The Free Market Low Tax Fairy Tale

I agree with Mike's points regarding the Arthur C. Brooks article but would like to extend with my own viewpoint regarding what I think is the main theme of the article.  As I read it Brooks is basically calling for conservatives to go back to their "roots" of advocating low tax free market capitalism and reducing the debt.  My main issue with this argument is that this conservative mantra has never been a reality.

As Mike's line graph so beautifully demonstrates, in peacetime republican presidents have actually increased the debt much more than any of the tax and spend liberal presidents of the past.  The reason is simple.  Republican presidents such as Bushx2 and Reagan are able to pass through their tax cuts but then when it comes to the "cut spending" part of the equation things inevitably fall apart.   Both Reagan and Bush significantly increased defense spending on projects such as star wars and were never able to significantly reduce other spending programs.  Tax revenues then fall or stay the same while spending continues to increase and as a result we see the increased debts.

Now the typical conservative response is "well it was the democratic Congress that kept spending all that money" but the truth of the matter is that Republican presidents never REALLY advocated any spending cuts.  Sure they propose minor cuts of "pork barrel" spending which are popular but when it comes to cuts that would be real and painful such as social security or medicare no measures are really taken.  It was a democratic congress which forced Reagan to pay for social security with some increased taxes and even with a republican congress Bush #2 never made any significant spending cuts.

Brooks also appeals to poll after poll which he says supports the fact that people want more capitalism and free market policies.  My response would simply be that the polls really mean very little because the terms "capitalism" and "free market" really have no meat behind them. Ask people if they would chose capitalism over socialism and they absolutely would prefer capitalism but ask them if they want government to provide universal health care and 66% will say yes.  Now government providing health care is undoubtedly a "socialist" policy especially if you consult conservative TV ads and yet Americans favor it.  Republicans and conservatives, along with an entire cold war era, convinced most Americans that socialism equals a Soviet style command and control economy and it is therefore understandable why most would chose capitalism.  In reality though many Americans favor "socialist" type policy like the progressive tax, social security, and universal health care most likely because they don't associate those policies as being truly "socialist" even though they really are.

In the end I just wish we could truly debate the debt with some sort of realism.  At least Obama admits he will have a tremendous deficit and proposes to start doing something unpopular in the future (raising taxes) to try to fix it.  Conservatives come with the same fairy tale of "we can lower taxes and cut spending and lower the debt" but history has shown that never really works out.  The taxes do get lowered but the spending stays the same and the debt goes through the roof.  If a republican came with a real plan such as cutting social security or medicare I would respect that plan more because at least it would be realistic; even with me being a strong supporter of social security and government provided health care.

Sequels are always worse than the originals

Since things aren't looking so good for conservatives these days in Culture War I, it was only a matter of time before it was necessary to open up another front. Arthur C. Brooks makes the case in the Wall Street Journal that "The Real Culture War is Over Capitalism." Unfortunately, and predictably, CWII is just as phony and shallow as CWI.

Let's count the distortions in just this one paragraph:

Despite President Barack Obama's early personal popularity, we can see the beginnings of this schism in the "tea parties" that have sprung up around the country. In these grass-roots protests, hundreds of thousands of ordinary Americans have joined together to make public their opposition to government deficits, unaccountable bureaucratic power, and a sense that the government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud.

We constantly hear about how these things were grass-roots, and I think the term is tragically misapplied. Its like how for about 5 years in a row, Gonzaga was almost universally an "upset" pick to win in the first round of the NCAAs, yet still referred to as an underdog. You can't be an underdog if you are nearly universally favored. This is what the tea parties are like for me. How can events which benefit from weeks of constant, free promotion on both FOX News and conservative talk radio, in addition to material support from mainstream, establishment conservative groups, be considered grass-roots? This is not to say that the whole thing was fake, or staged -- my parents very enthusiastically took part in the St. Louis tea party -- but to make it sound like it was the Underground Railroad is more than a little embellishment.

Secondly, Brooks makes the case (and is repeatedly backed up by the Becks and Hannitys of the world) that these rallies were not about Obama, or the Democrats, but about "...opposition to government deficits, unaccountable bureaucratic power, and a sense that government is too willing to prop up those who engaged in corporate malfeasance and mortgage fraud."

I call B.S. on that. Here's my evidence:


We're a country that has basically been in debt since our founding. Sometimes better, sometimes worse, but always in debt. In recent decades, we've had quite a few years of exploding deficits and expanding debt, but only now do we hear about conservatives' principled opposition to it. Now, it's important to clarify: I have no doubt that many conservatives are against deficit spending in general. I have no doubt that many conservatives hate the size of the federal government and want to see both its power and influenced reduced. I cede those points. But I would offer that no one goes out to rallies on the basis of these causes. I don't buy the line that only now have conservatives reached a tipping point with regard to deficits and bureaucratic power. Mostly because they've been silent, by and large, throughout the last three Republican presidents' profligate spending, but also because their complaints about government power are so contradictorily juxtaposed against their support for near-dictatorial powers for the president when it comes to national security. So you'll forgive me for rolling my eyes when I hear complaints about either, because they generally seem like political opportunism to me.

