An Oxymoron: Future Conservatives

A few weeks ago, I wrote a post titled "I think I'm Turning Liberal...  I Really Think So".  The piece was a critique of the current liberal paradigm in this country and I got lots of responses.

Conservatives could benefit from some self-reflection as well.  To recapture a majority, they must evolve their approach to governing.  Is it an oxymoron to think of conservatism evolving to some future state? Conservatives focus on traditional values not evolution of their values.

Today’s American conservatives often quote the founders, using the U.S. Constitution as a construct for pursuing a 21^st Century policy agenda.  The Constitution reflects the philosophies of Spinoza, Locke and Voltaire.  A philosophy that promoted civil liberty, political freedom, limited government, the rule of law and free markets -- tenets that today’s conservatives continue to espouse.  The irony is that, during the Age of Enlightenment, the term that defined these tenets was “Classical Liberalism”. 

That what was liberal at our founding is conservative by 21^st Century standards is perhaps a measure of how societies evolve.  Can conservatives achieve any political gains with a public that seems to be moving in the opposite direction?  Do conservatives have to embrace some of the philosophical and political prescriptions of liberals to regain their electoral mojo?  I don’t think so.

People don’t vote on the basis of philosophical prescriptions; they vote for what resonates with them emotionally.  That’s why the President could be elected on the flimsy promise of “Hope and Change”. 

But Ronald Reagan’s “Morning in America” theme during the 80’s was no more substantive; and, no Republican has been able to connect with the emotional core of the public the way that Reagan did in the years since. 

The nation needs real reform.  Conservatives understand that our debt and deficits are not sustainable.  They understand that our entitlement programs need restructuring to survive.  There are big changes required to get the country on track. 

Reagan understood that big change requires big majorities.  You can’t persuade the majority by standing at one end of the political spectrum, hurling epithets at the other.  Reagan’s “Morning in America” pitch was optimistic about our future at a time when we were also in crisis.  It was the faith he expressed in America that sold the voting public on his vision. 

The public and the media have focused on the excesses of Wall Street and the failures of a capitalist economy to support its middle class.  While some of the criticism is deserved, what is undermining the middle class is not capitalism but a government that is undermining the value of the assets we have worked so hard to accumulate. 

At their core, Americans – no matter their race, gender, ethnicity or sexual preference – are aspirational.  That is, our culture fosters ambition and self-sufficiency.  Aspirational Americans may wish for their government to provide assistance to the most needy; however, they do not wish for a segment of the population to be motivated not to work. 

If you eyeball this chart, you can see that an individual making an annual salary of $25,000 receives the equivalent of $20,000 per year in government assistance.  It’s pretty hard to improve your annual income by 80% and it’s unlikely that many will try if they will lose the equivalent in government support.

Aspirational Americans don’t wish for their hard earned wealth to be shared in this way.  All they want is an opportunity to succeed on their own merits.  They want access to a great education, equal opportunity for employment and civil liberties -- values that are consistent with classical liberals, our founders.  Conservatives preach these values but often don’t live up to them.

Instead, Republican politicians support corporate America.  Support that manifests itself in subsidies for ethanol, tax breaks for big oil and tax exempt bonds for corporate projects.  The founders never intended the government to be at the behest of corporations. It is supposed to serve the people.  Thomas Jefferson is rolling over in his grave.

Conservatives like to quote Adam Smith’s work “The Wealth of Nations” and speak of the “invisible hand” of the market as a the cure for what ails us.  But, they should also remember Smith’s words about government. "Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.”

They can regain their electoral mojo without sacrificing their values.  They just need to start practicing what they preach.   

WHO WILL LEAD?

Adam Smith: Communitarian

It is not from the benevolence of the butcher, the brewer, or the baker, that we expect our dinner, but from their regard to their own self-interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.



 Adam Smith, Scottish philosopher, economist and author



A colleague of mine – a college professor – describes herself as a Communitarian. She quickly quips that her husband says that’s the same as a Communist. But, while some Communists might be Communitarians and some Communitarians might be Communists, they are not the same. Wikipedia defines the term this way: “Communitarianism emphasizes the need to balance individual rights and interests with that of the community as a whole, and argues that individual people (or citizens) are shaped by the cultures and values of their communities”. Sounds pretty far from the common perception of Adam Smith. However, I think it’s fair to say that Smith might buy into that philosophy.

