I think this Jay Nordlinger item illustrates a pretty profound ideological divide:

Wanted to share a note that made me smile — maybe it will you, too. A reader wrote in response to an item I have in today’s Impromptus about personal wealth and personal politics. He said, “Fifty-five years ago, my New Deal dad said of some of his friends, ‘I never knew a Communist who was good to his maid.’”

Perfect. And it reminded me of an old line, which I learned — and learned the truth of — long ago: “A Marxist is someone who loves humanity in groups of 1 million or more.”

I have no particular interest in defending Communists or people who are rude to their employees. But the interesting thing here is that Nordlinger appears to believe that if you could actually prove that people with left-wing political views are disproportionately likely to be rude to their subordinates that this would in some substantial way debunk left-wing politics.

The point of left-wing politics, however, is not to secure polite treatment of maids as a matter of nobless oblige, it’s to secure justice and equality for the individuals whom fortune has not seen fit to reward with material wealthy. In a society with a relatively egalitarian distribution of wealth and income, after all, there just aren’t going to be very many maids in the first place. What’s more, the people doing the maid jobs will have appealing other labor market opportunities. And even if they lose their job, their families will still have access to decent health care and education while they search for a new one. Consequently, a rudely-treated maid would have the chance to stand up for herself and most likely secure better treatment. Nordlinger’s idea seems to be that as long as most people are mostly treated nicely by those placed above them in the social hierarchy that the objective powerlessness of those at the bottom is irrelevant.

It recalls the notion of “compassion conservatism,” an appeal to the idea that the halves out to toss some scraps to the halve-nots, as opposed to a fight for real social and economic justice.

Guess who said this?:

We have a vision of a different America. It is a vision of an America in which our cars run on electricity; high speed trains whisk us from North to South in less time than it takes to get across greater New York; we produce much more but use much less energy to do it; our power suppliers no longer depend to any great extent on imported oil and gas; our homes require less energy, produce far more of their own energy and are heated by gas we produce from our own agricultural and domestic waste.

It is a vision of a United States which leads the world in new green technologies. Secured against interruptions of supply and volatile prices, our industry can plan for growth. Our national security is guaranteed, regardless of decisions by volatile governments elsewhere to close pipelines or restrict supply. It is a decentralized vision rather than one in which all decisions about our energy future are vested in the government. Through it we play our full part in protecting our planet against the effects of man-made climate change.

Well, nobody said it. Instead I changed the words “Britain” and “centralised” to “America” and “centralized.” But it comes from the UK Conservative Party’s low-carbon economy white paper.

I mention this because David Brooks has a pretty good column urging Republicans to learn from David Cameron that, disappointingly, doesn’t mention anything about climate and energy issues. But if you want to make the point that at the moment European center-right parties are both much more politically successful than the GOP and also much more substantively sensible, then climate and energy is probably the topic where you’ll find the biggest contrast. After all, it’s not just that the Conservatives’ climate and energy issues page looks very different from the Republican one—the Republicans don’t have one at all.

One issue in health reform that’s gotten very little attention outside of Greg Mankiw’s blog is that the phase-out of the subsidies for low income people is going to have an impact on their incentives that’s similar to a high marginal tax rate:

According to CBO, a family of four making $54,000 would pay $4,800 for health insurance. The rest of the premium would come from government subsidies. If the family’s income rises to $66,000, the subsidy falls, and the cost of health insurance rises to $7,600. In other words, earning an additional $12,000 requires the family to pay an additional $2,800.

I think the best way to think about this (I sort of doubt Mankiw agrees) is as an illustration of the economic cost borne by U.S. political culture’s extreme aversion to taxation. Americans “know” that high taxes are bad for the economy, but this belief doesn’t really lead them to reject the idea of public responsibility to ensure the provision of certain kinds of services. Instead it often leads politicians to embrace ways of doing things that are much less economically efficient than high taxes would be.

In a socialist dystopia like Sweden, when the decision is made that everyone should have access to a certain level of health care services what happens is that the government pays for everyone to get those services. Compared to a complicated mix of mandates and subsidies, this leads to higher taxes. But it can lead to much less in the way of tax-related economic distortions. What’s more, it makes the tax situation much more transparent to policymakers and analysts. I’m pretty sure that nobody on the Finance Committee intends to create the particular set of weird implicit marginal tax rates that are now going to exist for the near-poor. But a number of the members probably don’t quite see what they’re doing. If they were just straightforwardly sitting down to write a tax law, by contrast, everyone could see what was happening.

It really does seem like if even Alan Greenspan is coming around to the view that we shouldn’t allow financial institutions to grow to such enormous sizes that we really shouldn’t allow financial institutions to grow to such enormous sizes. What’s a lot less clear to me is what you can actually do, in practical terms, moving forward. Now if only someone like Alan Greenspan had been voicing these concerns back in the 1990s it would have been easy enough for regulators (like, you know, Alan Greenspan) to deny regulatory approval to the kind of mergers that gave us the superbanks of today. But while regulators can prevent big firms from merging and becoming super-big, I’m pretty sure they can’t just order Bank of America to unmerge itself.

This, I think, is one of the main reasons you hear more about breaking banks up from people talking to newspapers than you do from policymakers. What, exactly, are Ben Bernanke and Tim Geithner supposed to do at this point?

Which is why, I think, the idea of enhanced capital ratios and special fees is actually a pretty good idea. Greenspan says “I don’t think merely raising the fees or capital on large institutions or taxing them is enough.” He thinks we need to actually break them up. But raising fees and capital requirements can be a way of doing this. The point would be to make the fees and requirements onerous enough that the managers of large financial institutions find it worthwhile to start finding ways to spin things off and shrink. That would produce the goal of smaller firms without having the Treasury Secretary personally step in and reorganize the commanding heights of the economy. The test is that if the fees are imposed and banks don’t start doing this, you need to come back and raise the fees. The fees need to be high enough to generate substantial fee-avoiding behavior, you can’t just say “well, we’ve got some extra revenue so it’s all good.”