In today's Bloomberg post, I get political:
If you’re a boxing fan, you’ve probably seen a video of Frazier vs. Foreman. It’s one of the most one-sided fights in history -- Frazier, who had conquered Muhammad Ali just two years earlier, gets knocked down six times in less than two rounds by the future barbecue-grill merchant. Again and again, Frazier fires his most fearsome weapon -- the famous left hook that had felled Ali. But this time, it wasn’t working.
Watching Republicans come up with economic policy ideas reminds me a little of Frazier vs. Foreman. Tax cuts are the Republicans’ left hook -- the weapon that swept them to glorious victories in the Ronald Reagan years. Today, after having been knocked down twice by Barack Obama, the GOP is throwing its roundhouse again and again -- and just not connecting.
The American Enterprise Institute’s James Pethokoukis sums up why the Republicans are so intellectually impotent:
A new manifesto making the rounds in conservative circles is ... a time-travel tale ... Activists hope that embracing supposedly timeless economic policies, such as tax cuts and balanced budgets, will unite and then ignite the Republican Party
Not surprisingly, the conservative plan calls for a vague lowering of "tax rates for every taxpayer." ...But even with the Obama tax hikes, the top-marginal tax rate today is just 39.6 percent. And [for most people,] payroll taxes are what really count ... Moreover, lowering income taxes without offsetting spending cuts or higher taxes elsewhere — the plan offers neither — is unrealistic. And let's face facts: Coping with America's rising elderly population will require a higher national tax burden in coming decades even with a reformed entitlement system ...If conservatives and Republicans desire a return to relevancy, then they can't offer today's voters reruns from the '80s and '90s in an attempt at solving yesterday's problems.
If you’re a conservative and you’ve lost the American Enterprise Institute, you’ve lost.Read the whole thing here! Politically motivated comment trolls are welcome, of course.
Liberty is radical, and both parties hate it. No money in trusting people to run their own lives. Don't mistake the establishment Republicans for a lack of ideas, Noah. There is a powerful liberty movement growing, it's just that the one-party state hates the idea.ReplyDelete
what you believe in is oligarchy, not liberty. Your leaders don't always make that totally clear though, as they are all liars.Delete
And your leaders don't always make it clear that their solution is to give more resources to already powerful government(s). No oligarchy to see there, move along please.Delete
The problem with libertarians is that they want to minimize all the power structures humanity is controlled by, except the strongest and most dangerous one ever devised - money.Delete
Unfortunately, the libertarian socialist movement is practically non-existent since both State Communism and State Capitalism had a century of free reign to destroy it with.
Well the biggest libertarian socialist movement of the 20th century was coopted by the radical right insiders who effectively had all the populists and socialists killed. Which is why it is weird that the Nazi party was called socialists even though it was anything but.Delete
Libertarians and other children are so boring.ReplyDelete
Well done Smith. Not only do you manage to taunt the other side with lots of little jabs in every paragraph, but you do so in the name of non-partisanship. You'll fit right in at Bloomberg.ReplyDelete
I'm a regular reader here and actually agree with this comment. The way to warm the right to your ideas is not to blatantly attack them. Try being more diplomatic...Delete
Suck it, BJW! :DDelete
If you think being diplomatic will sway the right wing, then you haven't been paying attention for at least three decades.Delete
At this point the only reasonable approach is outright ridicule, but Noah is too polite to do that.
The way to warm the right to your ideas is not to blatantly attack them. Try being more diplomatic
Ha. Jazzbumpa is right, that won't work; the GOP felt for decades that they were America's dominant party, poised on the verge of grinding liberalism into the dustbin of history. What they need right now is to realize how badly they've lost the thread. THEN, when they realize that (like liberals did in the 90s), we can be diplomatic.
I'll just leave this here...Delete
I think the trick is to make republicans think that new ideas are entirely theirs, which requires subtly from those not on the right pushing them to change their platform.
I for one am concerned about all your emphasis on divide-and-conquer politics. There are plenty of pressing issues that both the left- and right- can agree upon.Delete
The real problem is what the political establishment agrees on: policies that do not change across administrations or congresses. These are policies over which you have no effective power. You have no power because you spend your time on earth uselessly squabbling over imagined enemies (who are actually your allies).
