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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  1. Profile photo of Robert Dammers Thatcher

    I worry whether the article has actually been read rather than dismissed because of where it was published. Dr Hayward is a regular lecturer at the Ashbrook Centre, a PowerLine blogger, and the author of the two-volume, magisterial “Age of Reagan”. I struggle to see what further qualifications one needs to be a conservative in good standing. His comments about the embeddedness of the Welfare State come from Voegli’s “Never Enough”, one of our Encounter books of the week. Do we really not engage in discussion of ideas?

    Perhaps a good discipline would be to engage without

    • Generalisations about what “liberals are like” (BOO!)
    • Generalisations about what “conservatives are like” (Huzzah!)
    • Discussing what parties the author has attended to pick up such foolish ideas.

    We’re supposed to engage the idea, not the man. We’re supposed to be better than that.

    • #1
    • November 21, 2011 at 4:17 am
  2. Profile photo of Lucy Pevensie Inactive
    Robert Dammers

    We’re supposed to engage the idea, not the man.

    I thought that Dave Carter did an outstanding job of doing just that. Where do you think he went wrong? Or are you suggesting that we must read the article as well as Dave’s analysis? That strikes me as similar to saying that if we read a book review, we must also read the book, a sort of impractical idea.

    • #2
    • November 21, 2011 at 4:40 am
  3. Profile photo of Larry3435 Member

    I am a bit distressed at how often the limited government argument relies, as a first principle, on Constitutional originialism. The Constitutional argument is not persuasive — not even to me and I am a rock solid advocate of limited government. I can’t see how that argument will persuade lefties.

    Limited government is not good because it says so in the Constitution. Limited government is good because it works. The less the government meddles in peoples’ lives, the better off those people are. Always. There can be no re-boot, because there is nothing new. It is always the same fight and always the same two sides. As usual, Robert Heinlein said it best:

    “Political tags–such as royalist, communist, democrat, populist, fascist, liberal, conservative, and so forth–are never basic criteria. The human race divides politically into those who want people to be controlled and those who have no such desire. The former are idealists acting from highest motives for the greatest good of the greatest number. The latter are surly curmudgeons, suspicious and lacking in altruism. But they are more comfortable neighbors than the other sort.”

    • #3
    • November 21, 2011 at 5:07 am
  4. Profile photo of Dave Carter Contributor
    Dave Carter Post author
    Robert Dammers: I worry whether the article has actually been read rather than dismissed because of where it was published. … I struggle to see what further qualifications one needs to be a conservative in good standing. His comments about the embeddedness of the Welfare State come from Voegli’s “Never Enough”, one of our Encounter books of the week. Do we really not engage in discussion of ideas? …

    * The publication that carried the article was mentioned as a source citation and carried no weight in my opinion of the article.

    * The generalizations I address are Dr. Hayward’s, such as:

    – – Conservatives’, “categorical rejection of all prospective government action.”

    – – Economic stagnation and regress, “…have attracted only the attention of Charles Murray.”

    * I don’t award titles. “Conservative in good standing” means nothing to me because, as you suggest we ought, I engage ideas, like the idea that we must compromise by increasing the tax burden on a private sector that is already on its knees, or the idea that a progressive doctrine that has failed and bankrupted the country somehow represents a failure of conservatism, or the idea that defending Constitutional law is extremist.

    • #4
    • November 21, 2011 at 5:20 am
  5. Profile photo of Dave Carter Contributor
    Dave Carter Post author
    Lucy Pevensie

    Robert Dammers

    We’re supposed to engage the idea, not the man.

    I thought that Dave Carter did an outstanding job of doing just that. Where do you think he went wrong? Or are you suggesting that we must read the article as well as Dave’s analysis? That strikes me as similar to saying that if we read a book review, we must also read the book, a sort of impractical idea. · Nov 21 at 3:40am

    To be fair, Lucy, it is a huge article and I simply didn’t have time to address every point Dr. Hayward made. My general reaction was that his approach would, yet again, have conservatives playing only one half of the field, always on defense and never advancing the cause of limited government and Constitutional rule.

    • #5
    • November 21, 2011 at 5:24 am
  6. Profile photo of Dave Carter Contributor
    Dave Carter Post author
    Larry3435: I am a bit distressed at how often the limited government argument relies, as a first principle, on Constitutional originialism. The Constitutional argument is not persuasive — not even to me and I am a rock solid advocate of limited government. I can’t see how that argument will persuade lefties.

    Limited government is not good because it says so in the Constitution. Limited government is good because it works. …· Nov 21 at 4:07am

    Excellent point. If it didn’t work, the fact that it is law wouldn’t be particularly helpful I suppose. Which is why Obamacare gets so little respect. Its predecessors in Europe and Massachusetts tend to underscore the point. But the American experience of limited government, combined with the fact that is the law, ought to carry significant weight, especially in the court system.

