David Frum and “The Great Republican Revolt”

 

Jeb BushThe GOP plotted to restore the Bush dynasty, but instead triggered a class war. That’s the thesis of David Frum’s latest piece for The Atlantic, “The Great Republican Revolt,” which is really worth reading:

The angriest and most pessimistic people in America are the people we used to call Middle Americans. Middle-class and middle-aged; not rich and not poor; people who are irked when asked to press 1 for English, and who wonder how white male became an accusation rather than a description.

You can measure their pessimism in polls that ask about their expectations for their lives—and for those of their children. On both counts, whites without a college degree express the bleakest view. You can see the effects of their despair in the new statistics describing horrifying rates of suicide and substance-abuse fatality among this same group, in middle age.

White Middle Americans express heavy mistrust of every institution in American society: not only government, but corporations, unions, even the political party they typically vote for—the Republican Party of Romney, Ryan, and McConnell, which they despise as a sad crew of weaklings and sellouts. They are pissed off. And when Donald Trump came along, they were the people who told the pollsters, “That’s my guy.”

They aren’t necessarily superconservative. They often don’t think in ideological terms at all. But they do strongly feel that life in this country used to be better for people like them—and they want that older country back.

I don’t read a lot of Frum since I disagree with him so strongly on gun control and other left-leaning views, but he correctly identifies the divide between the donor class and the party rank-and-file. After discussing the long history of GOP compromises and sell-outs, he offers several alternatives to help the party heal the rift:

  1. Double down on comprehensive immigration reform to hopefully win over Latino and Asian American voters.
  2. Make a tactical concession on immigration enforcement to win back the party base.
  3. Reform the entire GOP agenda. I’ll let Frum explain:

Admittedly, this may be the most uncongenial thought of them all, but party elites could try to open more ideological space for the economic interests of the middle class. Make peace with universal health-insurance coverage: Mend Obamacare rather than end it. Cut taxes less at the top, and use the money to deliver more benefits to working families in the middle. Devise immigration policy to support wages, not undercut them. Worry more about regulations that artificially transfer wealth upward, and less about regulations that constrain financial speculation. Take seriously issues such as the length of commutes, nursing-home costs, and the anticompetitive practices that inflate college tuition. Remember that Republican voters care more about aligning government with their values of work and family than they care about cutting the size of government as an end in itself.

My advice is for the GOP to combine options 2 and 3, but my “reform” is very different from the swing to the left noted above. Frum has long advocated accepting Obamacare and other progressive programs, much like Eisenhower made peace with the New Deal. If you want to turn the Republican internal cold war into a full-blown civil war, option 3 is excellent advice.

Instead, the party elite should do something far more radical: Admit that it completely failed on comprehensive immigration reform, repeatedly lied about it to the base, and apologize with contrite words and concrete action. This is not the grudging “tactical concession” offered by Frum, but a full repudiation of amnesty and anything that smacks of open borders.

I don’t think illegal immigration is the biggest issue facing the country and I live in Arizona of all places. But it has become a proxy for the chasm that divides the elite from everyone else. Until the GOP proves its honorable intentions on immigration, forget trying to persuade the base on anything else. Even with this about-face, it will take a few election cycles before Republican voters trust their party on the issue. Nevertheless, confession must precede forgiveness.

Then begins the reform of the party agenda. Contra Frum, it cannot be a list of Democratic-lite policies; DC Republicans’ slouch toward progressivism is the reason the base is so furious.

The party can “open more ideological space for the economic interests of the middle class” by ending the self-serving racket that is the DC/Wall Street/Chamber of Commerce power structure. End idiocies like the Ex-Im Bank which exist only to serve big business. Instead of worrying about the tax rates of the highest earners, eliminate loopholes and lobbyist-written rules that advantage the monied class. Cut through red tape that interferes with charities, non-profits, religious organizations, and small businesses. Stop trying to slow the growth of the government and shrink it outright.

A large part of the GOP base doesn’t want government to do a better job of taking care of them; They want to take care of themselves. If Washington stops meddling in the inconsequential, it can focus on those few things that only the federal government can do, such as protecting the country.

My recommendations are far less “congenial” than Frum’s, because the elites would have to place their fellow Americans’ welfare above their own vanity, power, and quarterly dividend statements. I’m not advocating a temporary pose to trick the yahoos, but a change in heart, mind, and direction. The party bosses must admit that much of the work they do in Washington is either useless or counter-productive.