Conservative politicians have promoted the “invisible hand” of the markets quoting Adam Smith from his treatise, the Wealth of Nations. I doubt that many of them have actually read the 1000 page tome. If they had, they would know that Smith believed that efficient markets and general welfare resulted from local business owners bearing the cost of their enterprise and sharing the values of their communities.

Smith strongly disliked both governments and corporations. He viewed government primarily as an instrument for extracting taxes to subsidize elites and for intervening in the market to protect corporate monopolies. In his words, "Civil government, so far as it is instituted for the security of property, is in reality instituted for the defense of the rich against the poor, or of those who have some property against those who have none at all.” Certainly, that was an accurate description of 18th Century colonial America ruled by the British throne.

But, Adam Smith was a Scottish philosopher whose theories were not supported by data. A century and a half later, Friedrich Hayek developed the data to take Adam Smith’s philosophy to a new level. He advanced what would later be called Austrian Economics, a theory of monetarism that was embraced by his colleagues (including Milton Friedman) while he was part of the faculty at the University of Chicago in the 1950’s. Hayek believed that manipulation of interest rates distorted the price of capital leading to the boom and bust cycles we have seen throughout our history. In other words, the way to prevent the bust is to avoid the boom.

Like most students of economics of my generation, I lean toward the supply side theories that have been espoused by conservative economists, Hayek and Friedman. Their progeny like Arthur Laffer influenced Ronald Reagan whose response to an economic crisis was to return control of capital to those that earned the money. Lower taxes meant more money in your pockets, lower capital costs (without monetary distortions) and through the “multiplier effect” an expansion of the economy. He also coined the term “trickle-down economics” to describe the benefit to lower income families.

The expansion of our economy these last 30 years has been extraordinary. However, the promised trickle-down effect isn’t trickling. Over the last decade we have seen global corporations earning more money while the average real income for families has remained flat. Adam Smith would be appalled. Not only is the central government co-opting a significant share of our personal incomes but also it is reallocating our income to corporate interests in the form of subsidies and tax breaks. And, it has done so to the ill effect of the people who have elected that government.

Indeed, I know of no economic theory called trickle-down economics nor of any data to support its promise. It’s a political phrase. That’s all.

So, what would Smith and Hayek have to say about that?

Rarely do we hear of the other views expressed in The Wealth of Nations captured here: “It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion.” Nor, do we hear much from his seminal work, The Theory of Moral Sentiments, where he explored the nature of mankind in civil society. How’s this for an Adam Smith quote: “This disposition to admire, and almost to worship, the rich and the powerful, and to despise, or, at least, to neglect persons of poor and mean condition, though necessary both to establish and to maintain the distinction of ranks and the order of society, is, at the same time, the great and most universal cause of the corruption of our moral sentiments.”

Hayek, who had the advantage of observing governments in action in the 20th Century (Smith lived his entire life in the 18th), also espoused the creation of a “safety net”. In his most read work, The Road to Serfdom, he said: "There is no reason why, in a society which has reached the general level of wealth ours has, the first kind of security should not be guaranteed to all without endangering general freedom; that is: some minimum of food, shelter and clothing, sufficient to preserve health. Nor is there any reason why the state should not help to organize a comprehensive system of social insurance in providing for those common hazards of life against which few can make adequate provision."

So, where do we go from here? The threat posed by our national debt and its evil twin, the budget deficit, are real. If current trends continue, 100% of our tax revenue will go to paying interest on the debt within 10 years. That can’t happen. And, when something can’t happen, it won’t.

It is often said that governing is about choosing. We have rarely faced choices as difficult as those we face today.

Tuesday’s State of the Union Address will be interesting on many levels, political and otherwise. The President’s public pronouncements have recently focused on helping business in the name of lowering unemployment. He even took the extraordinary step of authoring an Op Ed piece in the Wall Street Journal. Will he announce that he will introduce the recommendations of his Fiscal Commission to Congress and ask that they make them law? Will he acknowledge the work of Rep. Paul Ryan who is carrying the Republican flag, toward a compromise that will balance our budget within a decade?

Will the next two years be marked by more partisan bickering? Or, to paraphrase my usual closing question, WILL HE LEAD?