Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Last week my friend, and Ricochet Member, Duane Oyen posited a question to those of us on the right, asking if it was time to "Re-Boot" conservatism. The centerpiece of Duane's post was an article by Dr. Steven Hayward, titled "Modernizing Conservatism." Dr. Hayward's piece, written at the request of The Breakthrough Institute, (an organization which Duane assures us is a "rational liberal" think tank) serves as a companion to a "modernizing liberalism" article. While Duane concedes that he agrees with a great deal of Dr. Hayward's ideas, he was curious about how others would react.
The reaction was swift as the comment thread itself became a bit contentious at times. But I thought it worth the effort to step back and read Dr. Hayward's article as dispassionately as possible, taking to heart Duane's admonition that, "… we also need to look at ourselves or we ourselves are unserious." Now to be sure, there are "pet conservatives" here and there whose primary occupation is tearing down those who advance the conservative cause. Because I don't count Duane in that category, I've spent no small amount of time considering the issues as Dr. Hayward frames them.
Dr. Hayward begins by citing the recent success of the Tea Party and the 2010 elections, and concludes that we're in trouble. "Conservatism," he says, "is failing on its own terms." As indicators, he points to a stagnant minority underclass and a middle class that is not only stagnant, but showing signs of economic regress. "Stagnant income growth and mobility and a shrinking middle class are considered unhealthy by most conservative understandings of social health, cohesion, and well-being," writes Dr. Hayward, but concludes that these issues, "…have attracted only the attention of Charles Murray." A categorical statement of this order, contradicted as it is by virtually every conservative publication and website in the country whose headlines and tables of contents regularly overflow with considered and urgent analysis of the catastrophic condition of the economy on both a macro and micro level, makes Dr. Hayward's conclusions something less than irresistible, …which is a polite way of saying, "Strike One." Yes, these issues are existentially important not only to conservatism, but to the survival of the country itself, which is why so many of us are utterly distraught by the choice in candidates offered to us in 2012. But Dr. Hayward doesn't really explain how the tragic indicators he cites can be called a failure of conservatism. Certainly the policies of the last two and a half years, which have brought the country to its knees, didn't originate from the right.
Then comes this statement, which is breathtaking:
By allowing their well-reasoned and often well-founded critiques of government action to metastasize into a categorical rejection of all prospective government action, while continuing to deny the basic political economy of the welfare state, conservatives increasingly find themselves in an ideological and practical straightjacket.
I, for one, categorically reject the idea that conservatives categorically reject "all prospective government action." What conservatives reject is unconstitutional government action. Conservatives have either proposed or passed, to standing ovations from other conservatives, one prospective government action after another, from "Cut, Cap, and Balance," to the Ryan Plan. The Constitutional distinction is a basic tenet of conservatism, yet curiously absent from Dr. Hayward's lengthy article. As to his assertion that conservatives, "…deny the basic political economy of the welfare state…" I know Dr. Hayward is aware of Paul Ryan's efforts in that very arena because he writes of them approvingly, so I'm at a loss to explain his assertion of a conservative denial. Strike Two.
One of the lynchpins of Dr. Hayward's argument that conservatism needs a restart, is something he describes as the failed "starve the beast" strategy. This strategy purports to reduce the size of government by reducing revenues into the government. Indeed, from a 1981 speech by President Reagan, we read;
Over the past decades we've talked of curtailing government spending so that we can then lower the tax burden. Sometimes we've even taken a run at doing that. But there were always those who told us that taxes couldn't be cut until spending was reduced. Well, you know, we can lecture our children about extravagance until we run out of voice and breath. Or we can cure their extravagance by simply reducing their allowance.
Conflating tax rates with tax revenues, Dr. Hayward continues;
Rigorous analyses from centrist economists Christina and David Romer of UC Berkeley, and from libertarian economist (and Reagan White House alumnus) William Niskanen conclude that the starve-the-beast strategy fails. Strikingly, Niskanen's analysis found that lower taxes correlated with higher levels of federal spending. As a result, Niskanen argues that raising taxes may be the most effective way to reduce government spending.