Even worse, they need to admit that, at least on a few issues, the “yahoos” were right.

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  1. Xennady Member
    Xennady
    @

    BastiatJunior:If we keep blaming the wrong things for our economic mess, we won’t be able to fix it.

    I agree.

    Globalization is not the cause of our problems. Globalization in one form or another has been around since caveman tribes started trading rocks with each other.

    Perhaps, but in prior eras the US dealt with globalization by tariffs and by restricting immigration. Now, the government will do neither, heedless of any complaint or election result.

    The cause of our problems is the leftish economic policies of the past two administrations.

    And we got the leftish economic policies because because of the failures of your preferred policies.

    We had prosperity in the 80’s and 90’s, for everybody, even with globalization. The problem is elsewhere.

    No we did not. The US steel industry suffered greatly in the 90s, with vast numbers of jobs disappearing, and the Clinton administration had the exact same policy as Bush had later- shrug. Different parties, same policies, same result.

    Just one example I’m familiar with, but the point is that the blanket statement about prosperity is false. This wouldn’t have mattered if enough jobs had been created to replace those lost- but it didn’t happen.

    Jobs that would previously would been created in the US went elsewhere thanks to globalization, and jobs that were created here went to illegals- or Americans were simply replaced by foreigners, thanks to H1B visas.

    And now- Trump. Globalist chickens, coming home to roost. Enjoy.

    • #61
  2. I Walton Member
    I Walton
    @IWalton

    Some think illegal immigration isn’t a big deal and that Republican middle class can regain control and direction by embracing it and liberal programs and attitudes.   Actually because of freedom under the rule of law the US became wealthy and powerful.  That led to very large portions of the world’s population wanting to move here to partake in the wealth. The first batch came from countries with the rule of law and accommodated nicely.  In the 20th and now 21st century most come from countries in which there is no rule of law as we mean the term.  Many do not learn what that means and meant and embrace the same approach to government and politics that made the countries they fled relatively poor and backward.  This is the invasion that generally kills civilizations after they stagnate and begin to die.  We fix it by moving back toward the constitution and in the mean time we must control the invasion.  First rule.   Stick to the basics.  Avoid cleverness and social scientists.

    • #62
  3. dbeck Inactive
    dbeck
    @dbeck

    The big sucking sound of job losses started in the 90’s because of NAFTA. I worked 33 yrs. for a major airline in Tech Ops aircraft maintenance. My maintenance base did acceptance checks on new aircraft as well as overhauls on 3 types of older aircraft. We always turned aircraft in record time and never had a return for something fouled up. Top management decided to use a Mexico maintenance base for the new aircraft acceptance checks. That base had no FAA approved A&P mechanics. We sent one Certified A&P down there to sign off on all the work done by the goat herders. It took three times longer to ready the aircraft for service. It did not matter, it was cheaper. In 2004 multiple U.S. maintenance bases were closed with all heavy maintenance shipped either to Mexico or for international aircraft Hong Kong. When the bean counters run the show it’s all about profit, nationalism and pride in country disappear. Bitter, angry, fed up, tired of double talk by the ruling class, yes I am.

    • #63
  4. Duane Oyen Member
    Duane Oyen
    @DuaneOyen

    Joseph Eagar:I don’t know what Frum is talking about. The GOP “made peace” with universal health coverage in the 90s. That’s simply not an issue. Whatever market-based alternative to Obamacare the party comes up, it will still have universal coverage. The party elite isn’t stupid.

    Frum also seems to be underappreciating the importance of immigration policy……

    ……………

    The party elite is not stupid, it is, rather, clearly not committed to any sort of “universal health coverage”, and is thus defensively reactive to every alternative.  Our side has consciously avoided the subject- except at election time- for 50 years, and consequently lost the opportunity to direct the solution toward free markets.

    Look at the comments at Ricochet every single time regarding GWB and Medicare Part D- how horrible it was that there was an expansion of Medicare…. blah blah, as though it would not have been effected had GWB not pushed it.  Never an acknowledgement of how much better Part D is- the market-oriented solution to what was universally agreed in 2000 to be a problem. Part D would have been put in place lightning fast by Al Gore using that pre-existing Medicare approach.  Never an acknowledgement of how hard GWB tried in the same bill to get Medicare reformed to reflect a premium support market approach.