Obamacare was a Republican idea taken outright from the Heritage Foundation. And Obama told them so. Didn't seem to matter...
These tried and true republican policies of tax cuts, defense, and free market capitalism do win over voters. I remember in 2000 when the Al Gore team scoffed at Bush's tax plan that, according to a political ad, would give the richest of Americans enough money to buy and extra car and the poorest to buy a rusty muffler. Turns out voters don't share the same class envy as the far-left and voted for bush-twice. The GOP didn’t used to be so pessimistic and angry about the economy, higher education, the American dream, or the youth. The GOP should return to the pro-growth policy and optimism that lead to the election of Reagan and Bush and abandon this recent obsession with deficits, the fed, NSA, etc.ReplyDelete
"Turns out voters don't share the same class envy as the far-left and voted for bush-twice"Delete
In the first time, most voters (!=most states) did not vote for Bush.
"Turns out voters don't share the same class envy as the far-left"Delete
The ad you describe was apparently about fairness, i.e. the richest people getting relatively larger tax cuts that the rest. It's odd that you should describe a complaint about fairness as being about "envy". Perhaps you think in that way because you are a far-right ideologue?
Hahah, grey "enlightenment" is the institute of economic "understanding",Delete
Oh, the richness of unintentional satire. I guess such things are made a lot easier when you can dispense with the inconvenience of attempts towards intellectual honesty.
Republican policies have been put in place since the 80s with Clinton who cut taxes and deregulated as Republican light. The result is slow growth and a shampoo economy with bubble, bust, rinse, repeat.Delete
The Republican base is angry because the economy sucks. The voodoo economics their leadership feeds them doesn't work.
Uh, you do know that Gore received more legitimate votes than Bush, right? Yes, even in Florida. Please acquaint yourself with the NORC report.Delete
Yes. They have an excellent new idea: Voter Suppression.ReplyDelete
Now you have fully embraced the arm-waving professions - politics for benefits of few through exploiting the ignorance and greed.
I wonder, why did the left not preach this "Romney has a point, we need more simple regulation" line during the election?ReplyDelete
I think the libertarian second-best choice may now be (1) cut everything slowly, and (2) transfer the money we cut into basic income. Somehow, I don't think those government employees will go for it, though. As a first approximation, it's like they're self-interested or something.
Deregulation of the financial sector gave us an epic housing bubble and financial crisis which nearly brought down the economy.Delete
I've wondered how the glibertarians would digest this new information and it turns out they'd just glibly ignore it and continue to distract us with red herrings like government employees.
Deregulation of the airline industry gave us low travel prices.Delete
Deregulation of the telco industry gave us the iphone.
Deregulation of the beer industry gave us microbrews.
Deregulation of New Jersey's auto insurance industry gave us low prices and better service.
Deregulation of... the entire Chinese economy (!) gave them economic superpower status.
The banks are among the heaviest regulated industries. The regulators allowed them to break the law with impunity, and nobody goes to jail. Blame the regulators. They can break any bank over their knee at any time. They choose not to prosecute.
"...red herrings like government employees" Really? Sounds like you are out of ideas yourself.
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Yes, there are plenty of instances when deregulation has yielded positive results.Delete
But when you grow up, you will learn that life is complicated and one size fits all solutions tend to end disastrously.
Like when we deregulated the financial industry.
There are plenty of instances where government subsidized mortgages have yielded political wins. But when politicians grow up, they realize that life is complicated and one size fits all solutions tend to end disastrously.Delete
Oh wait. http://www.charlotteobserver.com/2014/05/13/4906819/mel-watt-signals-change-in-federal.html
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So, you are concerned that banks will start issuing bad loans again, because Fannie Mae and Freddie Mac are back in the market, and you think that we should increase regulation to prevent a return to the private sector originating toxic mortgages?Delete
Gold standard. This will allow us to get rid of the federal reserve since the money supply will naturally follow the extraction processes in response to market demands. It will keep the politicians from meddling in the economy. A huge growth in productivity is sure to result.ReplyDelete
"the money supply will naturally follow the extraction processes"Delete
There's nothing natural about the government choosing to arbitrarily tie the supply of new base money to the amount of gold that is dug out of the ground.
