Guaranteeing people a decent retirement and decent health care does more than smooth out the rough edges of capitalism. Those guarantees give people the freedom to take risks. If you know that professional failure won’t leave you penniless and won’t prevent your child from receiving needed medical care, you can leave the comfort of a large corporation and take a chance on your own idea. You can take a shot at becoming the next great American entrepreneur.
The government of Ireland can run out of Euros—they make Euros in Frankfurt. And the government of Peru can run out of dollars—they make dollars in Washington. But the government of the United States can’t run out of dollars. The problem we could find ourselves with is the problem of inflation. Problematic inflation is a genuinely problematic thing, but it’s a strange thing to worry about at the moment when inflation’s been running unusually low for years. Our current problem is that the total volume of nominal spending is way too low, which means that as a country we’re producing much less than we could be.
You have people here who enjoy their existing low density lifestyles, they like the fact that said lifestyles are explicitly and implicitly subsidized through a variety of public policy measures, and they don’t like the idea of losing those subsidies. What’s more, they regard their antagonists as somewhat culturally alien. So they’re pissed off. The fact that a small government approach to land use would in fact lead to denser lifestyles, more bus commuting, and smaller homes is of absolutely zero interest to them.
Fundamentally, I think Fannie and Freddie as they existed pre-crisis represented a bad implementation of the bad idea that government policy should promote the construction of large single-family owner-occupied housing. But the concept of pro-suburbanization industrial policy seems very broadly supported in American politics.
Good point. Much of this boils down to an American love of cars and the hatred of mass transit. Cities don’t make sense without buses and trains. If you start there then the only policy than can support that is suburban sprawl.