    Regarding pensions, never an acknowledgment of how much political capital GWB invested in trying to fix SS and add personal accounts- a market solution- to the program.

    • #64
  5. Duane Oyen Member
    Duane Oyen
    @DuaneOyen

    (c0nt)

    Nope- nothing but harping on how much something costs, or the Feds should not be doing that, we need to roll back The Great Society, etc.  Thus, voters understandably recognize that the Right wants to eliminate these programs, not fix them, so we hand the Dems their issues.

    If the citizens demand something- as they have regarding health care and old age assistance in  every developed country in the world-  they will get it.  If not from you, with a structure that makes sense and permits freedom and consumer choice with market approaches, they will get it from the Left, tops down using government-run approaches.  This is not about whether we fight hard enough against big government- it is about certain basic points of large populations living together and insisting on certain basic things.

    The same kind of point applies to “amnesty”.  What we see here- constantly- is “NO AMNESTY”!  No serious acknowledgement of what the real alternatives are or are not, what the laws actually dictate, what the implementability of an approach is, how to address the noble and ignoble motivations are of the open borders proponents, no,  just declarations that we will never agree to AMNESTY.

    And thus, by trashing every alternative approach other than sending 500,000 jack-booted paramilitary thugs around the country with 200,000 buses to round up the illegals and dump them all in Juarez, we forfeit an opportunity to discuss and implement sensible solutions.

    • #65
  6. Mike LaRoche Inactive
    Mike LaRoche
    @MikeLaRoche

    Duane Oyen:

    The same kind of point applies to “amnesty”. What we see here- constantly- is “NO AMNESTY”! No serious acknowledgement of what the real alternatives are or are not, what the laws actually dictate, what the implementability of an approach is, how to address the noble and ignoble motivations are of the open borders proponents, no, just declarations that we will never agree to AMNESTY.

    And thus, by trashing every alternative approach other than sending 500,000 jack-booted paramilitary thugs around the country with 200,000 buses to round up the illegals and dump them all in Juarez, we forfeit an opportunity to discuss and implement sensible solutions.

    Go spend several years in a border state and then tell me that. I’ve been dealing with the consequences of lax border security and non-enforcement of immigration laws all my life. Also, regarding your second paragraph, nice strawman.

    • #66
  7. Larry3435 Inactive
    Larry3435
    @Larry3435

    Koblog:Yeah, that’ll enthuse the middle. “Make peace” with your sky-high insurance you can’t use because the deductible is $5,000.

    You know, I’m beginning to wonder if those high deductibles are a feature, rather than a bug.  Insurance has always been a terrible way to fund everyday health care costs, because it wildly distorts the market, removes reasonable incentives, and inflates prices.  When people have to pay for a doctor’s visit out of their own pocket, they are going to start asking why the doctor charges $500 for five minutes of his time (plus a tongue depressor), and why a hospital nominally charges $40 for an aspirin.  Health care professionals may even (gasp!) have to start competing on price.

    Maybe there actually is one good feature to Obamacare – not that it extends health insurance to more people (as advertised), but that it extends health insurance to fewer people except for catastrophic medical events.

    • #67
  8. Guruforhire Inactive
    Guruforhire
    @Guruforhire

    Duane Oyen:(c0nt)

    The same kind of point applies to “amnesty”. What we see here- constantly- is “NO AMNESTY”! No serious acknowledgement of what the real alternatives are or are not, what the laws actually dictate, what the implementability of an approach is, how to address the noble and ignoble motivations are of the open borders proponents, no, just declarations that we will never agree to AMNESTY.

    And thus, by trashing every alternative approach other than sending 500,000 jack-booted paramilitary thugs around the country with 200,000 buses to round up the illegals and dump them all in Juarez, we forfeit an opportunity to discuss and implement sensible solutions.

    claxton-fruitcake

    • #68
  9. dbeck Inactive
    dbeck
    @dbeck

    I live in a border state. Many of our traffic accidents have one or more vehicles throw open the doors and have people fleeing in all directions. Some times in a two vehicle wreck both throw open the doors and run. If you are unlucky and get clobbered by one of these undocumented people with out a drivers license or insurance the hit is on you. I have watched my insurance rate creep up year by year. My agent tells me the reason is the number of accidents with uninsured foreign drivers. Just another benefit of open borders. My current company is struggling with insurance costs for our fleet of trucks ( around 3000 tractors).

