All Things Michael Miles

I want to pull together some related information about a man named Jude Wanniski. There isn’t any original content in this post, but Wanniski was so instrumental in damaging our country and enriching the top two percent of wealth holders, that one more node in the web for the education of all is a good thing. [Note: my view isn't universally held. A number of his obituaries spoke highly of his accomplishments, including this one from the New York Times.]

There was a time when America’s two political parties had clear-cut economic objectives. Democrats believed in raising revenue (through taxes) and spending money on programs deemed desirable by their constituents. Hence the label, “tax & spend.” Republicans, on the other hand, embraced the “low tax, low service” mantra, tagging them as fiscal conservatives. Unfortunately for Republicans, being perceived as cheap and stingy didn’t help them maintain power, as evidenced by the period between 1932 and 1980. Mr. Wanniski was instrumental in changing all that.

Jude Wanniski was primarily a journalist and commentator, who consulted on political-economic issues. Although he wrote extensively about economic matters, it doesn’t appear that he held a degree in the field. However, his influence in restoring classicist economic theory to the public debate is substantial.

He was present at a meeting in 1974 between Arthur Laffer, Dick Cheney and Donald Rumsfeld when the infamous “Laffer Curve” was drawn, hypothesizing that lower tax rates would stimulate growth. He would champion the cause and coin the phrase “supply-side economics” as a response to Keynesian demand-side models. It also became known as “trickle-down economics” and later as “voodoo economics” (my favorite.)

But let’s get to the fun stuff. Wanniski realized after the Goldwater slaughter of 1964 that the Hooverite platform was a loser. Ten years later, armed with Laffer’s hypothesis, he created the Two Santa Claus Theory, which one-upped the Democrats by not only promising lots of government hand-outs, but also cutting taxes. Without any apparent attachment to reality, the claim was made that growth would offset the fall in revenue, thus allowing voters to have their cake and eat it, too. It caught on like wildfire, Reagan hired Wanniski to author the tax cuts of his first term, and our debt has skyrocketed.

The rest is pretty much history. A nation in need of a big dose of skepticism bought into Wanniski’s tireless campaign, and the fiscal debate has been a mess ever since. Instead of a “tax & spend” party being counterbalanced by a “low tax, low service” party, we are now told that no amount of holiday toys will make us spoiled. Even the contemporary Tea Party movement – populated by many self-described libertarians – now campaigns for balanced budgets, but refuses to cut Social Security, the Defense budget, or Medicare. After thirty-five years of brilliant marketing, Americans believe in two Santa Clauses.

This is another story about failing to assimilate cultural knowledge. As the chart illustrates, the debt-to-GDP ratio has grown substantially under Republican administrations, when supply-side tax cuts have been championed. With the Democrats’ loss of the House this month, and the beginning of the debate to extend the Bush tax cuts, Americans would do well to acquaint themselves with Jude Wanniski, and the history of a tax policy fabricated by a journalist and political consultant. Because despite our most fervent beliefs, there isn’t a Santa Claus.

William F. Buckley called. He rolled over in his grave and can’t light his smoke.

Dennis Prager, a syndicated radio talk-show host and columnist for the National Review Online, wrote a piece that was published on the NPR website November 2nd. It explains his reasoning for straight-ticket voting, and the argument deserves a response.

I’m not going to argue against Mr. Prager’s opinions, although it’s tempting. That is for another venue, and since I’m not a foreign policy expert or economist, it would provide you nothing except a “he said, he said” tussle. Nor is it necessary, for there are plenty of problems with the presuppositions Prager relies upon to make his argument; they are my focus.

Let’s begin with the statement, “With only two parties competing in American elections, each party has had to encompass a much wider spectrum of ideologies.” In order for this to be true, the majority of viewpoints in American society would have to be represented, and there is no evidence this is the case. Nor is the statement intuitive: the GOP experienced ideological purges after 1964, 1992 and 2004. Independent voters, which now make up a majority of the electorate, move back and forth between the parties (the antithesis of Prager’s op-ed), demonstrating their ideology is represented by neither party. I could easily design a party platform which perfectly reflects my views, instead of being forced to compromise and support an existing political party. However, the assertion is convenient for those who want to claim the Democratic Party represents socialists and Marxists, but that is no more valid than claiming all Republicans are fascists. No genuine, intellectual analysis would claim that. If you doubt me, go find an authentic socialist and ask them if they agree with the Obama administration’s economic plan.

