A Party of Economic Principles

As they sort out the election in New York’s 20th Congressional District, should the Republican prevail, lets accept the victory for what it is- a razor thin win that should not be interpreted as a repudiation of Obama or his policies.  Just as Obama’s 2008 election was not a “mandate” to transform government, this victory in New York, should it happen, will not shift the balance of power in the House.  Let’s accept it for what it is- a good start.

Instead, the Party needs to be cognizant of the fact that the economy is the #1 concern and priority of the electorate and the focus needs to be here.  As commander-in chief, allow Obama the leeway argued for when George Bush was President.  And Republicans need to stay away from fringe criticisms.  For example, pontificating on when and where we will see the Obama’s in church detracts from the more important task at hand.  Besides, Obama does not need to attend church since he is on the apparent fast track to sainthood.

That being said, the primary underlying economic principle is that of the free market, but more specifically, a fair and free market.  And by “fair,” it may mean the realization that the bain of most conservatives- regulation- may be necessary.  However, regulation need not be so onerous so as to restrict the free market’s functioning.  The zealots on either side need to be blocked out- those who argue for absolutely no regulation under absolutely any circumstances versus those who want to regulate the free market economy into some form of hybrid, bastardized socialism.  Knee jerk reaction to any and all regulation needs to be avoided and is, in reality, counter-productive.

For example, one of the arguments against any regulation is hedge funds.  The argument, in a nutshell, is that regulation of these funds will discourage investment.  But, what did businesses rely upon for investment before the advent and runaway reliance on hedge funds?  Despite their demonization in the press and before Congressional kangaroo courts, managers of hedge funds need to be involved in any regulations.  Quite frankly, the people writing the laws probably do not even know how these hedge funds work.  So the liberal knee-jerk rejection of Wall Street lobbyists is equally counterproductive, unless you want the likes of Barney Frank and Christopher Dodd writing these laws with their aberrant views.

And the underlying concept of the free and fair market extends to all federal policies- energy, health care, education, and trade.  As concerns education, the free market concept is a proven commodity and best left at the state and local level because it encourages experimentation and fresh ideas and approaches to improving the quality of education at minimal cost.  Is it any coincidence that the decline in academic performance roughly matches the time when the federal government became more intrusive in public education.  For the greater part of this country’s history, public education was the purview of the states, not the federal government.  Today, it appears they have 90% of the say for 9% of the funding.  Hence, the policy position of the federal government pulling back from educational policy and perhaps even abolishing the federal Department of Education fishtails nicely into the free and fair market concept.

With health care, if people are given a true choice under a set of clear cut rules that apply to insurers, and then financially enable individuals to purchase their own health care, it would do a great deal towards solving the problems of portability and access to health care insurance.  Has anyone ever inquired about car insurance on line only to be innundated with e-mails and phone calls from prospective insurers?  Imagine if this was the case with health insurance and how this increased competition would force the market to drive down premiums.  With employer-provided insurance, the employee is often given minimal choice.  Even Obama’s touted reform modeled along the lines of the federal employee insurer pool choice is unnecessary intrusion into the free market.  With energy, an actual revision of regulations written in the 1970’s based upon 1970’s technology needs to be undertaken.  One of the misunderstandings about businesses is that they are opposed to all regulations.  Yet, the energy sector’s profits are quite handsome despite sometimes draconian, out-dated regulations.  What businesses frown upon is an uncertain regulatory environment where they are closed out from the process.  When you are sick, you don’t go to your car mechanic for help- you go to the experts in “sickness,” your doctor.  When “fixing” the nation’s energy problems, why would you go to Congressional leaders for guidance, or environmental groups for that matter?

There is no doubt that free trade agreements have benefitted this country and others.  Detractors will always point out the negatives to the exclusion of the positives.  By nature, free trade agreements are designed to help both nations, not just the United States.  The negatives often mentioned are outsourcing and a decrease in the American manufacturing base.  Yet, if the United States could produce manufactured goods that could compete with foreign goods (that word again- competition) in quality and price, there would be less need for outsourcing and decreasing our manufacturing base.  Again, the detractors will complain that foreign countries play under a different set of rules; that they are not subject to like-minded American labor and environmental laws.  My point exactly which is why the United States has run trade deficits for years with no end in sight.  Populist, protectionist policies are to the detriment of the free market.  But all too often, we see and hear Republicans jumping on the “beat up the Wall Street banker” bandwagon, or beat up the Japanese car maker bandwagon, or beat up on the Chinese toy maker bandwagon.  One place the Republicans can take a principled free market stance is in the area of agriculture, one of this country’s greatest exports.  Specifically, ending agricultural subsidies and price supports- a sticking point in truly free trade with the European Union- would go a very long way to showing Republican resolve in support of the free market.  And it could actually have the unintended good consequences of lowering commodity prices domestically while increasing output and increasing farm income to the point of the subsidies being unnecessary in the first place.  This is but one vivid example of how a principled embrace of free and fair market policies need to be stressed.