    Health insurance costs for my company are going thru the roof. The caddy tax will do employee insurance in. My costs have jumped while  covered items have gotten fewer.

    • #69
  10. Ed G. Member
    Ed G.
    @EdG

    Larry3435:

    Koblog:Yeah, that’ll enthuse the middle. “Make peace” with your sky-high insurance you can’t use because the deductible is $5,000.

    You know, I’m beginning to wonder if those high deductibles are a feature, rather than a bug. Insurance has always been a terrible way to fund everyday health care costs, because it wildly distorts the market, removes reasonable incentives, and inflates prices. When people have to pay for a doctor’s visit out of their own pocket, they are going to start asking why the doctor charges $500 for five minutes of his time (plus a tongue depressor), and why a hospital nominally charges $40 for an aspirin. Health care professionals may even (gasp!) have to start competing on price.

    [….]

    I’ve had an HSA for many years now, and I love it – as long as my high deductible and increased scrutiny of necessary care and cost are compensated for with lower premiums. Lately, though, I’m getting it from both ends and that starts to diminish the incentive to take on the deductible and oversight. Pretty soon it’ll be better for me to go back to the regular plan and not care one whit about the cost, timing, or need of any care I get.

    • #70
  11. donald todd Inactive
    donald todd
    @donaldtodd

    BastiatJunior:Mitch McConnell’s recent comments on Tea Party candidates were extremely unhelpful. Listening to him, you would think that all Tea Partiers practiced witchcraft and legitimate rape.

    I guess we’ve been outed.

    • #71
  12. College Town Girl Member
    College Town Girl
    @CollegeTownGirl

    (Long-time podcast listener; first-time poster.)

    Has anyone looked into Frum’s stats that only 17% of Republicans support cuts to Social Security and only 21% support cuts to Medicare? Maybe the question was about current recipients vs future recipients?

    I am a Republican because I believe government actually locks people into poverty by redistributing wealth. I also believe that our health care costs are out of control BECAUSE of Medicare and Medicaid. I read Thomas Sowell’s economics textbook and believe that minimum wage and rent control and import tariffs hurt the people they claim to help.

    I’ve always known I was a squish, but those stats and the general concept of a war in the party have really shaken me up. Many thanks to Jon Gabriel for posting and analysis.

    • #72
  13. Franco Member
    Franco
    @Franco

    I think those stats are misleading. Most Republicans know their candidate would lose the election if they advocated those cuts, but if it were to be presented as a real possibility without electoral damage, I think the number would be much higher.

    • #73
  14. BastiatJunior Member
    BastiatJunior
    @BastiatJunior

    Xennady: Perhaps, but in prior eras the US dealt with globalization by tariffs and by restricting immigration. Now, the government will do neither, heedless of any complaint or election result.

    The last time the US did that was in the ’30s.  How did that work out?

    And we got the leftish economic policies because because of the failures of your preferred policies.

    I said leftish policies of the past two administrations.  It was GWB that turned left, in spite of two decades of a strong economy.  My preferred policies (and I’m honored you gave me credit) got us those two good decades.

    No we did not. The US steel industry suffered greatly in the 90s, with vast numbers of jobs disappearing, and the Clinton administration had the exact same policy as Bush had later- shrug. Different parties, same policies, same result.

    Just one example I’m familiar with, but the point is that the blanket statement about prosperity is false. This wouldn’t have mattered if enough jobs had been created to replace those lost- but it didn’t happen.

    40 million jobs were created over those two decades.  That’s the net increase.  Unemployment went steadily down for the whole time except for the Bush I recession.  Clearly enough jobs were created to replace the lost ones.

    The steel industry isn’t the entire economy.  In a dynamic economy, industries come and go.  To use Rush’s favorite example, how’s the buggy whip industry doing?

    • #74
  15. Jager Coolidge
    Jager
    @Jager

    Duane Oyen: And thus, by trashing every alternative approach other than sending 500,000 jack-booted paramilitary thugs around the country with 200,000 buses to round up the illegals and dump them all in Juarez, we forfeit an opportunity to discuss and implement sensible solutions

    I think Republicans could reduce a great deal of their concerns if they stole Bill Clinton’s immigration policy from 20 years ago. Clinton state we were a nation of immigrants but also a nation of laws. Illegal immigration cost tax payer money, hurt workers and was unfair to those who waited in line.

