A Conservative Case for Mitt Romney

Many have raised various arguments for why Mitt Romney is the best candidate for Republicans. The conventional narrative goes something like this: Romney's electability outweighs his moderation, so conservatives would be better off with half a loaf with Romney than with no loaf with Obama. The claim of electability is no small advantage, but I'm interested in exploring things from a slightly different perspective: the case for Romney as the best candidate from a conservative perspective as a matter of principle and not mere electability. So here's a thought-experiment along those lines:

First of all, an identification of the problem: America has currently slipped into the Bermuda Triangle of big government, big declines for the middle class, and big deficits. As more economic power concentrates in the hands of an increasingly small minority, this minority is more able to wring benefits from a bigger centralized government. Meanwhile, the struggles of the middle and poor make a large number of voters susceptible to the claims of increasing government power (even if this power is increasingly used to benefit the few). The stagnating economy for most Americans drives down tax receipts and puts a further strain on social welfare programs, leading to deficits as far as the eye can see.

A market-based economic policy that ignites growth for most Americans could detonate this triangle. The past decade or so has witnessed the winnowing of the middle class, and a set of policies that empower the middle could pave the way for new wealth for both the top 1% and the bottom 99%. Among top-tier presidential contenders, Romney seems well-poised to promote such a set of policies. Conservatives who are serious about setting the nation's fiscal house in order must turn their attention to the economy. Economic revival will slash short-term deficits and give the nation breathing room to engage in longer-term reform as it is necessary. The defense of the middle class should be more than just a partisan talking point: it serves a key interest of principled conservatism.

One might suggest Dwight Eisenhower as Romney's closest recent Republican presidential nominee ancestor, though Romney lacks Eisenhower's impressive military record and Midwestern charm. However, like Eisenhower, Romney has been viewed with suspicion by the right wing of the Republican party. Eisenhower Republicanism has been treated with disdain by many "conservative" activists, but the nation---and conservatism---could do worse than a president in the spirit of Eisenhower. After all, look at some of the things Ike did: oversaw a period of great economic growth for all ranks of Americans, helped stabilize global affairs, invested in new technologies, vastly enriched the American infrastructure, balanced the federal budget (a feat basically unmatched by any of his Republican or "conservative" successors), cracked down on the employment of illegal immigrants, and reformed some of the excesses of the New Deal. As a lifelong soldier like Eisenhower might have best been able to warn against the dangers of a military-industrial complex, Romney, with his experience in the world of Wall Street, might best be able to divert a finance-governmental oligarchy.

As a point of practice, Eisenhower put forward policies that responded to the nation's concerns and achieved, on many points, more conservative results than can be boasted of by certain "conservative" icons. One might hope the same thing for Romney. There might be a whiff of the technocrat about Romney, but it should not be forgotten that a technocrat, in order to be successful, must bow before the reality principle.

Conservatism is not about the drum-circle therapy of glib policy axioms cited over and over again. It's about applying principles to real-world situations. Classical conservatism is an empirical enterprise. It's not enough to aver that government regulations are always the problem; particular regulations have to be examined and their implications (and the implications of their repeal) analyzed. For example, the regulatory revisions of the financial markets in the late 90s and early 2000s helped lead to the meltdown of 2008; disregulation intersected with existing government policies and entities to fuel a mortgage and financial bubble. Singing hymns to the badness of the federal government is no substitute for acknowledging that recklessly pulling blocks from the social-governmental Jenga tower can easily lead to collapse. If we are going to reform some fundamental economic institutions and practices, we would be wise to have reformers who are confident with policy arcana and show a skill in assimilating a broad range of viewpoints. Romney seems such a reformer.

Romney seems to understand that a strong middle class has been a key driver of American prosperity and republican liberty. The Union victory in the Civil War and the US triumphs in World War II and the Cold War relied upon an industrialized middle class. He also seems more aware than some of his fellow Republican candidates that production and skills provide a better foundation for long-term economic growth than does resource extraction. Economic opportunity is a complement and ally to political liberty. Economic opportunity does not always lead to political liberty, but radical economic stagnation usually places a liberal, democratic republic under great strain.

The technocrat in Romney can read the charts that amply demonstrate the weakening economic power of the vast majority of Americans. With his family heritage in car country, Romney probably remembers Henry Ford's principle that it is ultimately in the best interests of the owners of capital for labor to earn more money; further disposable income for the middle class provides the fuel for economic growth. Romney is doing more than pandering to economic anxiety when he says that he is "not worried about rich people": he is pointing to an acute and real economic problem. The fact that Romney has been attacked on the right for daring to focus on the middle class reveals how out of touch certain factions of rightist orthodoxy are at risk of becoming.

While some of his rivals are defending an endless flow of non-citizen labor and tax programs that would raise rates on the poor and middle while slashing them for the rich, Romney has been outlining policies that defend the middle class, the historical pillar of democratic republics. He has moved beyond the principle that tax cuts are the magic solution for economic growth. This fixation on tax cuts has been one of the biggest anchors around the neck of conservative renewal. On many issues, Romney challenges so-called "conservative" orthodoxy and reshapes it into something more vital and, frankly, more conservative. He supports turning off the magnet of labor for illegal immigrants by punishing employers who knowingly hire them. Rather than stuttering invocations about a digital (or electric) fence or boots on the ground at the border, he has turned his eye on the engine that drives the influx of illegal labor: jobs. More than any leading Republican presidential contender in decades, Romney is running against the United States's unilateral trade disarmament, attacking the People's Republic of China's "great wall of protectionism." Conservative thinking has increasingly come to realize over the past few years that the current trade regime is not exactly real "free trade," and Romney finds himself on the cutting edge of this trend. Romney as a 2012 GOP nominee would have a stronger stance on immigration enforcement than any GOP nominee in many an electoral cycle; many of his Republican rivals have a far weaker record on immigration enforcement.

