What Is Government For? A Reading List for a More Democratic Economic Vision

The Right has some big ideas about small government. For decades, conservative forces have shrunk federal authority and constrained the government’s ability to govern—tilting society’s power balance toward corporations that prioritize profits, not people. This year’s Supreme Court rulings—such as the reversal of the Chevron precedent—have accelerated this trend, gutting regulatory power by limiting federal agencies and the executive branch’s ability to enforce rules that protect the public. At the same time, those “limited-government” conservatives have sought to consolidate more and more power within the presidency—exemplified by another recent ruling that shields presidents from prosecution over acts related to their core powers. These efforts may seem contradictory at first, but both ultimately serve the Right’s vision for society. That’s because conservative governing ideology is not just about whether the government is “big” or “small”—it’s about what the government does, how it does it, and why it should do it. 

It’s imperative that the Left’s governing framework also lays out a thoughtful and expansive view that addresses those questions. That long-term thinking about how to remake society has been at the core of the Roosevelt Institute’s latest research, examining the goals of current state involvement in the economy; what else the state can do, particularly with industrial strategy; and what we need to change about the state—both its capacities and its purposes—to achieve it.

As the state increasingly chooses to intervene on behalf of the public instead of the private sector, it’s worth reiterating what the government is for. These papers aim to do just that, and demonstrate how doing so will allow us to harness the resurgence of industrial policy to create a high-care, low-carbon democratic economy. 

Low-Carbon Building, High-Care Service

A paradigm shift is underway: The government is eschewing decades of conventional wisdom saying markets should handle societal needs and is now publicly embracing the use of industrial policy—as it’s long done for fossil fuel and military objectives—in sectors in which it traditionally hasn’t applied the tool. The star example of this approach is the Inflation Reduction Act (IRA), which directs public resources toward supercharging the renewable energy industry. By attacking this issue through the tool of industrial strategy—public investment in industries that serve public interests—the IRA asserts that renewable energy is critical infrastructure, and that it’s the government’s role to foster that infrastructure. 

In a recent report, Roosevelt Fellow Kate Aronoff lays out a plan for flexing and strengthening state power to achieve another, related objective: winding down fossil fuel production. “If [the goal of green industrial policy] is simply to build out domestic supply chains for low-carbon energy technologies, then there is no contradiction between green industrial policy and industrial policies that back an ever-expanding fossil fuel sector,” Aronoff writes. “But if the goal is to reduce emissions and transition to a fundamentally different energy system—rather than to simply diversify US energy production and consumption—then these two bodies of policy must be reconciled into a unified industrial strategy.” Articulating why the government should coordinate its resources to shore up renewable energy production—to address the climate crisis and its economic risks—leads us to understand why the state must also implement fossil fuel restrictions as it deploys renewable energy.

If we think even bigger, then industrial strategy isn’t limited to the “low-carbon” half of a high-care, low-carbon economy. We want the state to step in where markets are failing to create supply or meet demand for public needs efficiently—such as in the green energy sector, where high upfront costs deter private companies from taking the risk of investing. In a recent brief, Roosevelt’s Suzanne Kahn creates an industrial strategy agenda for another key market in which unfettered capitalism is failing to provide what society needs: the care economy, made up of childcare workers, home health aides, and others who provide services to society’s most vulnerable people. A childcare shortage “drives up prices beyond what many families can afford, even as wages remain too low in the industry to attract more providers into it,” Kahn writes. “The market fails to solve this problem because the people who need childcare cannot afford to finance an adequate system on their own.” That’s where the government could step in, establishing guardrails to ensure high-quality care and equitable markets, and choosing from a vast policy tool kit: increasing funding, leveraging Medicaid and Medicare, regulating private insurance, and even considering public provision. To be clear, government support of the childcare sector should look different from state support of renewable energy—they are similar but distinct dilemmas, and “policymakers must understand which tools make sense for which market failures,” writes Kahn.  

Strengthening Effective Governance

What both high-care and low-carbon efforts have in common is that they can’t happen without effective state capacity—the very thing conservatives are trying to demolish. In a report released earlier this year, Roosevelt author and law professor K. Sabeel Rahman argues that if the state is to invest in clean energy, infrastructure, and service delivery, it must optimize the institutions that are responsible for developing, implementing, and ensuring these efforts succeed. “The very idea of industrial policy depends on and presupposes state capacity—on the ability of state actors to generate financing and tax revenues, which in turn can be channeled into investments in industries or safety net programs,” Rahman writes. 

These goals aren’t possible without some level of public investment. In a recent brief, Roosevelt Fellow David Stein traces the gradual political takeover in the latter half of the 20th century by deficit hawks, whose objectives were about “reordering governmental priorities” to “[constrain] the ambitions and achievements of the public sector.” The austerity mindset that they championed sustained the belief that “the most important thing policymakers could do is not to provide for the public, but to satisfy private investors.” But as the paradigm shifts, if we agree that the purpose of government is not to bloat corporations but to nourish the public, then the state must prioritize peoples’ lives and futures, and invest in them. “Despite our decades-long obsession with governmental spending and frugality,” Rahman echoes, “the reality is that effective program design and implementation require some degree of expenditure on the state itself.”

Just as the Right seeks to fundamentally change governing and not just to shrink government, the Left’s aim of enriching state capacity will, perhaps paradoxically, “require the dismantling of some state capacities,” Rahman argues. These include functions of the state that are “fundamentally in tension with deeper ideals of democracy and equity,” Rahman writes, like investing in “institutions of mass incarceration” and “racialized surveillance of immigrant communities.”

State capacity is about not just what the government can do—an important question for evaluating and optimizing resources, staff, and procedures—but what the government should do. “As a democracy, we ultimately deserve a state with the capacity to empower, protect, and respond—rather than to exclude, dominate, and extract,” writes Rahman.

Which brings us back to the question the Left must center in its political-economic vision: What is government for? It could be to foster innovation among competitive firms, or to allow a small number of corporate shareholders to consolidate immense power over both markets and society. It could be to create shared prosperity for workers, or to leave their health, rights, and dignity at the mercy of their employers. It could be to sustain livelihoods, or to wage endless wars. With this clarity, we can optimize state capacity not just for more governance, but for better governance.

Roosevelt Reading List