How the Left and Right Can Unite to Restore Opportunity in America
The scandals erupting in Minnesota offer another example of how easy it is for generous U.S. welfare programs to squander billions of dollars. And while it’s important to hold accountable the individuals who figured out how to scam the system, until the system itself is changed, for every billion-dollar fraud that is uncovered, others will take their place. An endless game of whack-a-mole will continue.
However, the system can be changed, and in doing so, it will replace incentives toward corruption with incentives that reward enterprise and hard work.
America’s welfare system is justified by a moral appeal to compassion, and today that is expressed politically as social democracy, a pair of words that sound uplifting and selfless. The problem with social democracy, however, is that the incentives that fuel its application are not selfless. Across the world and throughout history, the results of too much “social democracy” are the same: people are not uplifted, the goals of compassion remain unfulfilled, and as millions of people descend into poverty and dependence, a handful of elites are enriched and empowered.
What is growing in America, from Mamdani’s New York City to Karen Bass’s City of Los Angeles, is a variant of social democracy that hasn’t yet managed to destroy the American economy and demolish the American middle class, but they’re well on their way. As Cea Weaver, Mamdani’s appointee to head the Mayor’s Office to Protect Tenants, recently said, “We’ll transition from treating property as an individual good to a collective good. Whites especially will be impacted.” How does that end well?
But is there a variant of social democracy that can uplift society?
In a recent article published by UnHerd, “Can social democracy save capitalism—again?,” author Joel Kotkin argues that “Capitalism can only be saved by addressing issues like housing affordability, lack of upward mobility, and a dearth of good jobs. In doing so, the forgotten midcentury model known as social democracy offers a promising blueprint.”
Kotkin is referring to the “New Deal Tradition” in the United States, a definition in which he broadens its scope to include not only the massive public works projects initiated by President Roosevelt in the 1930s but also the post-WWII wave of projects in the 1950s and 1960s.
In the 1930s, these projects included dams, reservoirs, aqueducts, highways, bridges, and rural electrification. In the 1950s and ’60s, added to that list was the interstate highway system, along with more dams, reservoirs, aqueducts, highways, bridges, and so on. But these projects delivered something that has been deprioritized, if not altogether forgotten, by today’s social democrats: they gave to all Americans economic dividends that have lasted for generations.
Government funding of practical civil engineering projects that are too big for the private sector to finance on its own is something that libertarians may deride as “social democracy,” but they are basing this on principle instead of recognizing the obvious benefits that accrue to public works projects when they are chosen for the right reasons. This should be clear when we contrast these civil engineering projects with the other side of social democracy—welfare in all its forms.
Kotkin argues that America’s limited embrace of social democracy starting in the 1930s was a choice that saved capitalism. The creation of Social Security and the legal recognition of labor organizing, as he puts it, “were intended to mitigate socially destabilizing inequality and thus served to ultimately preserve the enterprise system.” His point is that modest redistribution of wealth while preserving the capitalist system will create the stability required to increase overall economic growth. According to this theory, capitalists create more wealth in this stabilized system than they lose through the higher taxes that are used to stabilize it.
The complexity of this worldview is evidently too much for many libertarians and conservatives, who, as Kotkin puts it, believe that “the predominant conservative response to capitalism’s crises is to offer free-market bromides.” He’s right, adding, “Chanting mantras from Adam Smith or Ronald Reagan won’t save capitalism from the leftist tide.”
The problem with social democracy, however, is that its more effective variant, as evidenced by practical public works, a modest social welfare safety net, and reasonable but limited rights for labor organizations, has been completely overwhelmed in our era by corruption. It started with the expansion of welfare benefits in the 1960s, which turned fathers into economic liabilities and provided free housing projects that further destroyed incentives to work and be productive. Welfare became more lucrative than work, undermining the character of generations.
And into this loophole poured every special interest imaginable, creating a destructive and self-perpetuating negative spiral. Politically connected corporations that embodied the worst elements of crony capitalism joined with public sector bureaucracies, tax-sheltered “nonprofits,” and both public and private labor unions to feed on the programs ostensibly designed to help the less fortunate.