    His policy was to increase border security, enforce laws against illegals working, insure illegals did not get public benefits or welfare and deport illegals when found with mandatory deportation of criminal illegals.

    This would make a lot of the people happy and has very few jack-booted thugs. There is also no path way to anything or legal but non-citizen status. Just enforce the laws we have already passed.

    http://www.presidency.ucsb.edu/ws/?pid=51324

    • #75
  16. Ed G. Member
    Ed G.
    @EdG

    Franco:I think those stats are misleading. Most Republicans know their candidate would lose the election if they advocated those cuts, but if it were to be presented as a real possibility without electoral damage, I think the number would be much higher.

    Right. Having a goal/ideal is not the same as refusing to compromise at all, which seems to be the straw man most used. It’s helpful, though, to know who has what goals and who will compromise in which ways so that we know who to trust to tip the balance towards our goals for a change.

    • #76
  17. Midget Faded Rattlesnake Member
    Midget Faded Rattlesnake
    @Midge

    Ed G.:

    Larry3435:

    You know, I’m beginning to wonder if those high deductibles are a feature, rather than a bug… When people have to pay for a doctor’s visit out of their own pocket, they are going to start asking why… Health care professionals may even (gasp!) have to start competing on price.

    I’ve had an HSA for many years now, and I love it – as long as my high deductible and increased scrutiny of necessary care and cost are compensated for with lower premiums. Lately, though, I’m getting it from both ends and that starts to diminish the incentive to take on the deductible and oversight. Pretty soon it’ll be better for me to go back to the regular plan and not care one whit about the cost, timing, or need of any care I get.

    Same here, Ed. Our HSA at first seemed like the smart, responsible consumer move. But lately, as it has become increasingly inflexible, we increasingly wonder whether going back to the “wasteful and indulgent” regular-style plan might not be the better deal again.

    • #77
  18. SDN Inactive
    SDN
    @SDN

    Give citizenship to 12 million illegals, 3/4 of whom will vote Left, and you will most certainly kiss this country goodbye.

    • #78
  19. The Reticulator Member
    The Reticulator
    @TheReticulator

    Duane Oyen: Regarding pensions, never an acknowledgment of how much political capital GWB invested in trying to fix SS and add personal accounts- a market solution- to the program.

    The part I remember is that GWB waited until his supporters invested all of their personal capital into this attempt (and the leftwing machine in response was at full, white-hot hate) before backing out and leaving his supporters to twist in the wind.   And that it was just one of several times.

    Maybe I remember it wrong.  I often tell people that I have a very good memory.  I might remember things wrong, but I remember them very well.  And that’s the way I remember this.  It was a recurring nightmare.  I got so I’d wake up wondering when he was going to back out this time.

    • #79
  20. Xennady Member
    Xennady
    @

    BastiatJunior:The last time the US did that was in the ’30s. How did that work out?

    This isn’t the 1930s. Get over it.

    I said leftish policies of the past two administrations. It was GWB that turned left, in spite of two decades of a strong economy.

    Let me guess- absent Bush’s turn left, we’d never have had the economic collapse, right?

    Bad things happened- but it had nothing to do with the longstanding policies you like– open borders and free trade. Hey, I disagree.

    40 million jobs were created over those two decades. That’s the net increase.

    Mmm-hmm. Yet the country has added roughly 100 million people since then, and after every recession I see stories about higher paying jobs leaving the country. I remember seeing an advocate for the US-South Korea trade deal gush that, sure we’d lose jobs in chemical and automobile, but we’d gain jobs from pig farming.

    Keep that sort of thing up for a few decades and we’d be in the situation we’re in. Hence, Trump, and his skepticism about these sort of deals, which I share.

     To use Rush’s favorite example, how’s the buggy whip industry doing?

    The buggy whip industry- carriage making, etc, did fine, as it eventually evolved into the automotive industry.

    In the United States, too. Imagine that- an industry developing here, and not China.

    Crazy talk, huh?

    • #80
  21. BastiatJunior Member
    BastiatJunior
    @BastiatJunior

    Xennady: BastiatJunior:The last time the US did that was in the ’30s. How did that work out?

    This isn’t the 1930s. Get over it.

    Still don’t have an answer to that, do you?

    • #81
  22. BastiatJunior Member
    BastiatJunior
    @BastiatJunior

    Xennady: Let me guess- absent Bush’s turn left, we’d never have had the economic collapse, right?