Perhaps some of this concern for the economic interests of the middle class is just talk, but words in favor of needed reforms are probably better than blather against such reforms. There are many reasons why Barack Obama and his allies anticipate having an identity-driven attack on Romney (i.e., "He's a scary rich person!!!"): perhaps foremost among them is that the Obama White House represents in many ways a continuation of the economic policies that have perpetuated a decade of stagnation. From poor trade policies to big-business cronyism to little real reform of the financial system (we are not yet past the banking era of too-big-to-fail), Obama and his Democratic allies have left the economy just above neutral. Trillions of dollars in deficit spending have kept the nation barely treading water, while not enough has been done to offer the necessary structural change in the economy to guard against another collapse and offer the opportunity of sustainable economic growth. Based on his current economic blueprint, Romney would seem to offer an alternative to prevailing low-wage paradigm: a free-market policy emphasizing investment in human capital.

Of course, Romney, like any other candidate, is not without his flaws. But these flaws need not cripple a Romney candidacy.

In many respects, Romney's identity as a serial "flip-flopper" has about as much basis in the truth as Obama's identity as a super-genius political orator-philosopher: both are media narratives that may obscure more than they reveal. It's true that there have been some changes in Romney's public stances, but a number of his biggest "flip-flops" result from the contrast of his positions today with those of 1994, which was almost twenty years ago. Fewer than twenty years before he became the great conservative hope, Ronald Reagan was also a registered Democrat. Many of Romney's "flip-flops" are often exaggerated or distorted. The fact that a 2008 McCain campaign briefing book assails Romney's change of favorite movie from 2003 to 2007 as a "Top Romney Turnaround" demonstrates the utter triviality of some of these accusations. Some of his position changes (such as abortion) have occurred through the evolution of basic principles; others have come about as a result of changing circumstances (a tax policy recommendation in 2002 might not make as much sense as one in 2007, for example). It's often good for a politician's opinion on a policy option to adapt to new circumstances---that's called responsible government. Furthermore, I'm not quite sure how angry conservatives should be with an individual who comes to agree with them more.

And it seems as though many of Romney's "flip-flops" are no more extensive than those of many of his Republican rivals or many politicians, period. After all, Barack Obama campaigned against a health-insurance mandate, which is now central to Obamacare, and Reagan signed one of the nation's earliest laws liberalizing access to abortion. From a true conservative perspective, what ultimately matters is not whether a candidate is a member in good standing with the "movement" (a notoriously unconservative term), but whether this candidate shows some level of thoughtful integrity and can actually govern in a way that advances the principles of classical liberty. Whether Romney joined the "club" early enough or not should not captivate conservative thinking about him---this is politics after all, not the Seattle alternative music scene.

Romney's health-care reform in Massachusetts was less than perfect, to say the least. But this plan drew from mainstream, pre-Obamacare conservative thinking. It tried to cope with the fundamental problem of one of the greatest federal unfunded mandates (a Reaganite policy, by the way): the federal demand that hospitals treat patients regardless of their ability to pay or their insurance situation. The underlying assumption of Romneycare was that, since the state demands private entities (such as hospitals) provide health-care, the state will demand that consumers purchase health insurance if they can afford it; if they can't, the state will step in and provide subsidies to ensure that they can purchase this insurance. At its base, this idea has some (but only some) resemblance to Paul Ryan's Medicare reform proposal, which would give income-dependent vouchers for health insurance to the elderly. Another premise of Romneycare was that universal access would ensure a healthier population and slow the growth of health-care costs. All that Romney and his conservative allies had hoped for has not come true, and Romney's reform will itself need to be reformed. But he at least tried to solve a real issue. He took up the challenges of governing in a state dominated by Democrats, where his vetoes easily could be and were overridden. Rather than fruitlessly complaining, he tried to forge a workable compromise. Governors of many states have to compromise, and conservatives risk eliminating a big chunk of the political talent pool if they reject all governors who have have worked with Democrats (that is, governors who do not have big Republican majorities in their state legislatures).

Some on the left may find Romney more palatable because of his presumed "moderation." But conservatives should make no mistake: a Romney who lives up to his potential (a technically adept president with center-right instincts who renews the American economic architecture) could offer a national order significantly favorable to small-government classical conservatism. Technocratic skill could prove a real boon in unraveling bureaucratic dysfunction and in charting the course of reform conservatism. Reform of the financial world, medical sector, and manufacturing base could put America in the position to seize the opportunities of the twenty-first century.

Immigration Fallout

Mickey Kaus deconstructs Gingrich's position on the mass legalization of illegal immigrants:

5) For recent and future illegal immigrants, the key apparent features of the Krieble Plan–the unlimited number of “red cards” and the ease of obtaining them**–effectively means something close to open borders. Millions of impoverished workers now living abroad could flood the U.S. labor market legally. Krieble’s plan is similar to the Papoon for President drug plan, which would “eliminate all illegal drugs” by simply making them all legal. Krieble similarly ends illegal immigration effectively legalizing it (“a country where there’s no more illegality,” as Gingrich put it).

And these unlimited legal “red card” workers would all return home, of course, right? And they’d be happy with second-class, non-citizenship status?