And that's really what he seems to be after here; higher taxes. The paradox of which he writes is really not so striking when you consider the fact that it was the tax rate that Reagan lowered, not tax revenue. In fact, revenues to the government increased from $517 billion in 1980 to over $1 trillion in 1990, according to the Heritage Foundation. Adjusted for inflation, that's an increase of 28%. The beast, therefore, was never starved. The government simply blasted through the additional revenue, over President Reagan's veto, and continued running a deficit. Strike Three.
"Thus, conservative attachment to a failing strategy has rendered the Right incapable of reducing government spending," continues Dr. Hayward, who prefers a "serve the check" approach framed in the manner of making Americans pay for all the government they receive. In other words, an increased tax burden. Dr. Hayward's statement that the current arrangement, "…allows Americans to receive a dollar in government services while only having to pay 60 cents for it," strikes a discord in the ear of a free man, presuming as it does that the taxpayer is somehow ripping off the government, when in reality it's the other way around. From Tea Parties to town halls, from letters to newspapers and across the internet to the wave of citizen legislators we sent to Washington in the last election, we keep telling the government to spend less, and yet somehow we are being allowed some sort of unfair bargain when they spend more? In the first place, we didn't order all this stuff off the menu, and we aren't terribly happy about paying the checks for almost 50% of the population. Hell, we didn't even get to read the menu in the case of Obamacare, which was passed against the popular will. Who, aside from leftists, demanded quantum increases in operating budgets for administrative agencies? Secondly, increasing the tax burden depresses economic growth which, in turn, can actually depress revenue and further exacerbate the problem of debt, unemployment, economic stagnation, etc. But in the final analysis, the beast will be starved because we are broke. Across Europe, governments are, "running out of other people's money," as Margaret Thatcher so famously and astutely observed. Raising the cost to the productive sector is not the answer.
Again, from Dr. Hayward:
It may be that internal ideological reformation must precede bipartisan political compromise. Ideological extremists in both parties have repeatedly succeeded in scuttling tax and entitlement compromises pursued by moderate reformers in their respective parties, and at the moment, the prospects for any compromises seem remote.
I'm always intrigued by this kind of language. The left in general, and President Obama in particular, have shown outright hostility toward the Constitution. Conservatives, on the other hand, have tried to restore and conserve it. What is this "extremists in both parties" business, exactly? I understand that working to undermine the law of the land is indeed extreme, but what is extreme about trying to preserve it? What part of the Constitution ought we to compromise, exactly? On a micro level, if we're going to compromise, how about doing so on the left side of the playing field for a change? Regarding taxing and spending, the compromise always assumes that both taxes and entitlements will increase and so we compromise on the rate of increase. This, we are told, is the smart and moderate thing to do. We pat ourselves on the back, and continue toward the cliff though at a slightly adjusted speed. Just once, how about telling the left that we will compromise on the rate of decrease? I suspect that would be labeled, by both the left and some on our own side, as intransigent. Conservatism doesn't need a re-boot, but rather a renewed fidelity to the enduring principles that made this nation great.
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Comments:
Jun '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dave Carter
David Williamson
That's why I have liked Sarah Palin, Herman Cain, and now Newt - they don't talk about rebooting conservatism. By definition, it doesn't need a reboot - kinda like Apple computers. · Nov 20 at 8:59pm
[The above comment was read and enjoyed on a Macbook Pro which has never required a reboot.] · Nov 20 at 9:02pm
[Nor has my toaster -- it just keeps on plugging away!]
Jun '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Xennady:
...
When conservatives get uppity and challenge that assumption the leftist-dominated establishment hatefully mobilizes to destroy the challenger. Conservatives have learned this, painfully, and most accept it as normal, without conscious thought.
So when they venture into "mainstream" culture they adopt a pose accepting of many leftist tropes about conservatives, just to avoid the hate and anger, whether or not they make any sense. ...
Perfectly true. You should also like my take on this problem: we conservatives have been suffering under a type of Stockholm Syndrome wherein we have started identifying with our oppressors. We do this too much and so often that many of us don't realize when we have gone over the line to defeating a good conservative just because in doing so we seem more fair to our lefty friends.
I have seen how abortion has been used in this way. I can't tell you how many somewhat conservative older women come unglued when I start talking about how evil abortion is. They actually are often very soft-hearted people who worry about animals and the third world all the time. They have learned, though, to not let this emotional tug work with abortion.
Nov '11
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dr. Hayward is correct about one thing: Starving the beast has obviously not worked.
