Eight Steps to Renew America's Economic Architecture

America is now coping with the debt binge of the past decade and stagnating incomes across the board. Trying to provide some cushion for those left economically behind may be a good short-term strategy. But policy makers also need to work toward a restructuring of America's economic architecture. Unless America's economic vitality is restored, all plans to reduce the weight of the national debt are moot. A perpetually failed American economy will lead to skyrocketing debt levels, an ever-diminished standard of living, and a weakening of the ability of the United States to project power across the globe.

To borrow a phrase from Governor Huntsman, America's "core" needs to be renewed. The economic renewal of this core would require the increase of America's skill level, the defense of American jobs, and the development of a regulatory structure that incentivizes production and innovation instead of gambling and borrowing.

In light of this project of renewal, here are some thoughts about big-picture goals to keep in mind for the restoration of America's economic architecture.

Regulate the financial system. Perhaps because it was bailed out with untold billions of dollars, Wall Street has been least hurt by the current recession. But deep structural problems remain. In the decade or so before the crash of 2008, many regulations that had been crucial to the nation's financial system had been repealed. Meanwhile, various government departments gave special privileges to numerous connected banking institutions. Our financial regulations give bankers and traders the capacity to be more reckless, and the history of bailouts and insider loans gives the appearance of a safety net, at least to the chosen few. So our financial system grows increasingly less stable. Regulations must be put in place so that, for individual banks, individual failure will not lead to the collapse of the whole banking system; too big to fail must go by the wayside. Bankers used to be renowned for their prudence and circumspection. It would be helpful to put in regulations encouraging that tradition.

Let energy multiply. Since the Industrial Revolution, cheap energy has been a bedrock of economic growth. Unlike President Obama, I do not believe that the government should aim to make energy prices skyrocket. One of the major accomplishments of probably the greatest Democratic president of the twentieth century---Franklin Delano Roosevelt---was to spread electricity across America, to the poor and rural classes, in order to improve the living standards of the nation as a whole. If Democrats want to surrender that legacy, Republicans should pick up the banner of cheap, egalitarian energy and run with it. Investment in energy infrastructure could be one of the greatest improvements in the American economic architecture---and that investment would include oil, nuclear, and alternative energies. Current proven US oil reserves will not be sufficient to meet all national demand for the long term, but the Congressional Research Service estimates that there could be over a hundred billion barrels more worth of oil that further exploration could reveal. Further exploration and innovation could discover even more resources. But drilling for more oil will not alone solve America's energy problems. Nuclear is most sustainable and massively scalable non-fossil fuel energy source we yet have in place in an expansive way, so investment in nuclear power plants would be an easy route to expand America's energy prospects. Solar, wind, and other energy sources are also worth investing in; some of these technologies are in the experimental stage, but the the normal of today was once the experimental of yesterday. Gains in efficiency are good, but the sweet spot of economic growth is found when improved efficiency meets cheaper energy.

Get a twenty-first-century trade policy. This isn't the 1990s anymore, when we could trust in a technological leap to compensate for other countries using neomercantilist strategies against us. "Tradeable jobs," often the most value-adding, have been pummeled in the US over the past decade or so. Unilateral trade disarmament in the face of other countries' neomercantilist tactics (currency manipulation, tariffs, regulations that de facto prohibit American-made products, and so forth) is not free trade. The past couple decades have shown the effects of this neomercantilism for the American workforce.

Get a twenty-first-century immigration policy. The current immigration paradigm was put in place almost fifty years ago, after a great lull in immigration and in a time of great prosperity and economic growth. This paradigm may need to be revised. Current immigration policy often rewards law-breaking and family connections. A revision of immigration policy could focus on increasing the skill level of the American workforce and improving the conditions of the the workers currently in the United States. We should work to make the US immigration system resemble Habsburgian dynastic politics less and instead push it in an egalitarian, skills-oriented direction. While prioritizing the minor children and spouses of immigrants, a revised system could move towards a basket of skills, refugees, and extended family members (with increased emphasis upon the "skills" portion).