6) In embracing the Krieble plan, Gingrich fatally abandons the logic of “enforcement first,” which is that if you secure the border you can eventually have an amnesty–because the secure border will then be able to keep out future waves of wannabe illegals whom the amnesty will inevitably attract. If you really have a secure border, after all, you don’t need the unlimited Krieble red card plan, which would inevitably have a depressing effect on American wages (especially for the unskilled). Instead, the secure border would allow a numerically limited guestworker program, big enough to serve employers without having a major effect on wages, capable of being increased or decreased as market conditions changed.

Why would Gingrich want to control the border and then allow open borders–effectively unlimited unskilled future immigration–anyway? The main point of “controlling the border” is to prevent that.

Mark Krikorian piles on:

So the Gingrich Amnesty would cover illegal immigrants here when Congress passed IRCA. That is to say, it would pick up where the previous amnesty left off, legalizing precisely those people who didn’t qualify for IRCA. This just underlines what a chump you have to be to support any deal offered you by amnesty supporters.

Which is why “enforcement first” is the only way to go: consistent, unapologetic, across-the-board enforcement of the immigration law at our consulates overseas for visa applicants, at the borders, and inside the country, especially at the worksite — without preconditions or deals or grand bargains. Only after we’ve done that consistently — comprehensively! — for a sustained period of time and attrition has reduced the total illegal population by half or more is amnesty for some of those remaining even a legitimate topic for debate. For prudential reasons I might well be for amnesty under those conditions — I’m not an absolutist on the issue (though I don’t like second-class citizenship — if you’re going to amnesty someone, just do it and steer clear of Helen Krieble’s silly “red card” gimmick, which was the source of Mike Pence’s amnesty plan, too). But amnesty can only be the final chapter, not an opening gambit.

Accepting Reality

David Frum has an incisive (and controversial) essay up about his struggles with Tea Party-style Republican orthodoxies. There's much that's on target here, though some I disagree with. This paragraph has considerable merit:

Some call this the closing of the conservative mind. Alas, the conservative mind has proved itself only too open, these past years, to all manner of intellectual pollen. Call it instead the drying up of conservative creativity. It’s clearly true that the country faces daunting economic troubles. It’s also true that the wrong answers to those problems will push the United States toward a future of too much government, too many taxes, and too much regulation. It’s the job of conservatives in this crisis to show a better way. But it’s one thing to point out (accurately) that President Obama’s stimulus plan was mostly a compilation of antique Democratic wish lists, and quite another to argue that the correct response to the worst collapse since the thirties is to wait for the economy to get better on its own. It’s one thing to worry (wisely) about the long-term trend in government spending, and another to demand big, immediate cuts when 25 million are out of full-time work and the government can borrow for ten years at 2 percent. It’s a duty to scrutinize the actions and decisions of the incumbent administration, but an abuse to use the filibuster as a routine tool of legislation or to prevent dozens of presidential appointments from even coming to a vote. It’s fine to be unconcerned that the rich are getting richer, but blind to deny that ­middle-class wages have stagnated or worse over the past dozen years. In the aftershock of 2008, large numbers of Americans feel exploited and abused. Rather than workable solutions, my party is offering low taxes for the currently rich and high spending for the currently old, to be followed by who-knows-what and who-the-hell-cares. This isn’t conservatism; it’s a going-out-of-business sale for the baby-boom generation.

Robert Stacy McCain thinks that some of the problems Republicans have run into have resulted from a conflation of Republican politics and conservative principles, so that many non-conservative Bush-era policies were identified with conservatism. I think one thing Frum is trying to get at is that many so-called "conservative" policies function in highly non-conservative ways.

I think there's a tension to this part of McCain's response, though:

Frum is a wonk very much concerned with the question of what legislative and policy initiatives can be feasibly enacted (and politically defended) by Republican elected officials. That’s a very different thing than declaring, broadly, what the ultimate objectives of the conservative movement should be.

For example, were it in my power to accomplish one thing in Washington, D.C., the federal Department of Education would be abolished and its employees summarily dismissed from public service. Except for funding necessary research and providing educational benefits for military veterans, we would get the federal government entirely out of the education business.

This is not how wonks talk or think, however, because nobody in Wonk World has that kind of profound loathing for federal bureaucracy. When you suggest a genuinely bold proposal like zeroing out the Department of Education, a Republican wonk immediately imagines the hue and outcry from the Democrats, the teachers unions, and the New York Times. They can’t imagine Republicans withstanding such angry criticism and, they’ll point out, Reagan never followed through on his promise to abolish the Department of Education.

But, OK, say you want to get rid of the Department of Education, and say you that desire doesn't change the fact that it very likely will not be abolished? If it is going to exist, how can you make it run in the most effective and conservative way possible? That's not an incidental question (nor do I mean to suggest that McCain thinks it is). And it is precisely that kind of question that Republicans and conservatives need to think the hardest about.

Path to Reform

Rod Dreher has some interesting reflections here on the need for reform within conservatism:

The complaint I’m making here is not that any of these views are wrong (that’s another argument), but rather that the conservative movement and the Republican Party is so driven now by hidebound orthodoxies that it’s by and large unwelcoming to innovative thinking and creative challenge. This is unconservative, if conservatism is understood as the opposite of ideology, as Kirk had it. The whole idea of the RINO is what political correctness looks like when it manifests on the Right.

