Saturday, August 25, 2012

Independence and Union

Matthew Continetti has a very interesting essay up in The Weekly Standard arguing for a Republican campaign banner that unites the classic American terms of independence and union.

Continetti offers a more capacious view of "independence":
The American Revolution was fought not only to achieve independence from the British Empire, but also to realize independence for self-governing citizens. But America and Americans have become increasingly dependent in recent years. We are dependent on the government for jobs, for benefits, for pensions, and for health care. We are dependent on overseas energy and on cheap goods from China. We are dependent on consumer debt issued by a consolidated financial system in which the largest, Too Big to Fail institutions and their agents rig the game in their favor (see Rubin, Robert). Our economy seems dependent on an erratic and unaccountable Federal Reserve.
Such dependencies threaten to spiral out of control. Budget deficits and public debt are financed by overseas powers whose interests are not our own. Health expenditures in particular threaten to crowd out other parts of the budget, such as the core government function of national defense, as well as the education, transportation, and research dollars the incumbent talks so much about. Increasing reliance on means-tested government transfers enervates the character of the people and hampers economic growth. Trade deficits send money to potential adversaries, who return the money in the form of asset bubbles. The dangers of big banks are obvious: Excessive leverage and madcap derivative trading not only increase systemic risk, but the political pull of mega-firms also promotes cronyism and inside dealing.

Some of Continetti's solutions are also interesting:
The health care system would be improved and costs lowered through competition, the freedom to purchase insurance across state lines, a tough approach to malpractice litigation, and an end to the tax penalty for individuals who do not obtain insurance through their employer. The emphasis of social policy would be on getting families off government assistance, not ensnaring more of them in a safety net that raises effective marginal tax rates.
Full exploitation of America’s domestic carbon energy resources​—​oil, coal, and natural gas​—​would lessen our dependence on foreign oil and reduce the trade deficit. The sort of retaliatory tariffs against unfair Chinese trade practices and currency manipulation for which Irwin M. -Stelzer has argued in these pages would have a similar effect. A center-right consensus has emerged to deal with Wall Street: Link bank size to increased capital requirements so that financial institutions cannot grow fat on leveraged dollars. Go ahead and audit the Fed, but also increase the pressure on it to commit to a rules-based monetary policy rather than the sort of haphazard discretionary approach it has adopted since the financial crisis began.
A point implicit in Continetti's argument is that independence and union are allies in the American system.  Our union is strengthened by being populated by prudent, independent individuals.

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