And quickly, before I move on, the Republican Party is not – “at long last” – the party of small government. Movement leaders, as recently as last week, are on record supporting Social Security, Medicare and ever-expanding military involvement throughout the world. Even Prager advocates military intervention in Iran, in his own op-ed. George W. Bush refuses to repudiate his use of torture or indefinite detention, and it is uncertain whether the GOP is willing to investigate or prosecute him. The PATRIOT Act is still alive and well. These are not the hallmarks of small government. As I have argued in the past, the GOP – even with its infusion of Tea Party energy – does not behave in a conservative fashion. The mistake made by Prager and others is confusing positions adopted by conservatives as being conservative positions.

He also asserts that small government is required for liberty. I’ve never really understood this. Don’t get me wrong, I’m fluent in Hayek’s economic argument about centralized planning. And my knowledge of American and Modern European history equals or bests the next guy. Maybe that’s where I miss the point: liberalism was a movement to provide more liberty to citizens. It didn’t reject government, it simply decentralized power. Dethrone the monarch and allow the subjects participation and responsibility. The Boston Tea Party wasn’t about taxes, it was about a lack of representation in Parliament. So I have to ask Mr. Prager, do you think taxes are tyrannical, or are you an anarchist?

But my favorite has to be the contemporary trap of political philosophy: equating American exceptionalism with conservative values. Exceptionalism – the assertion of moral superiority and projection of might around the world – gained considerable momentum after World War II, and has advanced unimpeded. It has roots in Natural Law (see Jean-Jacques Rousseau’s A Discourse Upon the Origin and the Foundation of Inequality) and bears a striking resemblance to the Jacobinism that early conservatives and our forefathers were so afraid of. It is a radical belief that we can remake the world in our political image, with little regard for the “cultural gravity” of other societies. By laying claim to it, the American Right betrays its heritage and history in the conservatism of Burke and Adams.

Now, Prager and those of a similar mind are free to believe what they wish, which kind of neuters the argument that Democrats are opposed to liberty. If he wishes to assert that George W. Bush’s knowledge of foreign policy is more impressive than Joe Biden’s, so be it: people can judge that statement on their own. But let’s be clear: when he champions “Sarah Palin [confronting] Iran rather than [placing] her faith in negotiations and in the United Nations” he makes an assertion that has no basis in conservative philosophy. And yet he uses conservatism to provide credibility to his argument, asking people to believe that his path is traditional, reasoned and proven, when it is not. Instead, the contemporary American Right seeks to refashion society in a form that hasn’t existed in over 150 years, if ever. It’s goal is to start over, rejecting almost all of the progress this country has achieved, and discarding the tradition and incrementalism that is the hallmark of conservative principles.

There is a reason that right-of-center thinkers like myself have a problem with the GOP. It’s the same reason that Russell Kirk, who wrote the definitive tome on modern conservative thought, “The Conservative Mind,” broke with them. It is the same reason that Reagan Republicans like Orrin Hatch, Richard Lugar, John McCain and Olympia Snowe are in the crosshairs of the Tea Party: the American Right has radically transformed itself over the past three decades. In the process, it has dragged the rest of the political apparatus along with it. And while I realize the advantage of modifying the frame of debate to cast the Right as defenders of liberty, that does nothing to advance civil discourse. For there is nothing inherently free about small government, or inherently oppressive about big government. It is the reach of government and it’s openness to participation that is important.

I can think of a lot of words to describe the Democratic Party: cowardly, corporate, spineless, disinterested, but radical would not be one of them. Over the next few months, as Mitch McConnell and John Boehner refuse to legislate in order to disgrace the President of the United States, we need to stay focused on what is really the radical agenda. Is it a barely-left-of-center President attempting to meet in the middle, or a Republican leadership wanting to turn back the clock to the Gilded Age? Prager eschews the prospect of European progress; let him honestly argue for third-world economic isolation.

Take away the spirit of Individualism from the people and you at once eliminate the American spirit – the love of freedom, of free industry, free and unfettered opportunity, you take away freedom itself.

