The Progressive Liberal Synthesis


Gideon Rachmann pushes back a bit on Lula hagiography, but then ends up with a pretty positive assessment:

Yet, for all the inevitable qualifications, Lula will deserve much of the hoopla and praise that surrounds his retirement. He will go down as the president who oversaw two historic transitions.

The first was the completion of Brazil’s embrace of capitalism and globalisation. In his early campaigns for the presidency, Lula had denounced “neoliberalism”. In office, he tackled inflation, paid back debt and fostered the conditions for Brazilian business to thrive internationally. As he noted wryly in a recent FT article: “There is no little irony in the fact that the union leader who once shouted ‘IMF out’ in the streets has become the president who paid off Brazil’s debts to the same institution – and ended up lending it $14bn.”

I would put this point a bit differently. What you see around the world is that policies of economic “neoliberalism”—fiscal discipline, controlled inflation, private ownership of businesses, openness to trade and investment—succeed in producing growth. In principle, this growth can make everyone better off. But what leaders like Lula, or the post-Pinochet leftwing governments of Chile, or Bill Clinton, or the Blair and Brown governments in the UK bring to the table is to actually deliver on that promise through tax and welfare policies that ensure growth is broadly shared. Then on the other side you have things like the center-right governments in Sweden and Denmark (and perhaps the Cameron/Clegg government in the UK) who are succeeding by persuading people that some budget cutting needn’t presage a wholesale gutting of the welfare state.

Either way it’s global movement toward a model in which the government intervenes in the economy primarily through tax-and-transfer functions rather than through planning. Nothing’s perfect in life, but this trend has served the world pretty well and I think both sides of the equation are very much necessary. This progressive liberal synthesis is taking over pretty much everywhere in the democratic world except the United States, where the GOP remains ideologically unreconciled to the welfare state and I keep coming across odd columns urging us to try to emulate the alleged successes of Chinese central planning.