Tuesday, June 2, 2015

Unhinged from Reality, Part II: Republicans Cling to Progressive Views of War and Economics

In my recent post on how Democrats are unhinged from reality, I stuck with economics, since that party had adopted a full-blown share-the-wealth populism that, when applied before, always ends in social and economic disaster. Their rhetoric is one of "unity," but the reality of their policies is to enrich the politically-connected at the expense of everyone else. Of course, their policies never are to blame. Ask them.

On the other side of the Congressional aisle are the Republicans. You know, the Republicans, the party of fiscal discipline, the party of "peace through strength," and the party of low taxes, sound money, free trade, and small government. Yeah, that party.

Readers might be surprised to know (but, then again, maybe not) that the Republicans historically were not the party of low taxes, sound money, free trade, or even small government. Indeed, Republicans in the 19th and early 20th centuries were the original Progressives, only to have the Democrats out-Republican them with the presidential candidacy of William Jennings Bryan in 1896, who ran on a platform of inflation.

Economist Robert Ekelund (who was one of my professors when I pursued graduate studies at Auburn University 20 years ago) has laid out the original Republican policies that paved the way for a lot of the economic and social problems that damage our society even now. One even could say that the two parties pretty much switched roles, with Democrats going whole hog with Progressivism post-Bryan with the election of Woodrow Wilson in 1912, although by 1900, both parties had pretty much embraced the Progressivism that redefined the United States from being a constitutional republic to what it is today: a Progressive democracy.

Enough with the history. Instead, we need to take a hard look at the more recent Republican policies and ask ourselves if they are based in reality or fantasy. I believe it is the latter.

"Small Government" that Spies on Citizens and Imprisons Millions

Republicans are fond of claiming they favor "small government" while Democrats demand "big government." They are half-correct; Democrats really do believe that we need a government that controls every aspect of our lives -- except the decision of whether or not to have an abortion, and government should make all abortions free and encourage them.

Yet, how do Republicans favor "big government"? Let me count the ways:

1. They want near-permanent expansion of the armed forces, and have endorsed the invasion of country after country by U.S. troops (not to mention air strikes);
2. During the Bush presidency, when Republicans controlled the White House and Congress, government spending (and borrowing) grew rapidly, despite the "fiscal conservatism" campaign rhetoric Republicans are fond of giving us;
3. During the Bush years, the surveillance state grew rapidly and, frankly, out-of-control. Ordinary Americans came to find that the Bill of Rights no longer applied to them -- if it ever did;
4. Governmental power continued its march of being concentrated in Washington;
5. Instead of calling the "Clinton Prosperity" what it was -- a huge financial bubble -- the Bush administration immediately pushed artificially low interest rates and moved the economy into the even-more-disastrous housing bubble. It was the monetary version of "big government."

Republicans always seem to promise a return to the governance of Dwight Eisenhower while, in reality, emulating Teddy Roosevelt, but without the charm. One reason is that much of the party's leadership has been turned over to the Neoconservatives, with the first generation of that group being former Trotskyites (I kid you not, real-live Trotskyites) that pushed the Welfare State at home and the Warfare State abroad. The current generation of Neoconservatives like Sen. John McCain, Lindsey Graham, William Kristol, Charles Krauthammer, and the editorial page of the Wall Street Journal gives a cursory nod toward Rule of Law and free markets, but spend most of their time encouraging warfare abroad, prison nation at home, and, of course, torture.

I'm hardly the first person to say this, but it does seem ironic that while preaching the "small government" message, Republicans have been the force behind the growth of the surveillance state, ostensibly in response to the 911 attacks, and nothing says "big government" more than a state that is obsessed with every action of every citizen. (The recent successful attempt by Sen. Rand Paul to at least slow the surveillance machine has put him in hot water with the Senate Republicans, further demonstrating that the GOP is about advancing state power, not protecting the rights of the people.)

Once upon a time, Republicans (or at least the Robert Taft branch of the Republican Party) understood how war not only is destructive abroad but also at home. Today, the Republicans see themselves that being the "tough guys" that "kick ass" overseas in order to spread a version of "American Exceptionalism" that perhaps many of us would rather not see. That eternal wars abroad require "big government" at home seems to have slipped past Republicans who still use the "Democrats support big government, but we Republicans like small government" campaign slogan without even realizing that Republicans favor big, abusive government as much or more than their political counterparts.

