Wisconsin Policy Lab

August 20, 2012

by Chidem Kurdas

Paul Ryan is said to be influenced by Milton Friedman, Friedrich von Hayek and Ayn Rand. One might add that as the representative for Wisconsin’s first congressional district, he is from a state that has often been in the vanguard of policy thinking. That he came up with specific proposals for Medicare and the federal budget – unusual for a Republic politician, as David Wessel pointed out in the WSJ – updates a Wisconsin custom going back to the early days of the last century.

This year, before Mitt Romney named Mr. Ryan his running mate, Wisconsin was in the national news as governor Scott Walker successfully fought a recall measure  orchestrated by unions opposed to his effort to contain the growth in state and local spending.

In that matter, the state is in the forefront of the movement for limiting government sprawl. In the early 20th century, it was in the forefront of the movement for government expansion, in particular in regulatory powers and specific programs. At the time, there was a group of institutionalist economists at the University of Wisconsin, notably John Commons, who advised Wisconsin’s populist politicians Robert La Follette and Philip La Follette.

They pioneered social policies such as workers’ compensation in 1911, designed by Commons. He developed a civil service code, public utility rules and a minimum wage act. The programs and regulations he created became models for other states and some of his students went on to shape federal programs.

Commons was an exceptionally thoughtful social scientist whose interest was to apply abstract ideas to practical rule making. He recognized that policies often do not work the way they are supposed to. However, he expected policy errors to be corrected through trial-and-error experimentation. Wisconsin was truly his laboratory.

Observing new developments after he retired, Commons recognized more fully the pitfalls of the regulatory state, in particular the corruption in politics, and wondered whether he had been wrong all along. Bad policies might serve certain interests and not be reversible. He had helped spur interventionism, unfortunately realizing only too late the worst dangers thereof.

Mr. Ryan is a leader of the movement to turn back what has become a monstrous growth of interventionism, with all the problems that Commons came to fear in his old age.

The Ryan budget blueprint is receiving a lot of flack—notably from David Stockman, Ronald Reagan’s controversial budget director in the early 1980s. Recently Mr. Stockman argued in a New York Times op-ed piece that the “earnest congressman from Wisconsin is preaching the same empty conservative sermon.”

In fact some of Mr. Ryan’s policy proposals, such as vouchers for Medicare, are best seen as experimental, in that their full effects are unknown.

If Commons were around, he would likely no longer advocate the past century’s expansionist trajectory. He might instead seek ways to restrain government growth. The only way to do so is through thoughtful new measures, whether or not any of the particular measures suggested by Mr. Ryan come to pass.

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