On the Contrary

This Sunday there were a couple of themes that came out in the Sunday News shows and the editorials that I think are worth reiterating here.  The first has to do with how the Republicans have campaigned, who they are campaigning to, and the second has to do with our economy, its fix, and its future.  Let’s start with the Republicans.

David Brooks, the conservative, opined in “Ceding the Middle”, that modernizing the Republican party was critical to a win and that John McCain “…never escaped the straightjacket of a party that is ailing and a conservatism that is behind the times. And that’s what makes the final weeks of this campaign so unspeakably sad.”  David is arguing that there is still great value in conservative values, but that by not modifying their approach to the challenges of today, the party missed a major opportunity to revamp and revitalize the Republican Party.  He still thinks John McCain would be a great president, but I would argue that if he couldn’t lead his own party out of yesteryear, how would he lead the nation out yesteryear.  But the real question here is that if you are appealing to old tired out ideas, just exactly who is your base who thinks these ideas work?

Without the blinders of conservative philosophy, Timothy Egan opined in “The Party of Yesterday”  that the Republicans have focused their whole approach on the less intelligent and ignorant of our population. A recent study identified the most educated cities in our nation based upon percentage of college graduates:

“Among the top 10, only two of those metro areas — Raleigh, N.C., and Lexington, Ky. — voted Republican in the 2004 presidential election.  This year, all 10 are likely to go Democratic. What’s more, with Colorado, New Hampshire and Virginia now trending blue, Republicans stand to lose the nation’s 10 best-educated states as well.”

Is this the less American parts of the country that Sarah Palin refers to?  The point here is very simple.  The Republicans have a campaign focused on anti-intellectualism, jingoism, and a fear based appeal by claiming we are moving to socialism, elitism, and consorting with terrorists.  They have not argued effectively on the issues and have focused on character instead to appeal to our less educated citizens.  I think the conclusion is obvious.  When your conservative philosophy for our future doesn’t really address the challenges we face, all you have left is to try appeal to those who don’t think deeply about the issues and react to fear.  Hopefully this election will be  a referendum on that kind of thinking.

The other theme was about what kind of an economy will we have for the future.  With the nationalization of the banking industry are we moving toward a much more nationalized capitalism?  Although conservatives see the need for strong intervention now, they would prefer far less government control and say in how banks operate.  But after the bank failures in 1929 and the reforms that were instituted to prevent such a catastrophe again, we forgot those lessons in conservative pushes to get government out of the markets.  The real issue here is when does government intervention limit the necessary risk taking that is the hallmark of a vibrant and innovative economy.  Thomas Friedman opined in “If Larry and Sergey Asked for a Loan”  that we need to regulate but in a careful and thoughtful way:

“Bottom line: We must not overshoot in regulating the markets just because they overshot in their risk-taking. That’s what markets do. We need to fix capitalism, not install socialism. Because, ultimately, we can’t bail our way out of this crisis. We can only grow our way out — with more innovation and entrepreneurship, which create new businesses and better jobs.”

The point here is that the world has changed and even progressives see how the market place is critical to our recovery and we must strike a balance.  But note a balance is a far cry from the conservative dogma of laisse-faire capitalism.  But I think the most important comment about where our economy is going was made by Paul Krugman in his editoral, “Desperately Seeking Seriousness”.  In this piece, Mr. Krugman opined that the Republicans were running a frivolous campaign and it was working until the economy focused the voters on serious issues.  He closed his editorial with this:

“Will the nation’s new demand for seriousness last? Maybe not — remember how 9/11 was supposed to end the focus on trivialities? For now, however, voters seem to be focused on real issues. And that’s bad for Mr. McCain and conservatives in general: right now, to paraphrase Rob Corddry, reality has a clear liberal bias.”

The point here is that we can always go on doing stupid things if they don’t have consequences that are immediately felt.  But reality has focused us on our economy and the market system as it has been working in this country.  The market place of the future will not be the market place of the past if we are to regain our leadership in the world.  It will be a market place that does have a liberal bias, but also as Mr. Friedman points out, a market place with “smart regulation”.  This is not a world for slogans and conventional wisdom, but for well thought out policies for our future.  These are not the voters that the Republican’s have targeted and is why they will lose because they are not thinking deeply about where we are going or presenting policies that can address our challenges.