When it comes down to it, there are very few outright capitalists in our society, and there are very few outright socialists. The vast, vast majority of Americans lie somewhere in between: recognizing the need and value of government services and regulations, while also realizing how imperative the free market and competition are to development and ingenuity. What Brooks does in this article is to dumb down the conversation. Instead of a sensible discussion about where we should place limits on government power, he instead reduces it to essentially Evil Socialists Who Want the Government to Control Everything vs. Patriotic Americans Who Hate Government and Want To Eliminate It. In the process, he does the discourse a great disservice.

Krugman Thoughts

Beck you should expect this kind of stuff after all don't you watch Krugman give his thoughts everyday on the Keith Olbermann Show? I don't find his comments that extraordinary considering it is an Op-Ed piece and all as opposed to a report in the world section of the paper.

I think what is revealing is how shocked both sides are at the other side's opinions. I admit liberals such as I are shocked that conservatives are willing to accept the interrogation techniques so readily if they produce results. Conservatives are shocked that liberals are so ready to condemn techniques that may produce valuable information.

In the end I think historians may be the best judge. Right now we are still sort of "living in the moment" and fueled by our perceptions of 9/11 and the war on terror that followed. Some time will allow a more objective and removed opinion. Question is will the Bush era techniques be judged similarly to Lincoln's suspension of habeas corpus or like the internment of Japanese during WWII by FDR. I think people generally look at Lincoln's actions and say "hey the guy did what he had to do in desperate times" whereas FDR's actions are generally viewed as unjustified (though there are still some supporters).

Ryan

Is Krugman Nuts? cont.

I'm guessing you're objecting to this line:

...and, probably, tortured people in the attempt to extract “confessions” that would justify that war.

But if this McClatchy piece, is to be believed, that's not far from what actually happened:

WASHINGTON — The Bush administration applied relentless pressure on interrogators to use harsh methods on detainees in part to find evidence of cooperation between al Qaida and the late Iraqi dictator Saddam Hussein's regime, according to a former senior U.S. intelligence official and a former Army psychiatrist.

Is Krugman Nuts

Its been a crazy week.  I'll get to the global cooling problem ASAP.  But, here is a quote from Krugman's editorial in the NYTs this morning.  I read this quote and had two thoughts:  1.  Is he  serious or just trying to sell papers to cover the $1.5 billion in debt the NYT currently has run up?  Either way, its no wonder that the paper is about to be bankrupt when this opinion columnist is the standard bearer.  2.  I would love a fair investigation into the "torture" issue so the American people can decide if they are on the side of Krugman the Bushies or somewhere in between.  

"For the fact is that officials in the Bush administration instituted torture as a policy, misled the nation into a war they wanted to fight and, probably, tortured people in the attempt to extract “confessions” that would justify that war. And during the march to war, most of the political and media establishment looked the other way."

The Carbon Debate: A dose of cynicism

There are also still a few scientists on the fringe who will tell you global warming is not a threat, but the consensus among people who know more than any of us is that global warming can and will cause tremendous environmental AND economic damage if something is not done.

While I don't subscribe to Huber's smoke 'em if you got 'em approach, I do find myself somewhat cynical that things can truly be reversed at this point -- at least not within any of our lifetimes.

I think the biggest mistake the green movement has made has been to center its appeal on saving the environment. As noble a goal as it may be, there's a certain percentage of the population that just doesn't care, or at least doesn't care enough to alter their lifestyle in a meaningful way. If you ask me, though, a case can be made for clean energy, painful as it may be, on purely pragmatic grounds.

One thing that I think we tend to forget is how the rise in oil prices last year was one of the things that helped spark the recession. The graph on the right tracks the rise in energy prices since the last recession; clearly, gasoline prices rose much more significantly than the pace of inflation. Gas prices have definitely plummeted down from $4/gal. last summer, but that is in large part due to the nearly worldwide recession. When the economy turns around, don't we have every reason to believe that increased demand will cause gas to shoot right back through the roof? I have a feeling that we're going to be reading a lot of stories about our Energy Crisis in the summer of 2010.