    Yup.

    • #82
  23. BastiatJunior Member
    BastiatJunior
    @BastiatJunior

    Xennady: Mmm-hmm. Yet the country has added roughly 100 million people since then, and after every recession I see stories about higher paying jobs leaving the country.

    55.7 million to be accurate.  The number of job seekers in that would be well below 40 million.  And in fact the unemployment rate went down, not up.

    And yes, high paying jobs do disappear during recessions.

    You can deny all you want that the Reagan recovery turned into a 20 year expansion, but facts are stubborn things.

    • #83
  24. donald todd Inactive
    donald todd
    @donaldtodd

    Mike LaRoche:As a military historian, I say this with absolute certainty: you cannot retreat your way to victory. At some point, you must stand and fight.

    Or be overwhelmed and lose anyway.

    • #84
  25. donald todd Inactive
    donald todd
    @donaldtodd

    Ontheleftcoast:

    donald todd:

    Ontheleftcoast:Of course, it’s just the wingnuts who think that there’s a UniParty Elite that doesn’t represent their interests.

    Oh, wait. Jeb! donors threatening to vote for Hillary if Trump is the nominee, and Bob Dole threatening to vote for Hillary if it’s Trump and stay home if it’s Cruz. Move along, nothing to see.

    Do you know what they call Jeb!’s donors? Bob Dole? They call them the party faithful.

    donald todd:

    Ontheleftcoast:Of course, it’s just the wingnuts who think that there’s a UniParty Elite that doesn’t represent their interests.

    Oh, wait. Jeb! donors threatening to vote for Hillary if Trump is the nominee, and Bob Dole threatening to vote for Hillary if it’s Trump and stay home if it’s Cruz. Move along, nothing to see.

    Do you know what they call Jeb!’s donors? Bob Dole? They call them the party faithful.

    The party that ran Dole, McCain, and Romney, and can live with a Hillary victory but not a Cruz or Trump one?

    The party that successfully took the voting quid from the Tea Party but didn’t deliver the asked for policy quo well, despite having a majority in Congress largely elected by the Tea Party?

    The party whose unexpected generosity on that last minute, secret budget that Chuck Schumer was crowing about?

    The ones who are faithful to that stuff?

    It depends on who you ask.  I agree with you.

    • #85
  26. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    40 million jobs were created over those two decades. That’s the net increase.

    Mmm-hmm. Yet the country has added roughly 100 million people since then, and after every recession I see stories about higher paying jobs leaving the country. I remember seeing an advocate for the US-South Korea trade deal gush that, sure we’d lose jobs in chemical and automobile, but we’d gain jobs from pig farming.

    Keep that sort of thing up for a few decades and we’d be in the situation we’re in. Hence, Trump, and his skepticism about these sort of deals, which I share.

    To use Rush’s favorite example, how’s the buggy whip industry doing?

    The buggy whip industry- carriage making, etc, did fine, as it eventually evolved into the automotive industry.

    In the United States, too. Imagine that- an industry developing here, and not China.

    Crazy talk, huh?

    Yep, it’s crazy – and wrong:

    As noted above, it’s about 50 million population growth, last 2 decades.

    And incomes are going up, despite the loss of a tiny fraction of the total economy (steel manufacturing).

    Capture

    • #86
  27. Xennady Member
    Xennady
    @

    BastiatJunior:Still don’t have an answer to that, do you?

    Actually, I deleted it due to lack of words.

    I’ll elaborate further. However, I reiterate that it is not in fact the 1930s and we do not face the same problems. Yet whenever I bring up this topic I can rest assured that someone will bring up Smoot-Hawley, sneeringly assuming that mere mention will end any argument.

    But you took a worse option. You blamed the Great Depression on restriction of immigration and tariffs. Since the immigration restrictions predated the 1930s and lasted long after the Great Depression ended, I think it obvious that immigration wasn’t a causative factor. Re tariffs, you ignore the presence of that policy device going all the way back to the Founding.

    The casual assumption that any tariffs will necessarily be as stupid as Smoot-Hawley is as idiotic and false as the assumption any income tax will necessarily be 90%.

    In any case, the real failure here is political. The GOP not only refuses to adjust policies in response to its failure, it refuses even to notice that it has failed.

    Any example of failure is quickly explained away as some deviation from true principles- for example, when you claimed that we got the economic collapse because Bush went astray from true principles, not because his principles were flawed.