Setting aside for a moment the issue of how big government should be (I'd love to see it 1/5 its current size), we, as a nation, should pay for the amount of government we collectively demand. If we can't hold the line on the size of government, we should at least be honest about its costs, not push them off on future generations so we can have our cake and eat it too.
Unfortunately, the political system is so wedded to deficit spending that it seems all but impossible to break it of the habit.
Politically, I don't see a way to get this done short of a constitutional convention of some sort. A balanced budget agreement that truly constrains congress will never be passed through congress. But I fear for what a constitutional convention might produce once the genie is out of the bottle. Would we see a bunch of leftist "rights" such as a living wage, etc., added to the constitution?
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Canada managed to both raise taxes and cut spending, and maintained that pattern for a decade, reducing the size of our government from 53% of GDP to 35%, and in the process getting rid of a huge deficit, turning surpluses, and cutting our overall debt from about 70% of GDP down to about 30%.
It CAN be done. But it requires a government willing to do it.
Hayward has a point that when you lower taxes and eliminate the pain of paying for government, the pressure to keep government small might just drop off. Why should the 47% of Americans paying no income tax care about how much the government spends, especially if some of that spending comes to them? Sure, there's a huge deficit, but judging by the extremely high level of personal debt people in the west have picked up, there seems to be plenty of appetitive for short-term gain and deferred pain.
The problem isn't the welfare state, defined as a country making sure the poorest people have a minimum standard of living and education. Government goes out of control is when it starts promising goodies to the middle class. That is always unsustainable.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
The problem of governance in general is that the middle class provides the bulk of the votes, so it receives the bulk of the promises. Conservatives promise middle class tax cuts under the guise of family tax credits, education tax credits, 'ownership society' tax credits for home ownership, etc. Democrats promise the middle class goodies from the government in the form of under-funded retirement and health care programs, increased education spending, and a regulatory state that 'protects' them from their own bad decisions. They promise to pay for this by taxing the rich.
The result is a middle class that is showered with entitlements and exempted from the burden of paying for the government they consume. And now you have a situation where they won't tolerate tax increases OR cuts to their benefits. So politicians on both sides play a shell game, promising reforms that always benefit the middle class and never make them pay more or receive less. Liberals invent fictions like 'fiscal multipliers' that make spending free, and conservatives pretend the Laffer Curve allows for free tax cuts.
The government in the U.S. will continue to be screwed up until this pattern can be changed.
Jun '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dan Hanson: ...
... and conservatives pretend the Laffer Curve allows for free tax cuts.
...
Don't confuse people, Dan. Good comments overall. But the Laffer Curve only describes the reaction of people to tax rates. If we are overtaxed (rate-wise, especially), revenues can actually fall in the affected industry(ies). Under these conditions and over time, if rates are lowered revenues will go up. It's not instantaneous, it's not a calculable graph and it's not rocket science. It's human nature in a graph. It's a teaching tool.
Oct '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
I think I've fallen in love with Canada.
Oct '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dan Hanson:
The result is a middle class that is showered with entitlements and exempted from the burden of paying for the government they consume. And now you have a situation where they won't tolerate tax increases OR cuts to their benefits. So politicians on both sides play a shell game, promising reforms that always benefit the middle class and never make them pay more or receive less. Liberals invent fictions like 'fiscal multipliers' that make spending free, and conservatives pretend the Laffer Curve allows for free tax cuts.
The government in the U.S. will continue to be screwed up until this pattern can be changed. · Nov 21 at 10:25am
Very well put. I've been thinking the same myself; too much of politics is giving out favors to the middle class.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Pilli
Joseph, I am not picking on you. You just happened to use a term that provides a good example. "Crony capitalism" is one of those leftist tropes Xennady is talking about. Crony-ism is anti-Capitalism. Yet we allow the terms to be joined at the hip by lefty pundits. The net effect is a tarnishing of the idea of Capitalism. We even use the terms together ourselves.
Like Joseph, I don't see the use of the term "crony capitalism" itself as a major victory for the left. In fact, the phrase is a useful one (and used, I've noticed, by many conservative economists), distinguishing capitalizing on crony connections from capitalizing on other things.
That lefty pundits use "capitalism" and "crony capitalism" as synonyms betrays their ignorance. But when we use the terms in proximity, it's usually to explain how crony capitalism isn't free-market capitalism, no? Can we reasonably do better than that?