Executive Supremacy

Though Rick Perry's plan to "reform" Washington has been getting a lot of press, I think there is something that should especially be emphasized about it, one that does not bode well for classical conservatism: Perry's plan seems a recipe for radically increasing the power of the executive branch. Here are some of the principles:

Ending the practice of giving lifetime appointments to federal judges (current judges would not be affected);

Cutting Congressional pay in half;

Cutting Congressional pay in half again if they don’t balance the budget by 2020;

Cutting Congressional office budgets in half;

Cutting the Congressional calendar by half;

Criminalizing insider trading by Congressmen;

Reducing spending to 18% of GDP;

Privatizing Fannie & Freddie;

Ending the funding of Planned Parenthood;

Eliminating the Commerce, Education, and Energy Departments;

Getting the EPA under control;

Getting the TSA under control;

Audit the government, including the Department of Defense;

Freeze incoming federal regulations, and audit all of them for the last five years;

Federal salary freeze for all non-military and non-law enforcement officials until the budget is balanced;

And cutting the Presidential salary in half until the budget is balanced

There's a lot here---some of it good, some of it not so good. Let's focus on Congress for the moment. One of the key levers of power for Roosevelt's New Deal and, more broadly, the modern presidency is its corps of bureaucrats and analysts; the Executive Office alone has at least 2000 or so staffers. The president has access to layers and layers of information. This access gives the president great influence in shaping the annual budget and the details of policy. Members of Congress may propose laws, but the substance of these laws often has considerable White House backing.

Congressional staff provide at least a partial check on the data power of the executive branch. By undermining Congressional staffs through salary cuts, one also undermines the ability of Congress to shape the information narrative and write legislation. Meanwhile, cutting Congressional pay might seem an invitation to more petty corruption.

One can say this about Rick Perry with some confidence: he knows how power works. As Governor of Texas, he has shown considerable skill in centralizing power through a cunning use of the appointment powers of the governor and through legislative maneuvering. He knows that power abhors a vacuum and that a diminution of Congress's power will give the president a further opportunity to exercise power. A few Cabinet departments may be eliminated under Perry's plan, but those agencies under the president's direct control will have plenty of room to grow.

Any talk of cutting government employment may elicit shouts of glee from many on the right. But conservatives need to ask themselves whether it advances the cause of smaller government to reform the federal government so that the centralized executive branch has even more power.

(Crossposted at FrumForum)

Unity over Division

The defeat of Ohio's anti-union Senate Bill 5 will be hailed by both righties and leftists as a defeat for conservatism. Perhaps due to my skepticism about how authentically conservative that measure actually was (here I might differ a bit with Mytheos Holt), I'm not so sure about that. But it is a defeat for a certain set of political tactics and suggests that a route Republicans recently have surged down may be a bit of a dead end.

John Kasich has no small potential as a governor. However, he has fallen into an unfortunate trap: rather than focusing on selling an economic plan that brings opportunity to all, he instead chose to back a series of reforms that had the appearance of pitting Ohioan against Ohioan. In a way reminiscent of Scott Walker's policies in Wisconsin, Kasich offered a combination of tax cuts and spending cuts and then added a capacious anti-union measure on top of that.

Unlike Walker, Kasich chose not to buy off interest groups by making his anti-collective bargaining apply to all public workers---not just clerks and teachers but also firefighters and police officers (Walker exempted the last two groups). This act of principle only made the issue seem even starker and helped unite a union coalition against this measure. Moreover, certain parts of SB5 reach far beyond cost-saving measures and offer a fundamental restructuring of key parts of Ohio's public service infrastructure. For example, banning tenure for future teachers and tying teacher pay to student performance on standardized exams would have consequences that reach far beyond the government coffers.

Though hating unions has become an increasingly "in" thing for many in the conservative base, many Americans view unions, private and public, as a bulwark of the middle class, which has been subjected to such stinging attacks over the past decade. Economic anxiety about the decline of the middle has, in Ohio and other places, been translated into a defense of unions.

Analysts left and right are speculating about the importance of union spending in tipping the balance, but we should not overestimate the effects of this political spending: a majority seems to have always supported repeal. When Quinnipiac first started polling the repeal of SB5 in May 2011, 54% of respondents backed a repeal. By late October 2011, support for repeal had climbed up to 57%, a definite increase but not a game-changing one. 61% of voters eventually came out in favor of repeal. SB5 was never a popular piece of legislation. Union spending might have increased the margin of victory, but I think Republicans needed more than slick ads if they wanted to win on this issue in Ohio.

The overwhelming victory for Issue 3 (which would ban the enforcement of a federal health-care mandate) shows that conservatives can still get commanding majorities on the question of federal overreach. The defeat of SB5 shows that union-bashing may make for viscerally enjoyable talk-radio, but it may not be the best electoral tactic. Despite propaganda to the contrary, the United States can afford a vigorous public-sector employment field and can even afford public-sector unions. (There is a case to be made against public-sector unions, but fiscal sustainability may not be the strongest grounds for it.) But such expenses can best be afforded under conditions of economic health. Republicans would be far better off working toward an optimistic vision of economic opportunity for all than trying to castigate certain portions of the American public as parasites, vermin, and thugs. Faith in the American people is an ally of small-government thinking. Ronald Reagan understood this alliance and was able to forge an electoral message that combined economic growth with a sense of national fellowship. The defeat of SB5 may yet bring conservatives and Republicans to appreciate the wisdom of this Reaganite principle.

Kristol: 1980 Is Long Gone

Bill Kristol suggests that conservatives should not be held hostage by the nostalgia for 1980:

For every American conservative, not once but whenever he wants it, it’s always the evening of November 4, 1980, the instant when we knew Ronald Reagan, the man who gave the speech in the lost cause of 1964, leader of the movement since 1966, derided by liberal elites and despised by the Republican establishment, the moment when we knew—he’d won, we’d won, the impossible dream was possible, the desperate gamble of modern conservatism might pay off, conservatism had a chance, America had a chance. And then, a decade later—the Cold War won, the economy revived, America led out of the abyss, we’d come so far with so much at stake—conservatism vindicated, America restored, a desperate and unbelievable victory for the cast made so many years ago against such odds.

