In his big speech on financial regulation, President Obama vacillated between a vigorous defense of free markets and a second position that I described at the time as "a middle ground as a kind of neutral referee between the pro-market types and the socialists, someone who can see the advantages and disadvantages of both approaches." In his press conference today, Mr. Obama did the same thing. At one point, he offered a defense of free markets that sounded like it could have come from Friedrich Hayek, Milton Friedman, or Richard Epstein. Said Mr. Obama: "in fact democracy, respect for property rights, respect -- respect for market-based economies, rule of law -- that all those things can in fact lead to greater prosperity."
Elsewhere in his remarks, responding to questions about private health insurance worries that a "public option" would drive them out of business, Mr. Obama sounded downright skeptical, or at least agnostic, about whether markets work. "If -- if private -- if private insurers say that the marketplace provides the best quality health care; if they tell us that they're offering a good deal, then why is it that the government, which they say can't run anything, suddenly is going to drive them out of business?" Mr. Obama asked. Later, he said, "You know, I take those advocates of the free market to heart when they say that, you know, the free market is innovative and is going to compete on service and is going to compete on, you know, their ability to deliver good care to families. And if that's the case, then this just becomes one more option. If it's not the case, then I think that that's something that the American people should know." In that sentence, Mr. Obama makes it sound like he very much has not made up his mind about whether the free market is innovative and leads to high-quality services.
It's hard to know for sure what to make of these contradictions. One possibility is that they are sincere, and Mr. Obama hasn't really resolved them in his own mind. Another is that they represent competing points of view from different factions within his administration. Another is that Mr. Obama really doesn't believe in the free market but puts the pro-market rhetoric in there to pay lip service to it because he knows a lot of Americans want to hear it. A final possibility is that Mr. Obama is conveying some of the ambivalence about free markets that exists in the American public, which likes the choice and prosperity and freedom of free markets, but has reservations about the risks and inequalities of outcome that go along with such markets.