Sometimes you win by mute refusal to acknowledge "the other side's terms". Sometimes you win by engaging the other side with terms they can understand and persuading them. Which approach works when is a question of strategy, not ideology. So people with shared ideology can reasonably disagree on strategy without having reason to question each others' good faith.
Edited on November 21, 2011 at 9:37pmAug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Larry Koler
Dan Hanson: ...
... and conservatives pretend the Laffer Curve allows for free tax cuts.
...
Don't confuse people, Dan. Good comments overall. But the Laffer Curve only describes the reaction of people to tax rates...
An unfortunate side-effect of the 200 word limit. I tried to qualify that, but ran out of space. The Laffer Curve is just as you say, and certainly under many conditions it tells us that overall revenues can rise with a cut in taxes. But that's not always the case, and I'm certain it's not the case right now.
The reason it's not the case right now is because the low growth in the economy is not due to a lack of capital for investment or high taxes in general - taxes are at an historically low point. The problem the economy has right now is debt. Personal debt, and government debt. The U.S. is in a 'balance sheet' recession due to the destruction of a real-estate bubble and the realization that the growth in the 1st world in the past decade was an illusion driven by fiscal shenanigans and deficit spending.
<cont'd>
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Cutting taxes in that environment will result in an immediate drop in revenue (as you say, revenues take time to build, but the cuts take place immediately), which will make the deficit worse. This in turn will further destabilize markets and inject even more uncertainty into business decisions.
What the markets and the business community have been crying out for is stability - they need to believe in a stable dollar, a sustainable debt situation, an unchanging regulatory playing field, the removal of some recent, very expensive regulations, the uncertainty of Obamacare, etc. Taxes are not high on their priority list, and surveys of businessmen show that repeatedly.
In addition, taxes on the middle class are too low. It's crazy to have almost half the population exempt from income tax. It's not good for social stability or for responsible voting behavior. Everyone should have skin in the game.
My problem with the Laffer Curve is that politicians on the right have bowdlerized it and turned into a universal truism that justifies any tax cut at any time, while still allowing the politician to claim to be fiscally conservative. It's now the right's version of the fiscal multiplier.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Finally, making this election about tax cuts carries with it political opportunity cost. It displaces a meaningul discussion of regulatory reform, entitlement reform, and government downsizing, and makes Republicans look unserious about the deficit. This allows the Democrats to use demands for tax increases as a tool to shut down all other discussions. The Republicans have allowed the Democrats to frame the debate as a choice between making rich people pay a little more, or taking away all the goodies from the middle class.
The Republicans should say, "Yes, tax increases are on the table. But only if they are broad-based, and only if they come with iron-clad guarantees of immediate spending cuts and regulatory reforms. For starters, you can agree to 1 trillion in cuts over the next decade by repealing Obamacare. Do that, and we'll kick in a trillion dollars in tax increases. That'll move us 2 trillion dollars towards a better fiscal situation, which is a good start but not nearly enough."
Oct '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dan Hanson:
My problem with the Laffer Curve is that politicians on the right have bowdlerized it and turned into a universal truism that justifies any tax cut at any time, while still allowing the politician to claim to be fiscally conservative. It's now the right's version of the fiscal multiplier. · Nov 21 at 12:41pm
I've got to agree with you there. Tax cuts are often designed to boost consumption; true supply-side tax cuts are revenue-neutral, "putting money in the hands of consumers and businessmen" is a Keynesian argument.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Dan Hanson
The Laffer Curve is just as you say, and certainly under many conditions it tells us that overall revenues can rise with a cut in taxes. But that's not always the case, and I'm certain it's not the case right now.
The reason it's not the case right now is because the low growth in the economy is not due to a lack of capital for investment or high taxes in general - taxes are at an historically low point...
However, aren't taxes on capital gains in the US quite high compared to other nations right now?
Economists, including Laffer, have extended the curve to more than one dimension, different dimensions corresponding to different types of tax. Here's a 2-D model:
This graph agrees with you that lowering either tax while fixing the other would lower revenue. However, the yellow-green level-curve shows that you could lower capital taxes more than you increased labor taxes (for a total tax decrease) and produce the same amount (or slightly more) revenue.
Of course, in some sense the Laffer curve is beside the point. We don't want a government bent on maximizing its revenue.