Henry Clews, 19th century Wall Street veteran

Individualism, the assertion of the primacy and inherent dignity of the individual, originated in the hazy beginnings of America, and matured during the nineteenth century to the point where Alexis de Tocqueville coined the term. It is fundamental to our mythos, but the ability to actually achieve it has waxed and waned throughout the years for most Americans. Depending upon one’s station in life – agrarian, laborer, professional or elite – professing individualism and practicing it have not always been consonant.

In modern life, individualism is once again the central narrative, and its association with freedom and choice remain unchanged. During my youth in the 1970s and 80s, libertarianism made for interesting political science study, but little of it was found in civic debate. Today, with the advent of the Tea Party factions, most debates center around the libertarian notions of individualism, total government deregulation and the oppression of taxation. In short, social organization equals totalitarianism. In an examination of such an argument’s presuppositions, however, we discover unstable foundations. American history provides a robust laboratory to observe the relationship between individualism, well-being and financial security. When doing so, we find that the natural response of a group under threat or financial pressure is to organize for mutual benefit. Conversely, groups which have mitigated outside threats have more difficulty maintaining ongoing cohesiveness, and have a higher likelihood of disbanding. Which brings us back to the question of today: will public policies for which the Tea Party and GOP advocate, actually prompt a collapse of individualism, causing a resurgence in social organization and mutualism?

Americans foster a manic nostalgia for “the good ol’ days.” But the truth of the matter is that most people found life in the nineteenth and early twentieth centuries pretty horrible. A laborer or farm worker averaged well below a self-sufficient income despite working over 80 hours per week. Women and children compensated for the shortfall. Conditions were harsh, and average life-expectancy was short; as low as 40 years. Families could count on experiencing the premature death of a parent or child. The concept of economic mobility was unheard of, despite a couple of exceptions like Andrew Carnegie. If you were born to a working class family, it was unthinkable that your life would be an improvement over that of your parents.

At the height of the Gilded Age, when income disparity equaled today’s level, farmers and laborers had a singular response to their threatened existence: greater social organization. Immigrant populations in city ghettos formed mutual groups that provided child care, unemployment support, food banks and other family services during unforeseen circumstances. Farmers – despite their propensity for individualism – experimented with cooperatives and political movements (while these did not succeed, their creation attests to the validity of my hypothesis.) Even in the face of company militias, Illinois coal miners risked their lives to organize into unions, leaving us the legacies of Bloody Williamson and Mother Jones. Each of these groups favored mutualism over individualism, not because they didn’t share the American dream, but out of sheer desire to survive.

Interestingly, the greatest period of individualism – and the one which right-wing policy makers often cite as an example – is the period following World War II, when personal wealth, innovation and the economy exploded in this country. Obtaining greater financial security allowed populations the indulgence of individualism: blue-collar workers could afford a nice home, children and spouses were not required to contribute wages, an eight-hour work day and five-day work week provided time for leisure, readily available health care extended lives and careers, and ubiquitous public education facilitated economic mobility. Public policies like the minimum wage, union concessions like the 40-hour work week, and government programs like FHA and the GI Bill all contributed to America’s financial security. It was not until mutualism provided for each of these social goods that individualism became a mass movement, allowing Ronald Reagan to launch a systematic attack against mutualism in the early 1980s, finding little resistance.

During the current election cycle, Tea Party and mainstream GOP candidates (and, to be fair, a couple of conservative Democrats) argue for reducing or eliminating the minimum wage, repealing the recent health care reform legislation, privatizing Social Security and Medicare, deregulating the financial sector further, and even facilitating the outsourcing of jobs overseas. These policy planks align with an ideology based upon individualism. But will they produce the desired effect? Are they aligned with the extension of individualism? The history laboratory that is our country indicates they will not. With income disparity almost as high as the Gilded Age, and political pressure being exerted to minimize class mobility, the majority of Americans may find that, while individualism is their philosophical right, practicing it may be a secondary priority. As the middle class shrinks and experiences greater financial insecurity, it can be predicted to resort to mutualism as a strategy for survival.

Actioni contrariam semper et æqualem esse reactionem: sive corporum duorum actiones in se mutuo semper esse æquales et in partes contrarias dirigi. [translate: To every action there is always an equal and opposite reaction: or the forces of two bodies on each other are always equal and are directed in opposite directions.]

Newton’s Third Law of Motion