    • #6
    • November 21, 2011 at 5:29 am
  7. Profile photo of Xennady Member

    From the article:

    “Finally, conservatives must rethink their sweeping rejection of public investments in public goods such as science research and useful infrastructure.”

    Followed shortly by this:

    “In fact, over the last 30 years, federal science research spending has tended to grow faster under Republican presidents than Democratic ones.”

    Gosh. Doesn’t that second quote contradict the first? I’ve never thought conservatives sweepingly rejected spending on infrastructure or research and Hayward’s own words back me on that.

    Why would Hayward do this?

    Allow me to explain. (You’re welcome).

    Conservatives in this country have roughly the same status as Christians in Egypt. We’re tolerated, barely, as long as we keep quiet, on the assumption that our views and culture are on a path to ultimate extinction.

    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.

    That’s my take on “rebooting” conservatism.

    • #7
    • November 21, 2011 at 5:47 am
  8. Profile photo of Percival Thatcher
    Xennady: “In fact, over the last 30 years, federal science research spending has tended to grow faster under Republican presidents than Democratic ones.”

    Yeah, that has happened, and a lot of it is science research for the military.

    Some of the research is pie-in-the-sky, gee-it-would-be-neat-if stuff that never pans out.

    Some of the research is genuinely interesting stuff that doesn’t actually end up as part of a weapons system — at least not immediately.

    Some of the research ends up being what makes Johnny Jihad jump every time he hears an unexpected “click.”

    The idea that increasing the amount we collect will reduce the amount we spend is ludicrous.

    • #8
    • November 21, 2011 at 6:04 am
  9. Profile photo of Pilli Member
    Joseph Eagar:

    crony capitalism

    Xennady:

    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.

    That’s my take on “rebooting” conservatism.

    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.

    I agree with Xennady. We need to “reboot” by being more precise in our language. This is one of the traits that makes Newt so popular. He is willing to call out the pundits in their misuse of terms and their abuse of “facts” to support an argument. Would that more on the Conservative side did that.

    P.S. Great post, Dave.

    • #9
    • November 21, 2011 at 7:02 am
  10. Profile photo of Michael Tee Inactive

    David Frum, meet Steven Hayward. Steve Hayward meet David Frum.

    Substitute David Brock, Ross Douthat, Ramesh Ponnuru, the editorial staff at National Review, Ann Coulter, et al. for either of these candidates.

    • #10
    • November 21, 2011 at 9:33 am
  11. Profile photo of Joseph Eagar Member

    I think we can agree that the level of inequality in our society is unnatural. How could it not be, with the government distorting the marketplace in so many ways?

    With open borders bidding down wages, a stock bubble, a housing bubble, crony capitalism, the implicit wage deflation embedded in the trade deficit (we can’t consume more than we produce forever, thus the pressure on middle-income wages), and all the rest, is it any wonder inequality is so high?

    And whose fault is this? Who instigated these policies? Why, could it be the government? And now, that same government wants to make things worse with redistribution? While leaving in place the very policies that got us in this mess in the first place? Placate the proles by reducing inequality on paper only, so the elites can continue their corruption?

    • #11
    • November 21, 2011 at 9:58 am
  12. Profile photo of David Williamson Member
    Dave Carter: Conservatism doesn’t need a re-boot, but rather a renewed fidelity to the enduring principles that made this nation great. ·

    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.

    • #12
    • November 21, 2011 at 9:59 am
  13. Profile photo of Dave Carter Contributor
    Dave Carter Post author
    David Williamson
    Dave Carter: Conservatism doesn’t need a re-boot, but rather a renewed fidelity to the enduring principles that made this nation great. ·
    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.]

    • #13
    • November 21, 2011 at 10:02 am
  14. Profile photo of dogsbody Inactive

    Hear, hear. Since 2008 the process has gone something like this: (a) left wing politicians ram through enormous spending increases that are multiples beyond anything the nation has seen before; (b) ordinary citizens and conservative pundits cry alarm at this direction; (c) the press calls group (b) “extremists” and “racists”, while fawning on the “Occupy” protesters.

    Conservatism doesn’t need “rebooting”. The nation needs to give these left-wing idiots the boot instead.

    • #14
    • November 21, 2011 at 10:15 am
  15. Profile photo of Joseph Eagar Member

    I think we all agree that crony capitalism is not capitalism. The term is ironic. It’s a very serious issue, and in all likelihood we’ll have to work with centrist types in the Democratic Party to get rid of it. Arguing over terms is not such a good idea for something this dire.

    Since modern forms of socialism are crony capitalism times one thousand, I don’t think the left wins much by using this phrase.