Invest in the future. Despite propaganda to the contrary, government investment in science, technology, and distant innovations can actually work out. The nuclear age was greatly accelerated by government spending during World War II, advances in telecommunications are in part due to NASA, and early pioneers of the internet---one of the great drivers in growth over the past two decades---included government agencies and institutions backed by substantial government funding. In a time of economic turmoil, many large businesses are unlikely to invest in long-range projects that may never pay off; government investment can help redress that lack of funding for first-principles research. We cannot look for large institutions to provide all advances (much has been accomplished by a few lonely and talented individuals working on their own), but history has shown that some of that long-range spending can have dividends for decades in the future.

Revise the regulatory state. Many national regulations are economically onerous and often counterproductive. For example, many environmental laws put burdens on local manufacturers, even as our trade and tax policies encourage these very same manufacturers to ship their work out of the country (to nations with far fewer protections); it's hard to call such a result a win for the American economy or for the global environment. (I'm not here arguing against environmental regulations as such, but I am suggesting that we need to think of the broader implications of them and work to correct some of the negative results of these implications.) The 70s witnessed the acceleration of the dismantling of the New Deal regulatory state, but new layers of bureaucracy have taken its place. We must do what we can to ensure that projects (both private and public) of great vision and power can be advanced quickly.

Renew infrastructure. Regulatory reform could also streamline and make more possible broad improvements to the American infrastructure. Much of the backbone of our infrastructure (highways, bridges, etc.) is in disrepair, and much (such as America's rail system) could also take the leap into the twenty-first century. In an era of new experiments with energy sources, updating and rendering more flexible our electricity grid and other energy delivery systems could have considerable gains for the future.

Revitalize health-care. Medicare's long-term trends may eventually break the federal bank, but the cost of health-care inefficiencies are being felt throughout the whole economy today. Americans pay a lot for health-care, far more than do the citizens of other industrialized nations. More needs to be done to increase the supply of medical care and push America's health-care system in the direction of a functioning market. Health-care is perhaps the section of the economy with the most government interference; it is also one of the most inefficient. The British National Health System shows that it is possible to provide some level of national coverage at relatively low cost through socialized medicine. The US could instead go in the direction of unleashing the power of the market to provide cheaper, better health-care; the current faux-market of health-care in the US is not working as well as it might. And unleashing the power of the market means far more than putting senior citizens on Medicare vouchers. It means tackling the lack of transparency in the field of medical spending, updating the insurance-financing system, allowing doctors to focus more on giving care than defending against frivolous lawsuits, taking on health-care oligarchical structures, and opening up the ranks of medical providers.


Obviously, these thoughts are partial and open to debate; they are more posed in an experimental tone than a dogmatic one. But experiment is often the first step on the path to success. If the GOP is to offer a true competing agenda to the policies of Barack Obama, it needs to move beyond a fixation on tax cuts to a broader emphasis on growth, job creation, the defense of the middle class, and structural renewal.

Stumbles, Survivor, and Synthesis

Some thoughts about tonight's debate:

Though there wasn't a massive pile-on as in the last debate, Perry continued to lose ground, and most of his wounds were self-inflicted. The shadow of George W. Bush loomed larger over Rick Perry tonight. Perry's verbal stumbles and with-me-or-you're-a-bigot tone on immigration issues might have reminded activists and conservative politicos a little too much of the former Republican occupant of the White House. If Perry seems like George W. Bush Part II, he won't be able to clinch the GOP nomination, let alone the presidency. Moreover, his attacks on Romney often fell flat or wandered. Perry needs to sharpen his approach if he wants to gain here.

Romney followed his usual strategy of survivor in this debate: he didn't let anything get to him and didn't indulge in political napalm. He just kept insisting on his message. Romney did seem to have a few moments of sputtering, though. They might have added to his sense of authenticity, but they also made him seem less steady on his rhetorical feet. Romney's survivor strategy has paid off in the past couple debates. He's blunted the rise of Rick Perry and kept the Texas governor from running away with the race this early. Time will tell if this will allow him to wrest away the primary polling lead.

Santorum stood out in this debate. He had few striking exchanges (on immigration with Perry and foreign policy with Huntsman). I don't know how much these debate performances will translate into polling benefits for him, but he's definitely keeping his place at the table.

Gingrich is still plowing along. His comity tactics seem to help give his ideas a stage at these debates---and finding that stage may be more of a priority for Gingrich at the moment than the GOP nomination.