    • #87
  28. Joseph Eagar Member
    Joseph Eagar
    @JosephEagar

    Chris Campion:

    Joseph Eagar:

    But the Fed does things like QE, over and over again, which tends to deflate the value of the dollar, when there’s billions in dollars floating that aren’t being spent anywhere. The M2 velocity is stagnant and has been ever since QE began. That’s why you see no uptick in middle-income incomes, job growth, etc.

    Oh  come on.  The reason the dollar was weak is simple: fiscal austerity.  QE was the mechanism by which the Fed drove the money freed up by austerity into the private sector, but it wasn’t powerful enough by itself to devalue the dollar in real terms.

    Look, the U.S. had a classic  balance of payments crisis, if a mild one (compared to, say, Greece).  REER devaluation is how you get out of that situation, and you do it by tightening fiscal policy, thus increasing net savings and putting downward pressure on import demand, while printing lots of money.

    Keep in mind, said money printing even happens in totally deregulated monetary systems (free banking).  If the goal is to devalue in real terms, and one isn’t inside a fixed exchange rate system (and free banks are *not* a fixed exchange rate system), then the savings rate and the money supply will tend to rise together.  That, indeed, is the entire point of being in a flexible system in the first place.

    • #88
  29. Joseph Eagar Member
    Joseph Eagar
    @JosephEagar

    BrentB67:

    Joseph Eagar:

    BastiatJunior:

    BrentB67: Blame the Fed.

    I’ve read stuff by people wiser than I that Presidents tend to get the dollar they want, in spite of the Fed. That is, Bush and Obama both wanted a weak dollar and that’s what they got.

    I don’t fully understand the mechanics or division of labor here, but I learned this from columnist John Tamny, among others.

    The Treasury, which is under Presidential control, has a lot to do with it.

    This is not to defend Benjamin Bernanke, who was educated beyond his capacity, or Janet Yellen.

    Technically speaking, the Fed doesn’t have jurisdiction over the (foreign exchange) value of the dollar, which is formally the responsibility of the Treasury Department, not the Fed.

    What mechanism does the Treasury have to set exchange rates?

    I think inflation expectations and short-term interest rates have more to do with exchange rates than anything the Treasury has up its sleeve.

    They have a slush fund for the purpose, called the Exchange Stabilization Fund (which, if I remember right, hasn’t been used in an FX intervention in decades, though it has been used to bail out foreign governments, like Mexico in the 90s).  They can also instruct the Fed to intervene in FX markets.

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  30. Chris Campion Coolidge
    Chris Campion
    @ChrisCampion

    Joseph Eagar:

    Chris Campion:

    Joseph Eagar:

    But the Fed does things like QE, over and over again, which tends to deflate the value of the dollar, when there’s billions in dollars floating that aren’t being spent anywhere. The M2 velocity is stagnant and has been ever since QE began. That’s why you see no uptick in middle-income incomes, job growth, etc.

    Oh come on. The reason the dollar was weak is simple: fiscal austerity. QE was the mechanism by which the Fed drove the money freed up by austerity into the private sector, but it wasn’t powerful enough by itself to devalue the dollar in real terms.

    Look, the U.S. had a classic balance of payments crisis, if a mild one (compared to, say, Greece). REER devaluation is how you get out of that situation, and you do it by tightening fiscal policy, thus increasing net savings and putting downward pressure on import demand, while printing lots of money.

    Keep in mind, said money printing even happens in totally deregulated monetary systems (free banking). If the goal is to devalue in real terms, and one isn’t inside a fixed exchange rate system (and free banks are *not* a fixed exchange rate system), then the savings rate and the money supply will tend to rise together. That, indeed, is the entire point of being in a flexible system in the first place.

    “Oh come on” is not a convincing argument.  And currency devaluation in not a product of one or several things, it’s a much larger combination event.  But printing hundreds of billions, injected into the banking system, wasn’t done as a currency stabilization effort.  It was sold as a jump-start to the economy – low rates, lots of cash.

    The result of that scenario is often deflation, or a devaluing of currency.  What the exchange rate is is not necessarily dependent upon the reality of the market.  I’d have to research comparative currency rates, but QE, as part of fiscal and monetary policy efforts, did not produce the predicted effects.

    Might be getting a touch off-tangent here.  I think Frum misses the point, though, as usual.

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