It is one thing to defend our shores; it is quite another to send an army thousands of miles away to attack people who did not wish to be at war with us and who were no threat to us, our families, and our way of life. Even today, most Republicans cannot comprehend how unjust the Iraq and Afghanistan wars really were and how they created vast destruction of the way of life for many people, and how the instability that came about as a result of those wars ultimately led to the creation of ISIS.

Interestingly, the views of Republicans today in the area of war and foreign policy mirror those of the Progressives of a century ago, including Walter Lippman and Herbert Croly. Croly, who was ecstatic over the U.S. entry into World War I, believed that it was up to the USA to spread Progressive values abroad, and if military intervention was the vehicle, then so be it.

But what about the "Big Tent" that Republicans claim to have regarding their party? Well, Walter Jones of North Carolina regularly votes for the "small government" legislation that the GOP brass claims to favor, and he definitely campaigns against "big government." However, as the National Journal has reported, the party leadership is trying once again to unseat Jones in a primary just as the party used to do regularly with Ron Paul.

Like Paul, however, Jones is decidedly against U.S. military intervention overseas after having seen the carnage that was the Iraq war, which meant a reversal of his earlier position for the war. (Jones, as readers might recall, is the lawmaker who coined the term "freedom fries" after the U.S. Government did not receive French support for the Iraq invasion.)

Of course, what would the Republican view of "small government" be without the drug war at home. Even today, Republicans (and especially its ever-shrinking evangelical branch) continue to hold to the idea that giving law enforcement vast powers well beyond anything the U.S. Constitution allowed is a Really Good Thing because one day -- One Day! -- the drug war will have been won and nobody in this country will shoot heroin or smoke weed.

In a farewell speech given at the conservative Heritage Foundation in Washington just before he resigned his position as U.S. Attorney General, John Ashcroft openly endorsed mass incarceration, claiming that it was responsible for the fall in the crime rate, and he could not understand why people were bothered that the USA had more than two million people in prison at the time. (Note to Republicans: prisons are part of "big government.")

And, no, when Republicans held power in Washington, the number of federal crimes grew significantly. According to a Heritage Foundation report by LSU Law Professor John Baker, there was an "explosive" growth in what Congress designated to be federal crimes. (I do find it ironic that the Heritage Foundation, which actually has done good work in condemning the growth of federal crimes provided a special forum for John Ashcroft, whose DOJ would abuse federal statutes in a drive to throw as many people as possible into federal prison.)

It's the Economy, Stupid!

But aren't Republicans Really, Really Good on the economy? I mean, they believe in free enterprise, less regulation, and sound money, right? Unfortunately, as shown in this Business Insider article, the Republican years in the early and mid-2000s were pretty much business as usual for Washington. 

Furthermore, it is quite clear that the infamous housing bubble that ultimately gave Barack Obama a filibuster-proof U.S. Senate and a huge majority in the U.S. House of Representatives his first two years came about because of a deliberate policy by the Bush administration to expand home ownership. Now, I don't criticize the intentions of the Bush administration to place more minorities and lower-income people into home ownership, but people in these categories often make for poor home ownership candidates, and it is not just their lack of access to bank financing that puts them there.

Furthermore, it became obvious that trying to jack up the economy via monetary injections through home purchases and refinancing was going to fail. First, the whole model was consumption-based, and no economy consumes itself to prosperity. Efforts to manipulate the monetary system to bring about more consumption will have a negative long-run effect upon long-term investment and capital formation.

Because the Bush administration almost completely bought into the Keynesian approach to the economy -- stimulate, stimulate, stimulate -- it was unable to bring about a fundamental shift from a "bubble" economy to one that has a healthy tradeoff between investment and consumption. Today, we see a shrinking economy led by a president who is hostile to private enterprise and entrepreneurship, and who is trying to use force to drag us into the doomed Latin American model of crony capitalism and the ever-present danger of financial crises.

Second, it should have been obvious even to the Bushies that home prices were, on average, increasing much more than average incomes, which absolutely doomed whatever the Republicans were trying to accomplish. Simply put, at some point it becomes impossible to place a family with a $50,000 a year income into a $500,000 house.