Johnson had a good line, perhaps good enough for him to stay in the debates. Cain had some other good points. I think Huntsman still wanders sometimes, but he seems to be keeping his campaign viable. Ron Paul was himself. Bachmann struggled to find her voice again.

Another Victory for the "Free Market"

Perhaps the opening line of this news story says it all:

Under pressure from the Beijing government General Motors has agreed to provide access to its proprietary electric vehicle technology to its lead Chinese partner.

The move is raising numerous concerns, critics contending that China is, for one thing, using unfair pressure to gain access to technologies that will later be used by its own domestic manufacturers to compete with foreign brands like GM.

I guess this kind of coercion is now known as "free trade."

A few more details about the merger:

But critics note that GM has also faced significant pressure from China to accept the partnership, government regulators threatening to withhold sales incentives for the Volt were GM to have rejected the technology sharing agreement.

Such a move might violate international trade agreements, critics argued. But the more serious concern is that GM may now lose control of key intellectual property. Protection of IP rights has become a critical concern with Chinese businesses routinely ignoring trademarks and copyrights on everything from pop music and movies to pharmaceuticals and automotive design.

In the short term, this move may improve GM's access to the Chinese market, thereby increasing sales and probably the income of some upper-level executives.

However, this surrender of IP may in the long term prove more damaging to GM. The partner for this venture, Shanghai Automotive Industrial Corp., is an entity owned by the PRC government and is no doubt eventually looking to expand on its role in the automotive industry. Plenty of free IP along with billions of dollars of investments from Western companies will no doubt help it in this enterprise.

It's also unclear to me how, in the long term, the empowerment of government-run corporations due to government coercion is an effective path for supporting free market capitalism.

Economic Geographies

Via Tyler Cowen, I came across an interesting essay by Noah Smith discussing possible causes for the recent economic stagnation. He adapts a theory of economic geography from Paul Krugman:

The basic idea of the theory is this: It is expensive to move products around. This means that if you have a factory, you want to locate it close to where your customers are, to avoid paying a bunch of shipping costs. Now consider two factories. The workers in the first factory will be the consumers for the second factory, and vice versa. So the two factories want to locate near each other ("agglomeration"). As for the workers/consumers, they want to go where the jobs are, so they move near the factories. Result: a city. The world becomes divided into an industrial "Core" and a much poorer agricultural "Periphery" that produces food, energy, and minerals for the Core....

So this could explain why people in the rich world are getting poorer. In the 50s, America was the only industrial "Core" on the planet. But since the 60s, we have seen successive "growth miracles": Japan and Europe in the 60s/70s, then Taiwan/Korea/Singapore in the 80s, then China since then, and now even India. In a New Economic Geography world, we would expect these successive relocations of manufacturing to hold down income growth in the U.S., even if technology was advancing as usual. And now Japan and Europe are feeling the pinch as well.

Smith further expands upon the situation of the USA:

It may be that American manufacturing strength was due to a historical accident. Here is the story I'm thinking of. First, in the late 19th and early 20th centuries, our proximity to Europe - at that time the only agglomerated Core in the world - allowed us to serve as a low-cost manufacturing base. Then, after World War 2, the U.S. was the only rich capitalist economy not in ruins, so we became the new Core. But as Europe and Japan recovered, our lack of population density made our manufacturing dominance short-lived.

Now, with China finally free of its communist constraints, economic activity is reverting to where it ought to be. More and more, you hear about companies relocating to China not for the cheap labor, but because of the huge domestic market.

There are many good points here, especially the role of sudden shocks to the economy in changing events; the essay is well worth reading in full.

However, I'm somewhat skeptical of this theory of economic geography.

First of all, I think it may overvalue the cost of transporting goods. Shipping costs were a much bigger weight in 1830 than they are today, and producers are less tied to the physical territory of potential consumers now than they were. After all, the past few decades have seen many factories close down in the American market only to relocate thousands of miles away to sell to this very same market. The story of globalization over the past twenty years is in part the story of the diminution of shipping costs (broadly considered), which I think may complicate the narrative of this model.

Moreover, this theory of economic geography seems to suggest in some way that the most densely concentrated areas are likely to be destined to be the richest (I admit that this is a simplification of the model). However, often very densely concentrated countries are very poor, while there are plenty of wealthy less dense countries. I wonder whether density of population is really the most crucial variable for discussing national wealth or national capacity for wealth.