This is from an interview with Fareed Zakaria on GPS last Sunday. JEFFREY SACHS, PROFESSOR OF ECONOMICS AND DIRECTOR, COLUMBIA UNIVERSITY’S EARTH INSTITUTE:

“I do think the era of big tax cuts, whether for stimulus or other things, are over. We’re going to have to grow up and understand that we need taxes to pay for basic government services. We’ve been neglecting that for a long time.

We’re going to have to come back to reality. We’ve been in fiscal unreality even before the crisis. Now the crisis is going to make all of this more dramatic. We’ll have large budget deficits, as Fred and Sebastian have said.

The scope for big tax-cutting – the McCain ideas are absolutely surrealistic. They are completely outside of anything sensible.  Rich people are going to have to pay taxes again. That’s just going to be part of America once again.

We’ve been trying to run a government on about 17 percent of national income in taxation ever since the Reagan era came in. It’s been a myth all the way along. We’ve been borrowing heavy amounts all through the period.

You can’t squeeze government when you take into account Social Security and Medicare, Medicaid, military, the interest on the debt – things that have to be done. When you see all the other things that we care about, the quality of our lives, all squeezed into a tiny little amount, which is what’s happened for almost 30 years now, we’ve run out of that game.

So, this is not only a financial crisis, it’s the end of the Reagan era. It’s time to grow up again and understand that we’re going to have to pay taxes – rich people first – and that from there, we’re going to have to use those revenues for the things that count: health, education, infrastructure, energy.

This is not an invitation to ignore our future. It’s an invitation to start thinking seriously about it again.”

Well there it is.  The party is over and we have to pay for what we want in the future, not to mention pay for what we have already consumed when we embarked on the great Ronald Reagan free ride.  Dr. Sachs went on to say that in reality, there should be no tax cuts for anyone.  We have to embark on a whole new direction and we need to start responsibly paying for it.  I totally agree.  Tax cuts usually just fund additional purchases (and not effectively) of foreign produced goods and like the last tax rebate, many people just saved it.  It’s time to start spending on things that build our future.

I can hear it now from my conservative friends who have bought the low tax mantra that all we need to do is to reduce waste and abuse, and cut wasteful programs, and my taxes are already too high.  But when you touch one of the programs that they benefit from they squeal like pigs.  Every study ever done says that at best you could cut maybe 3%-5% out of the budget in real waste.  Like earmarks, it makes a good story but the reality is we want more than we are willing to pay for.

The bottom line here is that conservatives are just very, very selfish.  The present system has work well for them and has made many of them rich and they fail to feel any responsibility for the majority of our citizens who have suffered under their economic policies.  They will hang on to their beliefs to the very end because it has served them so very well.  Here is a real email conversation I had with one of them I had on Wednesday that emphatically illustrates my point:

HE: Double standard is applied to us.  I am voting “white and my wallet”.

ME:  And making the same mistake you made voting for George Bush.

HE:  Wrong!  I made a fortune and kept it.

Me:  While the rest of the country atrophied

The rest of the rant was about how we established two democracies in the Middle East, won the war against Al Qaeda, and that water boarding works.  Do we live in two different worlds?  You bet, but in mine reality has finally hit home with the market crashing to demonstrate the bankruptcy of Republican economic promise of low taxes, no regulation, and making the wealthy wealthier will make us all wealthy.  There is a level of selfishness here that is the hallmark of conservative thinking.  I am glad their time is almost over. They have almost destroyed our dear country. Or as Dr. Sachs put it:

“This is not an invitation to ignore our future. It’s an invitation to start thinking seriously about it again.”

There are two classes in America (who vote) and they are the rich and the middle class, with some poor thrown in (many don’t vote).  There is a war for our future going on between them.  What this war is about is free enterprise in its present form, which has allowed for large profits and gains for the wealthy, but also has resulted in a shrinking middle class, job insecurity, and a growing split between the haves and the have-nots.  Because of the laissez-faire approach to our economy, the economy ran wild with greed and group-think which allowed for very risky investments to seem the norm and the resulting crash.  Clearly the old concept of markets that are rational; that markets will determine where value lies and make the appropriate choices with the invisible hand; and that these allocations are neutral and fair and to be preferred to any government solution needs to be rethought.

