Armey, Gingrich: Republicans spent their way to the wilderness

Dear Republican

Your party has lost not only the Presidency and both houses of Congress in Tuesday’s election, it has been discredited and humiliated. This is good news, because you deserved it. This is also a troubling development, because America will not like to see you weakened to the point of impotence.

Whether in power or out (especially out), the Republican Party has a critical role to play. It is the watchdog of capitalism, the promoter of an ethos of free markets and private enterprise upon which much of America’s prosperity is founded. Even people who are morally repulsed by the results of laissez-faire – those who are drawn to the egalitarian philosophy of the New Deal, for example – will not like to see this role completely undermined. We need a delicate balancing act between prosperity and justice.

The reason you are in this hole, dear Republican, is that long ago you traded in your role of market advocacy in favor of what you thought was a more assured vote winner – the culture wars and regional or class resentment. While bankrolled by and catering to the financial elite, you manufactured an ugly antipathy towards the cultural elite. Since these groups overlap to a large degree, it amounted to hacking at the very branch on which you were sitting. Ever wonder where wealth spreader Obama got so much money?

The recent financial crisis is a great illustration of how disengaged your party has become from its own economic philosophy. Faced with the crisis, a thoughtful champion of free markets should have clearly stated two things. First, it reflects not merely financial corruption or state meddling but a kind of fragility intrinsic to a market economy – a fragility arising from the fact that it is ultimately a faith based system where both boom and bust can be self fulfilling prophecies.

Second, the elements which contribute to this weakness are also the reasons for its strength! Capital mobility fosters efficiency, finances innovation and encourages economic dynamism, but it also raises the risk of bubbles, panics and deep financial contagion. You cannot have one without the other. It was your duty to remind people of this trade-off before embracing the current regulatory mania.

What did your leaders do? They gyrated between absurd denial (“fundamentals of the economy are strong”) and hilarious attempts to outdo the economic populists on the left with hollow rhetoric (“I will stop the greed on Wall Street.”) They overwhelmingly opposed every pro-market pragmatist’s preferred solution – infusion of liquidity, extension of Federal guarantees, and even arm-twisting lenders in order to jump start the stalled economic engine.

These rabble rousers never learnt Keynes’ simple lesson – a little “socialism” today often inoculates against a lot of “socialism” tomorrow. A financial system that is allowed to go into systemic collapse will only be reborn, if at all, in a regulatory prison. Capitalism is not perfect. It is enough to ague that it is better than the alternatives, especially with a bit of socialist tinkering at the right times.

It is not hard to see why your leaders flailed so cluelessly. They have become steeped in such a Manichean world view that there is no room for the notion that even the best system may be a flawed system, with the flaws intimately tied up with the strengths.

What was the point of that Joe-the-plumber gimmick and the infantile railing against “spreading the wealth”? There are at least three possible interpretations: (a) the average voter will be a net recipient rather than a net contributor under Obama’s more progressive tax proposals, so it is against his self interest to vote for the Dem ticket (b) the average voter will gain in purely economic terms, but should nevertheless morally object to such redistribution (c) redistribution will affect stuff like investment incentives, so the larger share of the pie going to the average voter will be more than offset by its shrinking size.

(a) is patently false, but (b) and (c) are arguable points. McCain was not interested in or capable of articulating them. He was more interested in obscuring the economic issues with cultural demagoguery, parading the Monty Pythonesque cartoon of a goofy Midwestern plumber worried about the quarter-million plus tax bracket! Perhaps it is difficult to underestimate the intelligence of the average voter, but McCain may just have pulled it off.

Over the years, your leaders have become inveterate bottom feeders tirelessly mining the cultural swamp for political food. They have well honed skills, but only of a certain kind. They have become skilled at stirring the pot of xenophobia, homophobia, regional chauvinism, religiosity and jingoism. They have demanded of their supporters an inordinate pride in stupidity and ignorance.

In an election dominated by economic concerns, non-partisan voters may have come to realize that the Republican stance on the economy is not so much wrong as unserious and cosmetic. Democrats did not have to put forth an appealing proposal. They only had to show up.

If the Republican Party embraces honest libertarian ideals and free markets, its sensible egalitarian opponents may want to see it defeated but not decimated. The current incarnation, which has polluted not only governance and international relations but also political dialogue, is useless whether in power or as loyal opposition.

Before you go back to your roots, decide which one to choose.

sashal on November 7, 2008 at 5:20 PM