Smith's reading of the US economic path is interesting, but I think it also has some limitations. While our closeness to Europe might have allowed us to serve as a "low-cost manufacturing base" (though the US was much farther from Europe than many poorer nations), the growth of American industry in the nineteenth century was also accompanied by the increase of American living standards over those of many wealthy European nations (such as Great Britain); this combination of high wages with industrial growth differs from current low-wage trends. And the US had a huge manufacturing capacity even before the other great powers destroyed themselves during the two World Wars.

Also, I think Smith may underestimate the role of human agency in his claim that "you hear about companies relocating to China not for the cheap labor, but because of the huge domestic market." The appeal to the giant Chinese domestic market has merit, but we should not forget that the Chinese government often requires companies to invest in factories and other places of employment in the PRC in order for them to have access to the broader Chinese market. Beyond the "natural" appeals of economic geography, state coercion plays a considerable role in this narrative of Chinese expansion.

Though I'm doubtful about many of his policy suggestions, Smith is right in his recommendation that American update its transportation infrastructure. I think there's more to economic destiny than population density, and the "historical accident" of American wealth is in part the result of the deliberate choices of American policymakers in the past (even if some of these policies, such as tariffs, may run afoul of contemporary orthodoxies).

Update: Matt Yglesias has some more observations on the China market here.

Orthodoxy in the Balance

I was listening to the Laura Ingraham show the other day and heard an interesting conversation between Ingraham and her guest, Larry Kudlow. Discussing the prospects of various presidential contenders, Ingraham spoke warmly of Mitt Romney's pledge to be tough on the People's Republic of China for its currency manipulations, theft of intellectual property, and other barriers it puts up to foreign products. I could almost hear Ingraham's voice thrill as she mentioned "tariffs" as a possible tool to be used to compensate for PRC manipulations.

Kudlow did not act as might be expected: rather than denouncing such policies, he seemed positively inclined toward them. Kudlow is a pundit embodiment of Republican economic orthodoxy, so his response may be indicative here of a broader Republican souring on "free trade" myths (namely, that we even live in an era of "free trade").

If the part of correcting trade imbalances in Romney's economic plan is more than talk, this plan would represent a significant attempt to change the Republican position on trade policies since NAFTA: moving past the dogma of cheap imports toward one of a level playing field (with the aim of gaining and preserving high-paying jobs).

NY-09, Medicare, and Social Security

The victory of Bob Turner in heavily Democratic NY-09 is clearly not good news for Democrats. How bad the news is, though, remains to be seen: the badness of the news will in part depend on how much local issues decided this election (e.g., the Weiner scandal) versus the impact of broader trends.

In any case, Mickey Kaus has some good points here:

It’s the possibility that the Democrats favorite issue–Social Security–didn’t work to save them because Obama, too, has embraced cutting Social Security and Medicare in “some undefined ‘everything on the table’ entitlement reform,” as Weigel puts it. Could it be that the differences between Obama’s Medicare cuts and GOP Rep. Paul Ryan’s Medicare cuts–differences that seem so significant to policy analysts in Washington (and to me)–don’t have much salience in the crude argumentation of direct-mail electioneering? Now that’s scary for a Dem. After decades of pledging not to touch the two sacred programs, it’s beginning to look as if Democrats can’t just suddenly agree to pull trillions out of Social Security and Medicare and expect voters to maintain their reflexive loyalties.

However, I think it is a mistake to interpret Kaus here as saying that Mediscaring / Social Security-scaring has been proven ineffective.

If anything, this election suggests that Obamacare cuts to Medicare do provide an opportunity for Republicans to run on this issue, but running against Social Security and Medicare might not be the way to do it. Bob Turner distanced himself from the Ryan budget on Medicare and from Rick Perry (or at least the Perry of Fed Up) on Social Security. The "Issues" page on his website reads (emphasis added):

Social Security and Medicare represent solemn commitments made by the government to people who have been paying into this system their entire lives. I believe that these programs should be preserved as they are for those in or near retirement and that we should work to strengthen and preserve them for our children and future generations. I oppose efforts to privatize or bankrupt either. I would work with members of both parties to reach a solution that will meet our obligations on both of these programs.