Part of human nature, it seems, is to avoid making painful changes until it is absolutely necessary, and/or we are forced to. Energy use is no different. Over the past decade (and more), instead of taking a sensible approach to energy, we followed a course of action that was not entirely unlike Huber's suggestion. Instead of recognizing that there is a limit to the amount of coal and oil we can extract from the ground and investing in clean energy, high speed rail, etc., we exploded the nation's housing inventories and furthered urban sprawl out into suburbia, which require an even greater dependency on cars to get us to and from work. The only way this approach makes sense is if gasoline is and will continue to be cheap. We have structured our economy (and way of life, really) on the faulty premise that the atmosphere will continue absorb more and more carbon dioxide without reprecussion,and that we will be able to continue getting cheap oil from from the ground.

So to say "if we don't change, then the worst will happen," rings a bit hollow for me. I don't see how we can possibly change enough, in time, to make any kind of significant difference. But while Mr. Huber looks at that and says its party time! with coal-burning, I try to make whatever difference I can, however small it may be, in the hope that if enough of us make changes to our lifestyle, eventually, we can repair some of the damage we've done to the world.

Update: Stephen Chu seems to share my cynicism. Not exactly the most optimistic metaphor possible in Newsweek:

Q: Aren't we in pretty bad trouble no matter what we do?
We're not going to be able to stop burning fossil fuels for quite a while.

A: We're in the great ship Titanic, the Earth is, and it's going to take a half century to really turn the ship. But that doesn't mean we can't start doing it today, and we must. It's possible that the United States can greatly reduce its use of energy in our buildings, which consume 40 percent of our energy, and our personal vehicles.

The Carbon Debate

In his article "Bound to Burn" Peter W. Huber proposes a creative an innovative solution to the global warming crisis...burn more coal. The basics of his argument go something like this:
(1) The rest of the world will burn fossil fuels anyway so what does it matter?
(2) Carbon based fuels are cheap and we have plenty of them.
(3) Alternative energy will not be cheap enough to be effective.
(4) Carbon sinking can work.

The most glaring thing I found missing in the article is any discussion of the most obvious problem with coal burning - that being a small thing I like to call environmental collapse. No carbon sinking technology has been found to be anywhere near cost-effective so far. So really all of Huber's suggestions regarding the cheapness of coal fail if we adopt his carbon sinking technology with all this new coal usage. If we don't sink the carbon in the earth then we are left to spew more and more carbon in the atmosphere. Now we can play Bush all day - just try to wish global warming away as a fantasy - but eventually that sort of philosophy comes back to haunt us. You can find yourself a few rogue scientists today who say global warming is not for real. There are also still a few scientists on the fringe who will tell you global warming is not a threat, but the consensus among people who know more than any of us is that global warming can and will cause tremendous environmental AND economic damage if something is not done. At worst Huber's proposal accelerates this phenomenon and makes it irreversible. At best it accelerates it. Even if you don't accept global warming or its consequences, coal burning has real effects on our environment in other forms. The chemicals released by coal burning, such as mercury, already contribute to thousands of deaths by making the air we breathe more toxic.

Now Huber says it is all pointless because the rest of the world will burn carbon fuels anyhow. That is akin to saying that since most of the world is still illiterate we should not bother teaching anyone to read. If we accept that global warming is a real problem, we can't just take the philosophy of "well, we are screwed so might as well light up while we can." Right now the use of carbon fuels is cheap for other countries, such as China, but as demand increases and supplies continue to decrease, prices will rise and alternatives will be more practical. There will always be some people who burn trees for fuel as Huber describes but the vast amount of carbon is released in the production or power to generate electricity and for transportation. We can either be the leaders in developing alternative technologies to generate this electricity or we can just keep burning.

Which brings me to my next point. Huber's proposal is not really a proposal at all...it is simply the status quo. We already generate over 80% of electricity using fossil fuels (and over 50% using coal). We already use oil to fuel over 98% of our transportation. If coal really is the answer why is my energy bill not cheap and my air not clean? Last time I checked my energy bill kept going up, and while gas is relatively "cheap" now, almost every economist will tell you that once demand comes back up, prices will rise again. Coal is plentiful right now but the conservative estimates are that we have a 100 year supply and that coal "peak" will be reached around 2040 at our CURRENT rate of usage. What is more - the coal that is being mined now is the stuff that is the cleanest when it comes to sulfur content and cheapest when it comes to mining. As we continue usage, or increase it as Huber proposes, we will have to use the dirtier coal (if that is possible) and pay more to mine the stuff.

As a last point the anti-alternative always seem to come back to main argument of "fossil fuels are cheap and alternatives are not." My answer would simply be - of course, that is the way it is RIGHT NOW. We have an entire infrastructure built to support fosssil fuels and an established industry to mass produce them which makes them very cheap. Alternative fuels don't have the same infrastructure support or mass production capabilities. Now we can continue to simply rely on what is already established but we already seeing the consequences of that course on both the environmental and economic fronts. In the short term any fuel development will be more expensive than the established system. I still think spending more in the short term to develop alternatives is better than condemning ourselves in the long term by commiting to even more coal usage.