But that was then, and this is now. Now is 2012, and it seems clear that 2012 isn’t going to be another 1980. The reality seems to be that we’re not going to have a chance to replay that election, with (at least in the hazy glow of retrospect) a compelling conservative leader of long standing but ever youthful, a man who stood tall and spoke for us and for America, riding gracefully to victory over the GOP establishment in the primaries and over decadent liberalism in the general election. Assuming the presidential field stays as it is, 2012 won’t be a repeat of 1980.

As Kristol goes on to note, the fact that the 2012 dynamic seems like it will be different from that of 1980 might not be the worst thing in the world: there are other models for successful presidential campaigns than Reagan's.

Bill Jacobson thinks that we should blame conservative "technocrats" for this difference. Instead, I tend to think that, in order for conservatism and Republicanism to grow, it cannot be held hostage to a single electoral model. Yes, Reagan did a lot of good things as president. But some of what Reagan ran on in 1980 is no longer applicable (I don't think diplomatic relations with the Soviet Union are exactly a pressing issue anymore). And there are plenty of issues where Reagan's talk didn't exactly align with his actions; the Department of Education, which he ran on abolishing, only grew during his tenure. Furthermore, there are other points where self-styled "conservative" purists would excoriate Reagan for his governance. Of the current top-tier presidential candidates, the one whose stance on Social Security is closest to Reagan's is probably Mitt Romney, a man derided by many purists as a technocrat.

History changes, leading to new issues and new policy alignments. A political coalition unable to create narratives to cope with these changes is one that is fated to wither. In an interesting post earlier this week, Ace at Ace of Spades HQ argued that the hunt for the "Great Conservative Candidate" can sometimes substitute wishful thinking for realistic reflection. Conservatives cannot afford to let nostalgia displace critical thinking. As much as he admired Calvin Coolidge, Reagan did not try to put in place a Coolidge economic program. He adapted certain small-government principles into new policies. Conservatives would be wise to follow in the spirit of this example.

Toward A Foundation-Up Economics

Perhaps the greatest single threat to both conservatism in American life and the nation's economic vitality is not Ivy League professors or Hollywood elites or a sinister "progressive" conspiracy but the economic decline of the middle class. Take away hope in the churning of the free market, and you push many citizens considerably closer to the state as a provider. The turmoil of the markets in 2008 was merely the cataclysmic icing on top of the cake of a decade of lost ground for the bottom 90% of workers. Take that away, and an Obama victory would have been much less of a sure thing (and even such a victory would have been considerably moderated). If insurance premiums and coverage rates had been closer to those of 1993, Obamacare, the bette noire of conservative activists, would not have passed. The economic wasteland of the past few years has pushed more than a few public and private pension plans closer to the edge of insolvency.

The recent Congressional Budget Office report on incomes from 1979 to 2007 has depressing news for believers in egalitarian free-market capitalism. Since 1979, the after-taxes income of the bottom 80% of Americans as a share of the total national after-taxes income has dropped from 57% to 47%; every one of the first four quintiles has seen a drop in its share of the national income. Yet even the gains in economic strength for the top quintile have been unevenly shared. The 81st-99th-income-percentile range has seen its share of the national income stay the same. Meanwhile, the top 1% of earners have seen their share of the nation's after-taxes income climb from 8% in 1979 to 17% in 2007. These numbers suggest that the profits of the national economy (broadly considered) have increasingly flowed to the top.

There are broader policy reasons that explain this change. For much of the past decade and beyond, the prevailing Republican (and, frankly, bipartisan elite) orthodoxy has been as follows: lower wages, lower prices, and an empowerment of capital over labor. The CBO numbers reflect this dynamic, as they show the share of income due to labor declining since 1979, while the share of income due to the combination of capital and business income increasing. The claim made continually on behalf of statist globalization over the past twenty years has been that lower prices on various goods through cheaper labor would reward the American consumer, and that the increase in spending power on tchotchkes would exceed the decline in wages due to outsourcing. Similar claims have been made on behalf of massive amounts of illegal immigration: poor workers in the shadows enrich Americans as a whole through providing a plentiful peon class to act as babysitters, home-builders, fast food workers, and other assorted "service" positions.

This decline in labor cost provides a de facto empowerment of capital: if you earn money from investing rather than collecting a paycheck, having cheaper resources of labor allows your dollar to go much further. The "ownership society" sought by President Bush attempted to leverage this dynamic. By making as many Americans investors as possible (especially through investing in the housing market), the Bush administration tried to place hundreds of millions of Americans in the position of the victorious investor class in order to compensate for the decline of the labor class.

However, there are noticeable shortcomings to this model. First of all, not all Americans can join the investor class, so a substantial number of Americans lose out in an investor-centric model. Moreover, housing, the investment vehicle favored by the Bush administration, is a dangerous institution on which to base an investor-centered economy: an individual house is nowhere near as fluid an investment vehicle as a stock portfolio, and the fact that most people need somewhere to live complicates the role of a house as an investment commodity. Since most people need to take on a mortgage in order to buy a house, using the house as the doorway to the investor market requires Americans to take on considerable amounts of debt, and the debt needed to keep the housing-investing game going will balloon (as the 2000s proved).