    • #15
    • November 21, 2011 at 10:17 am
  16. Profile photo of Mel Foil Inactive

    Because conservatives are an independent sort, it’s just hard to get them all on the same page. If they’re all the same page, they’re probably not all that conservative. Where conservatives come together is in the understanding that government central planning is the mortal enemy of freedom, and as an added feature it doesn’t work. Only the Market (the crowd) works, because in the crowd, unreasonableness gets killed off just by the number of options, by the vigorous competition. Leave the market alone as much as possible, and it works. The conservative coalition is the “leave me alone” coalition. Nothing more American.

    I was watching the documentary about Woody Allen tonight, and in one of the clips they showed, Woody was playing a guy who just got a job helping strippers dress and undress “for $20 a week.” They ask Woody, “why so little?” Woody replies, “that’s all I could afford to pay them.” A conservative would say, far be it from me to object to a work contract where both sides are satisfied. Liberals would go to court to impose minimum wage. That’s the difference.

    • #16
    • November 21, 2011 at 10:18 am
  17. Profile photo of Dave Carter Contributor
    Dave Carter Post author
    etoiledunord: Because conservatives are an independent sort, it’s just hard to get them all on the same page. If they’re all the same page, they’re probably not all that conservative. Where conservatives come together is in the understanding that government central planning is the mortal enemy of freedom, and as an added feature it doesn’t work. Only the Market (the crowd) works, because in the crowd, unreasonableness gets killed off just by the number of options, by the vigorous competition. Leave the market alone as much as possible, and it works. The conservative coalition is the “leave me alone” coalition. Nothing more American.

    . · Nov 20 at 9:18pm

    Very good point. It’s a little like herding cats.

    • #17
    • November 21, 2011 at 10:29 am
  18. Profile photo of Larry Koler Member
    Dave Carter

    David Williamson

    Dave Carter: Conservatism doesn’t need a re-boot, but rather a renewed fidelity to the enduring principles that made this nation great. ·
    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!]

    • #18
    • November 21, 2011 at 10:30 am
  19. Profile photo of Larry Koler Member
    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.

    • #19
    • November 21, 2011 at 10:44 am
  20. Profile photo of Mel Foil Inactive

    Another example of how competitive capitalism helps the buyer as well as the seller:

    A few days ago, I was shopping for an out-of-print book, published in 2001. Either “new old stock”, or used, I didn’t care. Turns out it was available from maybe 25 or 30 different sellers. The price (from various small book dealers) ranged from about $15 to $150…and in some cases the new was much cheaper than the used…for the identical book. I bought the $15 one. Thankfully, bookselling is not a government monopoly. Not yet.

    • #20
    • November 21, 2011 at 10:47 am
  21. Profile photo of Terry Mott Member

    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?

    • #21
    • November 21, 2011 at 10:58 am
  22. Profile photo of Dan Hanson Thatcher

    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.

    • #22
    • November 21, 2011 at 11:14 am
  23. Profile photo of Mendel Member

    I just read through the entire article. I must say that I (as something of a centrist) find a number of Hayward’s specific points appealing.

    However, I am getting fed up with conservatives of any stripes trying to force homogenization onto their side. At the same time that a center-right type like Hayward is trying to “convert” those more conservative than himself, many on the far-right dock Hayward, Ramesh Ponnuru or David Frum of their titles as conservatives.

    The truth is that in a two-party country, there will always be only one party representing the right. It would behoove its members to learn to accept one another instead of constantly trying to disown each other.

    • #23
    • November 21, 2011 at 11:18 am
  24. Profile photo of Dan Hanson Thatcher

    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.

    • #24
    • November 21, 2011 at 11:25 am
  25. Profile photo of Larry Koler Member
    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.

    • #25
    • November 21, 2011 at 11:37 am
  26. Profile photo of genferei Member

    What a cry of despair! From the article:

    Which brings us to the third major political fact of our age: the welfare state, or entitlement state, is here to stay. It is a central feature of modernity itself.

    Fortunately, ‘political facts’ are not real facts. Perhaps ‘conservative intellectuals’ will take time out from their normal activity of seeking to suppress thought that makes them uncomfortable at Georgetown cocktail parties to think the thoughts that need to be spread to unpick something that is, after all, only a few generations old.

    • #26
    • November 21, 2011 at 12:09 pm
  27. Profile photo of Midget Faded Rattlesnake Moderator
    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.

    • #27
    • November 22, 2011 at 1:00 am
  28. Profile photo of Dan Hanson Thatcher
    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>

    • #28
    • November 22, 2011 at 1:34 am
  29. Profile photo of Dan Hanson Thatcher

    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.

    • #29
    • November 22, 2011 at 1:41 am
  30. Profile photo of Dan Hanson Thatcher

    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.”

    • #30
    • November 22, 2011 at 1:49 am
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