Edited on November 21, 2011 at 10:06pmMar '11
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
I think this conversation, and the article by Steven Hayward that started it, demonstrate a sad point: we can't stop talking about taxes.
At this point in time, taxes are the smallest problem we have. Dan is spot on: every minute we spend debating tax reform amongst ourselves (or with the left, for that matter) is a minute we're not talking about the infinitely more important issues of entitlement reform and discretionary spending. Even the home page of NRO today has a big debate about the "fairness" of the tax code, another navel-gazing distraction.
The Democrats want to repeal the Bush tax cuts on the rich? Just give us Paul Ryan's Medicare and SS reforms first and it sounds like a good deal to me.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Mendel
At this point in time, taxes are the smallest problem we have.
Suppose that's true. Will enough right-leaning voters see it that way?
Mendel
At this point in time, taxes are the smallest problem we have. Dan is spot on: every minute we spend debating tax reform amongst ourselves (or with the left, for that matter) is a minute we're not talking about the infinitely more important issues of entitlement reform and discretionary spending.
Unfortunately lower taxes are an easy sell, while entitlement reform is not. (Republican voters far more partisan than I balk at the risk of their middle-class goodies being taken away. It's human nature.)
That many voters would accept entitlement reform if it came with lower taxes, I could believe. That many would accept entitlement reform with higher taxes... Uh-oh...
Mendel
The Democrats want to repeal the Bush tax cuts on the rich? Just give us Paul Ryan's Medicare and SS reforms first and it sounds like a good deal to me.
Hmm... I think I'm fine with that, too. But I know many Republican voters who'd go ballistic.
Political incentives are nuts, aren't they?
Mar '11
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Midget Faded Rattlesnake
Mendel
At this point in time, taxes are the smallest problem we have.
Suppose that's true. Will enough right-leaning voters see it that way?
Doubtful.
Midget Faded Rattlesnake
Mendel
The Democrats want to repeal the Bush tax cuts on the rich? Just give us Paul Ryan's Medicare and SS reforms first and it sounds like a good deal to me.
Hmm... I think I'm fine with that, too. But I know many Republican voters who'd go ballistic.
Political incentives are nuts, aren't they? · Nov 21 at 2:03pm
Agreed and agreed.
Mar '11
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Midget Faded Rattlesnake
Unfortunately lower taxes are an easy sell, while entitlement reform is not. (Republican voters far more partisan than I balk at the risk of their middle-class goodies being taken away. It's human nature.)
That many voters would accept entitlement reform if it came with lower taxes, I could believe. That many would accept entitlement reform with higher taxes... Uh-oh...
I'm not completely pessimistic.
The debate about how to deal with our looming debt has escalated to the point where change will only come when both sides take a hard blow to the gut. Even if the Republicans were to sweep the 2012 elections, public opinion combined with Democrat filibusters would still prevent any sweeping changes without oxen on both sides being gored.
Besides, if (per Dan's comment) the Canadians can do it, surely Americans can too!
Jun '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Joseph Eagar
Dan Hanson:
My problem with the Laffer Curve is that politicians on the right have bowdlerized it and turned into a universal truism that justifies any tax cut at any time, while still allowing the politician to claim to be fiscally conservative. It's now the right's version of the fiscal multiplier.
I've got to agree with you there. Tax cuts are often designed to boost consumption; true supply-side tax cuts are revenue-neutral, "putting money in the hands of consumers and businessmen" is a Keynesian argument.
Dan: Point taken and great explanation -- I think you are probably right about where we are now but don't forget that it depends on where the taxes are lowered, by how much and really important is the confidence that movers and shakers have in the tax horizon looking stable. It's pathetic to have people complain about the short-sightedness of venture people when they have to always hedge their bets against what the idiot 800 lb. gorilla is doing today.
Joseph: what is a supply side tax cut? I agree about stimulating consumerism -- government should just focus on lifting their foot off the brakes.
Aug '10
Re: Re-Booting Conservatism (or, In Which I Disagree With A Friend)
Mendel
I'm not completely pessimistic.
No, not completely. Not as pessimistic as I could (and alas, often do) get.
Mendel
Besides, if (per Dan's comment) the Canadians can do it, surely Americans can too!
How much truth is there to the stereotype that Canadians are more willing to take one for the team than Americans?