And the decrease in prices due to cheaper labor is not spread equally across all sectors of the economy. Those sectors least undermined by outsourcing and domestic and international low-skilled workers, such as health-care, have seen some of the biggest price increases over the past decade. Jeans at Walmart may be less, but your health insurance premiums have doubled. With wages stagnating or declining, health-care bills and others like them eat more and more into a worker's paycheck. So the decline in wages is not fully compensated for by cheaper goods and services.

A final limit for the low wages=low prices model is that the consumer often does not feel the full price benefits of the decline in worker wages. Instead, the "savings" that many companies find through shipping work abroad or otherwise cutting labor costs are translated into bigger compensation packages for elite management and the investor class. While current "globalization" has witnessed the decline in wages for the middle and working classes, it has also seen the the pay of upper management (those who control large amounts of capital) increase. The recent history of American business is saturated with stories of companies that close down their American factories while giving upper management colossal paydays. So many of the presumed benefits of declining wages are accruing to an increasingly narrow band of the population.

With wages shrinking and the spigot of easy credit turned off, it's no wonder that public demand has withered.

What might be slightly more interesting, though, is a movement among some factions on the right and left toward a policy reversal: using higher wages and not lower wages as a stimulant for economic growth. Under this model, rising incomes for working- and middle-class workers would increase consumer demand. Rather than the cost of jeans production going down, workers would have more money to spend on jeans---and housing and cars and medical care and foreign trips. Economic growth for the bottom 90% of wage-earners would in turn provide new opportunities for the top 10%. Things weren't exactly bad for top-tax-bracketers during the egalitarian 1950s and 1960s or during the later part of the 1990s, when the income of a broader range of Americans increased in real terms (though income inequality increased in the 90s, as well). Rather than trickle-down economics, we would instead have foundation-up economics.

Nurturing this foundation in part depends upon increasing the skill level of the American workforce, so that workers can make the most of cutting-edge technologies. Education as driving future economic growth has perhaps acquired the somewhat dusty ring of tired dogma, but, like many things that may seem trite to the jaded, it has some truth to it. Reforming our immigration system, making new investments in fundamental research, and pushing back against social dysfunction (among other policies) would go a long way in the direction of improving the skills of America's workforce and would likely improve the wages of many workers.

But mere training is no panacea. With all due respect to current education "reform" movements, people are not mere containers for educational inputs; they exist in vibrant, heterogeneous communities, where all do not all have the same aptitudes. America will not and probably cannot be a nation populated solely by Facebook founders and investment bankers and political pundits. It will have maids and clerks and factory technicians and farmers and truckers, too. We can and we should have an economic system that offers advancement to all productive enterprises of worth and merit.

(And make no mistake: the People's Republic of China is witnessing great economic growth not because some of its students are doing well on international standardized math and science tests but because it has pursued an aggressive policy of protecting and developing Chinese industry. The decline of the US economy has less to do with the notion that it is graduating "insufficient" numbers of math and science majors and more to do with the fact that whole sectors of the economy have withered.)

Part of foundation-up economics also thus depends on protecting the livelihoods of so-called "lower-skill" workers (though, in reality, it does take considerable skill to build a house or run complex machinery or sundry other tasks). It may be true that the current statist flavor of globalization may increase inequality somewhat, but the extent of this inequality is in part due to other domestic policies. Our immigration and trade policies in particular have allowed those on the higher end of the ladder to leverage worker against worker in the pursuit of maximizing profits. Moreover, many of the gains for the wealthiest have been due not to the fair functioning of a free market but to the manipulations of state power.

It is possible to realize an economy that combines the exuberance of the market with a sense of popular prosperity. However they may differ in their methods of reaching this goal, many Republican and Democratic presidents have aimed for it. For a number of years now, we have empowered capital through cheapening labor; now may be the time to increase the value of labor in order to find new opportunities for capital.

From a conservative perspective, an egalitarian economy, where all may have ready hope of living a comfortable life and of advancing economically, is far better than either an economy where the vast majority of workers need government checks to survive or an economy where the super-wealthy plunder the resources of the public and leave the populace as a whole to malinger. Some extremists of the left and of the right would push the economy in one direction or the other. Neither extreme is sustainable. A happy, prosperous workforce is not only the best environment for defending the free market; it is also one of the greatest promises of the free market.

(Crossposted at FrumForum)

Perry's Immigration Attacks May Backfire

In the short term at least, it seems hard to deny that yesterday's debate was good to Rick Perry. The leading un-Romney contender, Herman Cain, sank underneath withering attacks on his 9-9-9 plan; his inability to defend the details of this plan with anything other than assertions that his opponents are wrong reinforced impressions that he still has a lot of policy areas to brush up on.

And Perry's deeply personal attacks on Mitt Romney helped bring the focus of the debate back on himself. These attacks may help keep Perry as the media takeaway from the event seems to be focusing on how much he's hurt Romney---not on the Texas governor's verbal slips or policy haziness.

All this may provide a boost for Perry and keep him in the race. But his attack on Romney about immigration may eventually raise even more problems for Perry. Via Byron York, here's the substance of the exchange:

And Perry, for the first time in any GOP debate, rattled former Massachusetts Gov. Mitt Romney. He did it by bringing up a 2007 charge that Romney hired illegal immigrants to do lawn work at his Massachusetts home. Jobs are the magnet for illegal immigrants, Perry said. "And Mitt, you lose all of your standing, from my perspective, because you hired illegals in your home and you knew about it for a year. And the idea that you stand here before us and talk about that you're strong on immigration is on its face the height of hypocrisy."

Romney tried to laugh it off and to deny the story. "I don't think I've ever hired an illegal in my life," he said. Romney tried to explain, but Perry kept pushing, leaving Romney protesting that Perry was ignoring the rules -- just as Perry had planned.