Mediscare couldn't work against Turner because he pledged his total support for Medicare. Indeed, he has spoken strongly against the Ryan budget. This election is less a sign of victory for the Ryan budget and more a sign that Republicans can run away from this budget (at least if they haven't voted for it) and win.

Even in the far more GOP-friendly special election in Nevada, Republican victor Mark Amodei at times expressed some reservations about the Ryan budget (even as he praised Ryan for trying to solve the problem). Amodei refused to say whether he would vote for it or not.

Vowing to protect Social Security and Medicare, a Republican was able to win in a strongly Democratic district. If Turner had run on the Ryan budget and declared Social Security unconstitutional, the result might have been quite different. NY-09 is not representative of the nation as a whole (it usually favors Democrats far more), but, if Republicans hope to cast this election as representative, they might do well to note what their man did not run on.

Coasting Stops

The fight between Perry and Romney continues. Perry came into this debate confident in his conservative bona fides and hoped to use the weight of that confidence to steamroll Romney. The former Massachusetts governor, for his part, responded with an array of facts, figures, and arguments.

The Social Security component was interesting. Romney ended up highlighting the distinction that many Perry partisans are trying to obscure: while Romney and many others have suggested that the financing of Social Security may be a problem, Perry in his most recent book has claimed that Social Security seems to be in some way contrary to the Constitution. Romney tried to get an answer out of Perry about whether he still thought Social Security was unconstitutional, but Perry seemed focused on avoiding answering that. If he wants to win the nomination and go on to the presidency, Perry is going to have to clarify his position on Social Security. Does he want to reform it (as he now says) or does he think it's an unconstitutional abomination? Even in a rabidly pro-Perry audience (at least in the beginning), Perry seemed to stumble at certain points in this exchange. The audiences at debates with Obama won't be so congenial.

Santorum and Bachmann have realized an electoral reality: their only path to the nomination is through Rick Perry. Bachmann knew she had a rough debate last week. So she came into this one looking for some moments, and she found them. She went beyond criticizing Perry's Gardasil executive order as an overreach; she suggested it was due to undue corporate influence. That's probably the most personal slam Perry has faced yet in the race posed by a rival. She also didn't let Perry slide on his immigration record.

Bachmann regained her stride in this debate, and Santorum found it. Between hitting Perry, going toe-to-toe with Ron Paul, and offering relatively detailed answers to policy questions, Santorum positioned himself as a solid, competent conservative who is also electable (hence his persistent emphases on his ability to win in Pennsylvania). Some pundits might find Santorum's references to events of the 1990s to be dated, but many voters (left, right, and center) look back on the 90s with fondness. Santorum may be trying to offer a path back to prosperity.

As with the last debate, Gingrich played the conciliator. As with the last debate, Ron Paul couldn't wait to attack Perry as a conservative pretender, hitting him on increasing Texas taxes and spending.

Bachmann and Santorum may have succeeded in putting a few chips in the conservative finish of Rick Perry's reputation. Perry has been greatly helped by the aura of authentic conservatism. If that sense is challenged, he could struggle more as a candidate.

In order to distract from last week's Social Security debate, many Perry supporters went on attack against Romney, accusing him of taking from the Democratic playbook (apparently defending the Constitutionality of Social Security is supposed to be the purview of Democrats now?). If those attacks are doubled down on over the next few days, we might have an indication of how concerned Perry's camp is over this debate.

I'd guess Perry lost ground tonight with the right (over immigration and Gardasil) and the center (over Social Security). Romney held his own. Bachmann and Santorum gained. I think the primary is still very fluid (as it should be). And there might still be room for other candidates to jump in.

Ten Years Later

Like millions of other Americans, I remember September 11, 2001 quite clearly. I remember watching the twin towers collapse on TV. I remember wondering whether a skyscraper near me would be next. I remember the sudden panic and uncertainty, the sense of a nation hanging on the edge of chaos.

The modern liberal society depends upon a sense of order and openness: the terrorists of 9/11, like many other terrorists, sought to detonate those twin pillars. And they did cause great suffering and fear and, for many Americans, many sleepless, tear-stained nights. That terrorist attack has cast a shadow over the past decade, which has been suffused with anger, resentment, paralysis, and a haunting sense of disappointed hopes.