By using this concept as the foundation of an economically principled Republican Party, it stands in stark contrast to the policies espoused by the Democrats pitting capitalism against that bastardized form of socialism of Barack Obama.  A recent Rasmussen poll showed that 53% of Americans favor capitalism over socialism; that is a scary finding!  Unfortunately, Republicans often shoot themselves in the foot by getting off message and engaging in populist rhetoric, joining those anti-business diatribes on Capitol Hill.  This is a sad attempt at that “big tent” category of trying to bring everyone into the fold- of trying to be everything to everyone.  It doesn’t and shouldn’t necessarily work that way!  Republicans need to demonstrate that there is a very viable choice and option out there to the big, grand government world of Barack Obama and company.  Some of the possibilities are as radical as those of Obama with one exception- the concept of the free market.  These include such ideas as eliminating employer provided benefits, privitization of social security, abolishing the federal Department of Education, etc.  I leave the specifics to the number crunchers and policy wonks out there.  Hopefully, John Boehner’s chart-drawing graphic artists will not be included.

Upon the foundation of the free/fair market are then placed the three pillars- tax reform, fiscal discipline and smaller government.  This sounds like typical Republican politics, which it is.  When the Democrats talk about the “same failed policies of the past eight years,” their only difference is that they would fund those policies whether they actually have the funds or not.  That is, the compassionate conservatism of George Bush was anything but conservative and anything but compassionate.  In essence, the Republicans, perhaps drunk with power, behaved like Democrats and the self-flagellation over this fact now taking place in the Republican Party is long overdue.  By simply refocusing on free and fair market principles, the ship could be righted.

By reforming tax laws to allow people and businesses to keep more of what they earn, they then would have the purchasing power to obtain health insurance, to save for their child’s education, to have a choice in where and how their children are educated, to provide for their own retirement security, etc.  What would be a better and more effective economic stimulus than allowing people to retain more of what they earn?  What would help businesses to expand and flourish and create jobs than allowing them to keep a greater percentage of their profits?  Why should a business be effectively punished because they are effective and post profits by taxing those profits?  Is there any wonder there is outsourcing and a loss of manufacturing jobs to overseas labor markets?  Yes- the United States has the second highest corporate rate among industrialized nations and yes, we rank eighth in actual collection of those taxes.  Recitation of these facts by the Republicans- the current, almost exclusive “talking point”- does very little to demonstrate to the American public how lower corporate tax rates is to the advantage of everyone, not just businesses.  Perhaps, the problem is that the Republican Party does not have a great communicator in the Ronald Reagan mold (please- no more Bobby Jindal!).  Or perhaps, the Republican Party has just strayed too far from their economic principles.

And fiscal discipline is also important.  In 2008, John McCain railed against pork spending.  Guess what?  If he somehow managed to eliminate 100% of all the earmarks, he would decrease the federal budget by less than 1%.  It was a nice line that, in actuality, does precious little towards addressing the more important issues.  Essentially, the federal government is a bloated entity which has effectively morphed into surrogate parents for the population providing, should the Democrats have their way, alleged security for everyone from birth to death.  Unfortunately, those provisions often come with strings attached and a very large price tag.  Perhaps the only memorable line from the 2008 Presidential debates- a/k/a, Snorefest 2008- was McCain’s line in response to educational reform when he questioned why Obama thought that throwing money at education was the only solution. 

And with fiscal discipline comes a necessarily smaller government.  Obviously the world of 2009 is vastly different and in many ways more complex than the world of 1787 when the Constitution came into being.  Certainly, our founders never envisioned the complexity of modern government which we have craeted.  Enshrined within the Constitution is the inferred preference for smaller government, that the government closest to the people was the most effective government.  When they stated that the federal government had the power to regulate interstate commerce, they never envisioned the Roosevelt-era Supreme Court shredding of that clause, where the big hand of government would be given free reign to intrude into the free market.  While not arguing that we should return to the 18th century, perhaps a greater adherence to Constitutional philosphy which implicitly endorses the free and fair market is what is needed in 2009.  The Republican Party is presented with a unique opportunity and challenge to return this country to its rightful path to the chagrine of the Democratic Party.  Those constitutional ideals served us very well for the vast majority of this country’s existence (slavery excluded).  Although a challenge, the rewards are an America more reflective of our ideals and beliefs.