"Rick, again, Rick, I'm speaking," Romney said. "I'm speaking, I'm speaking, I'm speaking. You get 30 seconds. This is the way the rules work here…Anderson?"

By the time Romney appealed to CNN moderator Anderson Cooper for help, Romney seemed flustered, almost frantic. "Would you please wait?" he said to Perry. "Are you just going to keep talking?"

When Perry finally told Romney to "have at it," Romney explained that he had hired a company to do lawn work and had no idea the company hired illegals until it was reported in the paper.

Perry has become known for his verbal imprecision in presidential debates, and his attack depends upon an indifference to the details of verbal meanings.

Romney "hired" illegal aliens, according to Perry, by paying a company that employed them to do a service. Under this definition of "employment," anyone who goes to a restaurant that employs an illegal alien is also "employing" an illegal alien. A woman purchasing a candy bar from a supermarket with an illegal alien working at the deli counter is also "hiring" an illegal alien. By Perry's definition of employment, he has probably "hired" countless illegal immigrants---at restaurants, stores, and so forth.

The point of Perry's charge of hypocrisy was not to clarify the distinction between proclaimed position and actual practice but to shut down debate by casting an impossibly wide net of guilt. This appeal to hypocrisy to avoid a debate of policy principles is all too common in politics, especially at the federal level, so it's perhaps no surprise to see Perry engaging in it here.

The point that primarily concerns American voters is not whether some individual candidate's money ended up indirectly in the pocket of some illegal immigrant. The point that ought to concern us is whether a candidate thinks it is good to have the workforce be flooded with millions and millions of illegal workers. Romney's record as governor and his rhetoric as president demonstrate that he thinks that might be a problem for this country. Rick Perry's rhetoric and record---from his opposition to E-Verify to his support for major taxpayer subsidies for illegal aliens---suggest that he doesn't think that's such a big problem, if a problem at all. Both positions are understandable, but they are quite different, and we should not blur those important policy distinctions.

Ironically, Perry's attack on Romney may leave Perry open to accusations of being a flip-flopper. Supposedly Romney hiring a company that (unknown to him, so he says) employs illegal aliens is to be a thing of outrage. But someone is also "heartless" if he doesn't support giving tens of thousands of dollars of taxpayer subsidies to illegal aliens. It's hard to square that circle. And such a Texas two-step seems more motivated by political opportunism than anything else.

One of Perry's distinguishing characteristics has been his reputation as a straight-shooter. If Perry tarnishes that reputation by contradictory attacks on his political opponents, he may find his standing further erode in the polls.

(Crossposted at FrumForum)

$ Primary between Brown, Warren Heats Up

The third quarter results are in for fundraising for Elizabeth Warren and Scott Brown:

Warren pulled in $3.15 million in total for the third quarter, with more than 11,000 people in Massachusetts pitching in, her campaign announced Monday. Brown raised $1.55 million in the third quarter — almost exactly half of Warren’s total. But Brown, who wielded a hefty war chest heading into his reelection campaign, now has more than $10 million in the bank.

Fear Stalks

Two bits of performance art last night suggest how panicked Democrats, progressives, and socialists (see item #2) are becoming.

One is Harry Reid's decision to muscle his caucus together and weaken the minority's ability to offer amendments to a measure after cloture has been invoked. Philip Klein has a helpful summary:

Tonight, McConnell made what's called a "motion to suspend the rules," to allow a vote on the amendments. Such motions are almost always defeated, because they require a two-thirds majority to pass. But they're another way for the minority party to force uncomfortable votes. Even though the minority party doesn't get a direct vote on the amendment, how somebody votes on the motion becomes a sort of proxy for such a vote. In this case, for instance, if Democrats had voted down a motion for a vote on Obama's jobs bill, it would have put them in an awkward spot.

Though it's been the standing practice of the Senate to allow such motions by the minority, tonight Reid broke with precedent and ruled McConnell's motion out of order, and was ultimately backed up by Democrats.

So, the end result is that by a simple majority vote, Reid was able to effectively rewrite Senate rules making it even harder than it already is for the minority party to force votes on any amendments.

And what caused Harry Reid to rewrite rules in this way? A desire to keep the Senate from having a vote on Obama's jobs bill. Is the president's plan that toxic (or that much of a pipe-dream) that his own party doesn't want to vote on it in the Senate?

Democrats seem to fear that they're on the verge of losing control of the public narrative. This attempt to shut out minority voices is a flailing attempt to provide uniformity to that narrative, to shut out any competing principles or politically embarrassing facts.

This brings us to the second piece of performance art: Lawrence O'Donnell's interview with Herman Cain. Cain is often most effective in these talking-head encounters, and the vitriol of O'Donnell's questions helped the Republican presidential contender portray himself in a good light. The interview is worth watching in full, but a few points bear particular mention.

Perhaps one of the most striking features of this interview is O'Donnell's apparent desire to jump in the timewarp machine and approach the campaign of 2012 like it's 1968.

In a time when millions suffer in long-term unemployment, the national debt is skyrocketing, and the globe's political-diplomatic order is on the verge of disintegrating, O'Donnell seems much more concerned about whether Herman Cain was sufficiently activist about Civil Rights in the 1960s: why didn't he join in the Freedom Rides? Where was he during the protest marches? It seems rather bizarre to think that Cain's viability as a presidential candidate should depend upon if he went to marches fifty years ago. The premise of O'Donnell's questions seem to suggest that there was only one route for a virtuous "black" man in 1960s America: engaged on the frontlines of political activism. While I think that the fight for Civil Rights was a virtuous activity, it was not the only one. And the totalizing narrative on race that O'Donnell was edging toward seems less than desireable.

