The proper relationship between markets and governments in a liberal state is a debatable one. Adam Smith, generally understood to be one of the major progenitors of modern laisezz faire economic-political theory, did not advocate for the absence of the government intervention in economic affairs. Indeed he felt that the state, via law, would be required to create efficient markets because, in the era in which he wrote, professions and financial institutions were dominated by private parties who had not achieved that domination through economic division of labor and competition - the hallmarks of the Smithean classical economic theory. Rather, professions and financial institutions were dominated by guilds and churches, among other groups, who had achieved their economic position not by virtue of serving the economic interests of the community well, but as a side-effect or perk of attaining power in other ways. Smith's economic theory qualifies as liberal not because it advocates minimal government intervention in economic affairs, but because of its egalitarianism: Smith argued that in order to create equal opportunity for individuals pursuing their economic self-interest (which he believed would have the fortuitious effect of creating an overall efficient wealth creating economy), power had to be removed from the special interest groups of his day (the guilds, the churches, etc.) that denied that equal opportunity on grounds that had nothing to do with economic interests (e.g. excluding some people from some sorts of jobs on the grounds of the religion) or with simply shoring up economic self interest that was not being exercised within a system likely to maximize overall wealth creation.
Today, President Obama has signed an executive order creating "a revamped White House office for religion-based and neighborhood programs, expanding an initiative started by the Bush administration that provides government support — and financing — to religious and charitable organizations that deliver social services." (See this New York Times article, also reprinted after the jump in this post for all quotations).
This is precisely the inverse of a Smithean approach to government and the economy. Wholly apart from questions related to the constitutionality of the expanded office and its powers, this inversion must be noted on grounds of its illiberalism. What the expanded office does is to advantage certain groups - faith-based ones - not on grounds of the likelihood of their contributing to efficient wealth production, but on the grounds that the President believes they are "good" and will do "good":
“No matter how much money we invest or how sensibly we design our policies, the change that Americans are looking for will not come from government alone,” Mr. Obama said. “There is a force for good greater than government.”
Whether or not one agrees with President Obama's metaphysics (if by forces for good he is referencing supernatural beings) or his confidence in the beneficence of organized religious groups (including, see article, The Church of Scientiology) has nothing to do with the illiberalism of the government funding religious groups to expand their resources for “to lift up those who have fallen on hard times,” as President Obama put it.
If one of the tasks for our society is to aid those who have fallen on hard times, we have two established, liberal ways to accomplish that task. We can entrust the job to the market, assuming that entrepeneurs will find a way to serve their own economic interest while helping others. Indeed, many mega-churches can be understood as doing just just this: they participate in the supply-and-demand cycle for charitable services, often advantaged by all sorts of tax-exemptions, not just on income but on property owned. Or we can choose to add social safety nets officiated over by civil servants acting directly on behalf of the state.
The Time article notes: "In announcing the expansion of the religion office, Mr. Obama did not settle the biggest question: Can religious groups that receive federal money for social service programs hire only those who share their faith?"
Sometimes a conspicuous lack of an answer tells us more than any answer could. The fact that this question - whether faith-based organizations who receive direct government funding to engage in economic activity may discriminate on the basis in their own hiring practices - has not been giving a resounding no tells us that there is not even aspiration to liberalism in this effort to further meld government and religion in this country. Recall, Smith specifically objected to the negative that churches had on the creation of efficient provision of goods and services because churches imposed noneconomically relevant criteria who could participate in the provision of those goods and services. President Obama's new office flies in the face of this point.
Perhaps this is why his executive order was signed stealthily, "away from the view of television cameras or an audience"?