So, what does the economy need to get out of its current funk? I can tell you that it does NOT need more Keynesian "stimulus," no matter what Paul Krugman and the Democrats tell us. Unfortunately, the Republicans are not going to offer anything better.

Yes, they will call for the repeal of ObamaCare (and then offer to substitute their own administrative plan in which all of the players will behave as they do in ObamaCare), decry regulation, call for a balanced budget (just as Republicans "balanced" the federal budget during the Bush years....), and push for tax cuts.

Now, none of those things are bad in and of themselves. Like any kind of national program that attempts to bureaucratize and centralize medical services, ObamaCare is going to create perverse incentives, financial imbalances, and, ultimately, severe forms of rationing. That WILL happen, but I have no faith that Republicans can create anything any better. The problem is not how to better tweak a centralized plan, but rather trying to centralize something as vast as medical care in the first place.

Regarding business and environmental regulation, all of those things have grown under Republican administrations and via Republican control of Congress. Yes, the regulatory process significantly raises business costs, but Progressives have managed to convince most Americans that unless government bureaucrats are permitted to have near-complete oversight of nearly everything, American society would be a living hell. It is impossible for people to imagine their lives not being full of paperwork and Republicans are not very good at convincing people otherwise.

Regarding taxes, it will take a huge sell, one Republicans probably are not capable of making, just to convince Americans that cutting a few percentage points from marginal tax rates is not just "tax cuts for the rich." (For example, I work with people who always say "tax cuts for the rich," but after Obama let the Bush tax cuts expire, these middle-class people found out quickly that THEY are the rich and found themselves paying several thousand dollars a year more in taxes. But even then, few of them were willing to tell themselves that the original Bush tax cuts actually benefited them, too. Political identity and political rhetoric are very powerful forces.)

The problem, as I see it, is that Republicans want to make the "Keynesian Lite" argument on taxes ("Tax cuts will spur consumer spending and will 'stimulate' the economy") instead of pointing out that what this economy needs is more capital investment. Democrats have spent the entire Obama years trashing capital, demanding, instead, high wages and other productivity-killing initiatives. Their "guiding lights" like former Labor Secretary Robert Reich are claiming that capital investments benefit only the rich, and that the only way to have a strong economy is to jack up the minimum wage to $15 an hour, cut working hours, and generally force up business costs.

There are ways to present a case for lower taxes, less regulation, and encouragement of entrepreneurship without sounding as though the real goal is to make life a living hell for everyone, but Republicans apparently have not yet reached that point. As in the Bush years, they sought to "revitalize" the economy through wars overseas and creating a financial bubble at home, all under the aegis of "cutting taxes" and "economic stimulation." We see how well that turned out.

Potomac Fever: The Sum of Delusion

To be honest, most Republican lawmakers are not even principled enough to make Keynesian-based economic arguments. Instead, like Dennis Hastert, who entered Congress with middle-class wealth and left as a multimillionaire, they confuse their doing well with the country doing well. There is a reason that while most of the country has struggled, economically speaking, the counties contiguous to Washington, D.C., have gained in wealth significantly during the Obama years.

Thus, our economy is down to this sorry state: Washington loots the rest of the country, becomes wealthier, collectively speaking, so all must be well. Instead of real investment, both Republicans and Democrats seek out crony capitalism and line up behind their favorite billionaires to give them campaign cash.

This is an unsustainable model, but for now I don't see any way out of the trap. The Federal Reserve System uses monetary tricks to try to poke fingers into the leaking dike, and the government becomes increasingly authoritarian in an attempt to bully firms into achieving politically-acceptable results.

Folks, this, too is Progressivism. Like the Progressives of a century that sought to expand "freedom" through invasion of other countries and forcing new (and unworkable) institutional and social arrangements, Republicans have deluded themselves into thinking that just one more military strike, one more invasion, and we FINALLY will be safe!

Will Republicans tell the rest of this country that the Emperor has no clothes? Don't count on it. Instead, the Republicans will do what they did a decade ago: try to create yet another bubble and insist that the Emperor's clothes are just magnificent.

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