Connecticut, continue living in their fantasy worlds.  But what can't go on, won't go on - the only question is how will it end? 

Finally, culturally and intellectually, bureaucrats and politicians often remain blue. Despite the ebbing of the blue private sector, they think instinctively in the old ways, come up with blue solutions to non-blue problems (think the Obama Administration’s approach to health care costs), and often fail to grasp either the constraints or the opportunities of the new era.

As long as the Federal government can print money and find lenders to buy its bonds, it can bleed slowly. It can watch its fiscal position erode gradually, and only gradually become less effective and popular. But state and local governments increasingly need vast transfers of cash from the Federal government to keep their blue noses above the rising tide. The stock market declines after September 2008 wiped out huge chunks of the wealth that state pension systems needed to have even a hope of paying the pensions promised to government retirees under terms more generous than virtually any private employers now provide. California and New York are headed over the cliff without Federal bailouts, and others are following close behind. That is why a substantial share of the Obama Administration “stimulus” spending was targeted less at New Deal-era infrastructure projects than at simply keeping unsustainable state bureaucracies and systems afloat for a few months or years longer.

There are several ugly truths that the country (and especially those states whose governments are bigger and bluer than the rest) must soon face. One concerns taxes. The debate today at the elite level is about whether the rich should pay more. Given the historic lows of marginal and capital gains tax rates, this is a debate of consequence for reasons having to do with fairness. But it distracts attention from a more fundamental political reality: Voters simply will not be taxed to cover the costs of blue government, and in most cases they will vote out of office anyone who suggests otherwise.² That, at base, is what the Tea Party movement is all about. Voters with insecure job tenure and, at best, defined-contribution rather than defined-benefit pensions simply refuse to pay higher taxes so that bureaucrats can enjoy lifetime tenure and secure pensions.

The entire series is worth reading.  Here are the most recent entries:

As Blue Dies, What Happens To the Jobs? Part One

Obama Nails His Blue Colors to the Mast

Maryland Takes On Big Blue

Latest Casualty in the War on Arithmetic: Public Pensions

But you should probably start with this one:

The Crisis of the American Intellectual