This is the version of “social democracy” that dominates American politics today. It is a cesspool of corruption, incentivized to seek power and profit through endless expansion of government. To the overarching theme of compassion, it has appended the moral imperatives to prevent racism through DEI initiatives and reparations, and to protect the planet by restricting private and public sector investment in practical infrastructure. In practice, now more than ever, all of this moral posturing is a grotesque facade.
Social democracy in America has devolved into a tax-subsidized public/private industrial complex that grows in direct proportion to the degree to which ordinary Americans are unable to pay for basic necessities. The layers of mutually reinforcing negative feedback loops are daunting:
If basic maintenance and upgrades to publicly held physical infrastructure are neglected, and private investment in practical solutions is restricted, the basic foundations of a healthy and affordable economy—energy, water, and transportation—become scarce, expensive, and inadequate.
Instead of creating jobs and a lower cost of living by continuing policies that in the 1930s, ’50s, and ’60s stimulated economic growth by creating jobs and constructing public assets that lowered the cost of doing business, stimulated competition, and made products and services more affordable to every working household, social democrats and their crony capitalist allies use that money to provide government benefits and services to households that were driven into insolvency by the very policies they enacted.
This negative reinforcement loop has accelerated in recent years. The federal budget ten years ago was $3.7 trillion, and for fiscal year 2025-2026 it has nearly doubled to 7.0 trillion. In California, firmly under the political control of social democrats, the state’s General Fund was $115 billion ten years ago and has jumped to $228 billion today.
Unwinding this corruption before it completely destroys America’s solvency and social stability will not be easy. But the solution requires a combination of approaches that recognize the potential of so-called mixed capitalism, something that violates the principles of both sides of the ideological divide between social democrats and libertarians.
On one hand, the government has to return to funding public works that have practical value. Build water supply infrastructure. Invest in seaport modernization. Upgrading existing interstate freeways and railroads instead of blowing through billions on a high-speed rail scheme that hardly anyone will ride and will never make a profit. Libertarians will oppose these policies.
On the other hand, the government has to engage in sweeping deregulation of industry. This will make a far higher percentage of investments in useful infrastructure viable for the private sector and it will compel more competition among private sector corporations. Take away restrictions on land development, mineral extraction, drilling and refining oil and natural gas, timber harvests, and home construction. Progressives will oppose these policies.
But despite violating left- and right-wing dogma, taking both of these steps will lower prices for everything. It will create jobs in productive industries that will produce assets that pay long-term economic dividends. It will make it possible not only for millions of Americans taking these new jobs to support their households without government assistance, but also because it will lower the cost of living, and it will lower the minimum household income required for any working family in America to survive without government benefits.
This is the antidote to populist discontent with the system, whether that discontent is coming from the left or the right. It is an antidote that threatens special interests that benefit from the status quo. It is a solution that can unite Americans regardless of their underlying ideologies, because it offers solutions that will restore their dignity and independence.
We can reverse the negative reinforcement spiral where more government causes higher inflation, leading to more government benefits, higher taxes, less independence, and still more government to provide benefits to even more dependent Americans. Through a judicious yet sweeping reprioritizing of government spending to practical infrastructure investments, along with equally dramatic deregulation of the private sector to force it to compete again, the cost of living in America will be lowered at the same time as the quantity of good jobs will increase.
This is the opportunity that defies polarized ideological stereotypes. It transcends the focus on the various abusers of the system and instead modifies the system itself. It offers all Americans a chance to believe again in the rewards of hard work and prefer that choice to ongoing dependency. And it can redirect populist political power, unifying the left and the right against special interests and the system they created.
This article orginally appeared in American Greatness.
Edward Ring is the Director of Water and Energy Policy at the California Policy Center, which he co-founded in 2013. Ring is the author of Fixing California: Abundance, Pragmatism, Optimism (2021) and The Abundance Choice: Our Fight for More Water in California (2022).