Vietnam was another fixation of O'Donnell here. As he's done in the past, O'Donnell seemed unable to resist indulging in a little militarism (and more than a little opportunism) when he claimed he was "offended" that Cain had the temerity to run to be Commander-in-Chief without having volunteered to serve in Vietnam. Apparently working on ballistics with the Department of Defense during the war (which Cain did) does not count as a sufficient contribution to the war effort. Based on O'Donnell's premise that it's "offensive" to dare to be president without having volunteered to go on the battlefield, I presume he spits upon the picture of Franklin D. Roosevelt (that "chickenhawk" who took a cushy job in military administration instead of volunteering to fight during World War I) and looks upon the administration of Bill Clinton (no Vietnam volunteer he) as an offensive abomination in American history.

O'Donnell's rabid attempt to caricature Cain as a cowardly lackey of The Man shows a deep anxiety about the failure of Barack Obama's "progressive" dreams. And it's unfortunate that this anxiety is manifesting (and will no doubt increasingly be manifesting) in vitriol, personal enmity, and snide rhetorical questions. There are some shortcomings to Cain's economic plans, and O'Donnell was stronger when interrogating Cain about actual policy options that could affect the future of the USA---and not when playing the grand inquisitor of the 1960s.

Our nation is in great trouble, and the best route out of this danger is the well-intentioned interrogation of all possible options. Instead of the rhetoric of exclusion, the tactics of totalization, and the drug of demagoguery, the spirit of charity and rationality would much better serve our purpose.

A Path to Victory for Brown

The recent UMass Lowell/Boston Herald poll of the 2012 Massachusetts Senate race has some sobering news for Scott Brown: among registered voters, he has a slim three-point (41-38) lead over Democratic frontrunner Elizabeth Warren. Other polls have also suggested that this could be a close race.

However, there is plenty of good news for Brown here. 54% of voters think that Brown met or exceeded their expectations. His favorability/unfavorability ratings remain a healthy 52%/29%, respectively. Massachusetts voters don't hate Brown, and they're willing to give him a chance. Moreover, this race is still very fluid. Over 20% of voters are undecided, giving both Warren and Brown plenty of room to grow.

Digging into the demographic data for this poll suggests in many ways that Warren may be more identified with the status quo than Brown is. Interestingly, having a layoff in your household makes you more likely to support Brown: he leads Warren 42-36 among those experiencing a layoff in the household, while he only leads her 40-39 among households that haven't experienced a layoff. Voters who have felt the pain of the Obama economy are more willing to back the Republican. About half the Massachusetts population thinks the economy is getting worse, and Brown has his strongest lead with them. Among those who think the nation is on the wrong track, Brown has a commanding lead over Warren (though a less commanding lead than he had over Coakley in 2010).

These trends suggest that the less happy Massachusetts voters are with the status quo, the more likely they are to support Brown. But if Massachusetts voters aren't thrilled with the Obama economy, they are even less enthusiastic about having the national "conversation" that some conservative activists want to make the 2012 election about. An overwhelming majority of Massachusetts voters want Social Security and Medicare to be untouched. Bay State voters also believe 52-40 that government should "do more to solve problems." Brown can't run on wanting to privatize Social Security or Medicare, and a Republican presidential candidate who made such a policy the centerpiece of his campaign could very well sink Brown. He has a slim lead over Warren in all age groups, but a defense of the mission of social insurance could help him win more votes from the middle-aged and elderly.

Brown has long recognized the banner of independence as crucial for his political survival as senator. By crafting his own identity apart from the Republican policy monolith (however frustrating that may be to some Tea Partiers), Brown can find space for electoral maneuvering.

The middle class is also crucial for Brown. Elizabeth Warren beats Brown among the poor (those with household incomes below $30,000) and wealthier (those with household incomes above $100,000). In fact, top income earners are the demographic most likely to support Warren (she gets 46% of their votes). Apparently, the rich of Massachusetts haven't gotten the memo that Obama and Warren are socialists who want to confiscate all their wealth or something. They don't seem too worried about taxes going up on upper-income earners, so Brown would be smart not to make tax cuts for the top 2% the core of his economic message. The rich have been the least affected by the recent recession, so they seem quite happy to let the Obama times roll.

Instead, Brown should focus on the rich electoral territory of the middle and working classes---the people whose jobs have been downsized, hours cut, and wages slashed. The great hollowing out of the middle class in the 2000s has made voters willing to listen to voices that challenge partisan orthodoxies of the right and left. Those with household incomes between $30,000 and $100,000 are the most likely to support Brown, so he should do what he can to maximize his margins here.

If Brown can offer a message that convincingly offers a rebuilding of the middle class, he might in turn increase the hopes of (and support for himself among) poorer Massachusetts residents. A convincing economic plan might also pull wealthier Warren supporters, especially those in the upper-middle class, in Brown's direction. Furthermore, a narrative of economic progress could boost Brown's numbers among the young, the demographic group hit so hard by the nation's poor employment picture.

Brown won in 2010 as a fair-minded outsider, and this poll suggests that Massachusetts voters are still willing to view Brown in that role. Though Brown looks more vulnerable now than he did six months ago, he still has a better shot of being elected to a full Senate term than any Republican has had in a long time. If the GOP wants to stay a national party with majorities capable of enacting large-scale reforms, it's going to need a diversity of Republicans. There's a case to be made in Massachusetts for independent-minded and efficient smaller-government policies, and Scott Brown seems the candidate to make this case.

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.