Now for conservatives like David Brooks, this will bring on socialism (‘Big Government Ahead‘).  Note that in conservative speak “Big Government” is code for socialism and in their dogma this idea of big government is anathema to their idea of freedom.  The question in this discussion is freedom for whom?  Yet in the last eight years the conservatives have grown government larger than any other administration.  It is not that they are hypocrites (although they are), it is that their competing dogmas don’t quite mesh.  Incorporating the religious conservatives into the party means injecting government into your life on your personal choices.  Being xenophobic means an ever-increasing military and border police, not to mention incursions into what we though was private.

But back to the topic at hand:  Conservatives see the Democrats as the party that will bring us government intervention into everything and destroy the economic engine that has made them fat cats.  Well that belief is partly true.  What was freedom for them was enslavement for the rest of us. While the current policies of the Republican administration gave them tax breaks and a free reign to ignore regulations, it increased the wealth at the top and the poor at the bottom, and made most of us fearful for our jobs.  What most of us would like to see is a more controlled economy that works for all of us.  But ideology of the conservatives will get in the way.

That is because they don’t see a middle way.  In their world things are black and white.  It is either good or bad.  If they had their way the bailout would be minimal, and like Herbert Hoover, would have fiddled, while Rome burned.  It is interesting that the real direction of the bailout is being driven by better ideas from “liberal” Europe and specifically the English.  They are not wedded to conservative ideology and are unafraid of a more aggressive government action.  Conservatives cannot accept that Democrats also know the benefits of the market place and their fear knows no bounds.  Just pick up the paper and read the letters to the editor who are terrified of a Democratic approach to problems.

But there are some realities that have to drive the train and upset the apple cart of ideology.  Here is a sampling of what I think are the realties that conflict with that conservative economic ideology:

• The profit motive does not serve many basic needs and the most salient example is health care.  Making profits by skimming the healthy or denying coverage is expensive and is counter productive to a healthy population.  What is it about the success of Medicare and health care in other countries that we cannot learn from.  The objections are usually based upon anecdotal stories and fear of anything government.  There are two medical systems in the United States, the one that works really well for the wealthy, and the one that fails miserably for the rest of us.
• The market has not been a good decision maker for public policy.  We have let the market place determine our energy policy for the last 30 years since the first oil crisis and it has served us poorly.  Had we put a dollar tax on gas, set tough mileage standards on new cars, and focused on getting off oil back then, we would not be in the fix we are in today.  Now the choices are more dire.
• Public spending has been equated with big government and we have to get over it.  In order to replace and replenish our infrastructure, only government with a grand plan for our future is going to be able to manage such a program.  We need to set priorities and this is not going to get done without federal government planning.  Did it ever occur to conservatives that this is one of the best ways to put money into the economy because it provides jobs, spending money for those employed, and increases equity for the country?
• In this time of large deficits, conservatives (who created these deficits) are going to try to leverage the bad times to reinstitute some austere spending plans and cuts in government.  It is exactly the wrong thing to do.  Even though it seems counter-intuitive, we are going to have to spend our way out of this problem we are in.  We have gone so long ignoring our problems that they only way to start turning around our country is to invest in our future. This investment will pay great dividends in the future in a robust economy and tax revenues, but in the short term will worsen our deficit.   This also has large implications for cutting military spending and our adventures in Iraq and Afghanistan.
• Being secure may have little to do with our military and everything to do with our ability to project our economic strength.  This will have to be addressed in what are the real limits of military power, and what are these implications on moving budgets from the pentagon to our infrastructure education, health care, and other investments in our human capital.

All of this is best summed up by Bob Herbert on Tuesday in his column, “Amusing, but not Funny”.  While John McCain and Sarah Palin appeal to the anti-intellectual Joe Sixpacks, with small town simplicity, racism, fear, and appeals to character and conservative ideology, Barack appeals to looking at new ways of doing business and thinking about our challenges.  What we need is a leader who is not tied to ideology and will do what works and be flexible to change.  If you listen closely to John and Sarah, they are creatures of the true faith of Republican cronyism and the interests of the old guard.  It is time for a new direction that will terrify the old guard, but will be the only path to our salvation.  Hopefully Barack will be elected and have the courage to take us down this road.