Yet, despite the darkness, there are still sparks. For all the wreckage, the terrorists have not yet been able to break the back of the spirit of this republic. Though the forces of violence, radicalism, and tribalism have risen across the globe, the dream of a better order has not yet fully vanished. Though hopes have been disappointed, hope itself has not been extinguished.

September 11 has become a day of mourning: for the dead, for the orphans and widows and widowers, for the injured and lost, and perhaps for what might have been had not this been a decade of terror. We remember the suffering and the dead and those serving in foreign lands. But we should also remember the heroism of that day and later days. Professionals and average citizens rose to the challenge to save lives on that September day. The passengers on United 93 broke through the frenzy of panic to save countless other lives by their own willing sacrifice. Nihilists are willing to die to kill; true heroes are willing to die to save.

Many years ago in a different age of crisis, Franklin Roosevelt told us that we have nothing to fear but fear itself. Let us not forget the place of fear, nor let it usurp the thrones due to reason, hope, and charity. The promise of this republic---the promise of life, liberty, and the pursuit of happiness---has not yet expired. Terrorists with their bigotries and fears cannot kill it. Only we can, if we surrender to an angry despair.

Now is not the time to surrender or to forget. Now is the time to continue and to dare and to try and try and try.

Debating Social Security

Outside the Beltway has a few good posts up about Social Security today. Doug Mataconis has a survey of opinions here.

Meanwhile, Steven L. Taylor raises some doubts about calling Social Security a "failure":

What creates problems, however, is tossing out terms like “Ponzi Scheme” because even if one does not like SS (or welfare policies in general), likening one of the most popular programs in US history to a fraudulent, illegal venture is problematic. Beyond, there are the empirics of the situation. Perry has called SS a “failure.”

The basic problem is: that is empirically untrue. One may not like SS. One may think it is inefficient. One may have a preferred alternative. One may even think that is non sustainable in the long haul. However, to call it a failure ignores over half a century of operation. It also denies the reality of millions who currently receive monthly checks (who will be stunned, no doubt, to hear what a failure the program has been).

Immigration and Wages

David Frum has some interesting points here about the role of immigration for Romney and Perry:

Perry’s views on immigration are not a “liberal” deviation from his views on the minimum wage, on Social Security, on healthcare coverage, etc. His high-immigration views are of a piece with his general preference for a low-cost, low-wage economy.

By contrast, Mitt Romney has begun to articulate a call for a high-wage economy. To get average wages rising again after a dozen years first of stagnation, then of outright decline, will not be easy. The most important step is to control healthcare costs. The rising cost of healthcare benefits devours workers’ cash pay.

But a rethink of immigration policies is also necessary. In the September 7 debate, Romney articulated something almost never said in a Republican primary: much, much, much more important than a fence or “boots on the ground” is tighter enforcement of labor laws inside the country. I’d go further: if the labor laws were effectively enforced, a border fence would be a costly redundance.

Perry v. Romney: No Knockout

Some thoughts about tonight's debate:

Romney is not going to give up. Romney did not Pawlenty out in this debate: when struck at, he struck back---hard. The jobs exchange with Perry early in the debate showed some fight in Romney. Romney needs to fight Perry on this in order to defend his own claims on the economy.

Social Security and immigration are still issues. Romney's response to questions about immigration and amnesty subtly attacked Perry's support of in-state tuition for illegal immigrants and Perry's opposition to a border fence. After hitting Perry from the right, Romney also hammered Perry's claim that Social Security is a failure. Rather than abolishing it, Romney says he wants to save it. He's implicitly aligning himself with a long line of Republicans (such as Reagan and Cheney). Romney wants to challenge Perry's claim to be Super Mr. Republican.

Perry is not Obama. One of the dynamics of the 2008 Democratic race was that many Democratic candidates were willing to have Obama be the nominee if they couldn't. So they were quite willing to tear down Clinton in order to assist Obama. Going into this debate, there was a chance that other GOPers would view Perry as the preferred candidate. This debate showed that other candidates are quite willing to go after Perry. Many candidates jumped on the chance to pile on Perry regarding his executive order to mandate Gardasil vaccinations for Texas girls, for example. Perry does not seem to be getting the pass from Republicans that many non-Clinton Democrats gave to Obama during the 2008 race.

Newt plays the statesman. Newt Gingrich hit upon an interesting tactic in this debate: rather than feeding into intramural conflict among Republicans, he called out Obama and lashed out at the media. Both rhetorical tactics are sure to increase grassroots affection for Gingrich. By taking the battle to the president, he seems to rise above the fray while still seeming passionate. Gingrich had some strong moments tonight.

Ron hates Rick. While other candidates weren't afraid to knock on Perry, Ron Paul seemed to relish any chance to attack Rick Perry as a showman and pretender to conservative purity. Those attacks might not cripple Perry, but they could have an effect.

Bachmann struggled. Perry's entry to the race hurt Bachmann's momentum in Iowa and other states. Unlike earlier debates, Bachmann did not find a real moment to stick in viewers' minds. She's lost a lot of "Tea Party" ground to Rick Perry. If she wants to get that territory back, she'll need to shift the debate.

There were great expectations for Perry going into this debate, which seemed like it would focus on testing him. Though Perry handled himself fairly well, I don't think he landed a knockout blow. If anything, this debate perhaps strengthened Romney, as he was able to hit Perry from both the center (on Social Security) and the right (immigration). Tonight suggests that Perry is not invulnerable in the primary. Moreover, this debate also shows that other candidates are not willing to let this race become a two-man battle.

Update: Ace seems to agree with much of this analysis here.

Foundations of Government

Matthew Continetti has an interesting essay up at the Weekly Standard about the evolution of the American state after the New Deal. While I think there are some pieces missing in his narrative, he has a good point here:

Only later would we come to understand that the house FDR built sits on a wobbly base. Steady economic growth is necessary to pay for all of the government’s promises. The bureaucracy functions only if experts have the confidence of the people. And government and citizenry must agree on a limiting principle that prevents national bankruptcy, a bloated state, and an irresponsible public.

Growth, confidence, and a recognition of limitation---those do seem the foundational pillars of the modern state. Those were the very things that leading Republican presidents of the post-New Deal era (such as Eisenhower and Reagan) sought to build open. I'm more optimistic about the future of many American political and social insurance institutions than Continetti, but his diagnosis of the basis of New Deal government has some merit.

A Reach Too Far

With the ascent of Rick Perry in the GOP race, allies of "comprehensive immigration reform" are lining up behind the tough-talking Texas governor who has not exactly been a vociferous opponent of illegal immigration. Meanwhile, candidates like Romney and (probably) Bachmann, who want to challenge Perry's bona fides with the base, are turning their eyes to Perry's perceive softness on illegal immigration. Like the Texas governor preceding him (George W. Bush), Perry has spoken strongly against a border fence. He has also signed a bill giving in-state tuition to illegal immigrants.

This political dynamic has prompted Jennifer Rubin to observe the following:

Perhaps Perry’s stance is a bridge too far for the base of the Republican Party. It may be that not only Romney, but Rep. Michele Bachmann (R-Minn.) who can capi­tal­ize on this issue. But should Perry secure the nomination, there will be a significant opportunity for Republicans to reset their stance on illegal immigration. It took Richard Nixon to go to China; maybe it will take Rick Perry to pass comprehensive immigration reform.

I wonder really here how big of a "reset" Perry would be as a Republican candidate. Ronald Reagan passed an amnesty, George W. Bush fought very hard to pass a mass legalization, and John McCain, the nominee in 2008, was a very persistent proponent of mass legalizations throughout most of the last decade. Republican presidential candidates and presidents have often been much more anti-enforcement than the base. The Republican leadership class (to which Perry, the longest-serving Republican governor in the nation, undoubtedly belongs) is filled with individuals who range from indifferent to hostile to immigration enforcement efforts.

Nixon going to China might not be an apposite comparison. Richard Nixon had a reputation as an implacable foe against international communism, so his willingness to normalize diplomatic relations with the PRC was a very big step. Rick Perry has no such reputation in regard to illegal immigration. Indeed, his background (long-term Texas governor with close connections to business interests) would suggest that he would be most likely to support "comprehensive immigration reform." Now, a guy like Tom Tancredo supporting "comprehensive" reform would very much be a Nixon to China moment.