The US gradually broke the gold standard in response to cheap and plentiful oil, which powered immense economic growth. The rule became: pump as much as possible, we'll print the paper to accommodate the growth.Delete
This is changing as we write: we'll go back to harder currencies when the marginal cost of oil production rises. In fact, it's already happening!
The current 3.4% nominal GDP growth is a sign of extraordinarily tight monetary policy. 14% nominal GDP in 1978, that was easy money!
I'd also admonish any gold-standard-fan to first talk about discharge/default/inflate away debts that were contracted under fiat-standard-inflation assumptions. Otherwise, you will be locking in a very hard currency for immense debts.
First get rid of "odious debts", then a pure gold exchange, denominated in ounces.
"we'll go back to harder currencies when the marginal cost of oil production rises"Delete
Can you explain why you believe this is the case?
"In fact, it's already happening!"
"then a pure gold exchange, denominated in ounces"
What would be the point of that, other than satisfying your fetish for rare shiny objects?
1) Read the NGDP comment. Tight money has been in place since 1978, resulting in slower NGDP growth. Tight money kicked in just as US oil production peaked. Then, a strong dollar / tight money was required for all those imports. http://commons.wikimedia.org/wiki/File:US_Oil_Production_and_Imports_1920_to_2005.pngDelete
2) Marginal extraction costs are rising. http://ftalphaville.ft.com//2012/05/02/983171/
3) Fetish? Come on, we're talking economics here. The concentration of titanic financial power -- the value of every dollar in your pocket -- with seven people at a privately-owned bank is an immense problem.
They work for the banks first, the US federal gov second, and keep the host alive as an afterthought.
Gold is not a bad solution, and it has worked in the past.
" Read the NGDP comment. Tight money has been in place since 1978, resulting in slower NGDP growth."Delete
Since the NGDP crowd DEFINES tight money policy as low NGDP growth, this is nothing more than a tautology. Read Sumner, Beckman or Nunez.
"Gold is not a bad solution, and it has worked in the past."
And it's just a coincidence that countries that were off the gold standard avoided most of the ravages of the Great Depression, and that countries on the gold standard started their recoveries in the exact order in which they abandoned the gold standard.
That is how it worked in the past.
Well, gold as currency has a bit longer pedigree than the 1930s. You're looking at the problem in isolation: you need to fix the unsustainable booms, not only the busts. The boom of 1918-1920s was not the fault of the gold standard, but rather the Federal Reserve. The bust was the natural consequence.Delete
WW1 took the US to unsustainable levels of economic output through the 1920s, enabled by the Fed's base money creation. The Fed bought huge volumes of discount bills (essentially CP), created reserves, and banks used their freed-up balance sheets to fund an immense run-up in US Treasury debt. US NGDP ran at 25% per annum due to this easy money.
From 1922 the Fed then ran tight money policies that lowered NGDP growth, lowered interest rates, and created a massive financial asset boom-and-bust cycle -- much like what the US has experienced since the late 1970s easy money.
Gold standards mitigate both booms- and busts- by rationing capital during the boom, and forcing default earlier and faster for the bust. Hybrid gold-plus-central bank systems fail -- in the Fed's case, within five years of its creation.
I'd favor NGDP targeting of 5% per annum, but gold is not a bad solution to boom-and-bust cycles.
"Gold standards mitigate both booms- and busts-"Delete
But of course that isn't true, as there were booms and busts throughout the gold standard periods, not just the almighty international bust called the Great Depression.
The active word was mitigate. I'm looking at 1792-1914 right now, and if you take out 1813 and 1860 wars, you have short-lived inflation and deflation. Very short lived -- exactly what you'd expect, and this has virtues. Nothing like the long-cycle miseries seen since 1914: the great depression, 60s-70s inflation, and 3.5x debt to GDP. Don't be blind to empirical evidence.Delete
there were plenty of financial crises, and periods of high unemployment in the 19th century. Plenty of extreme poverty too.Delete
Also, the most stable period since 1800 in terms of finance was the post-war period up until the 1970s.
But I guess they don't teach many facts in goldbug school. Shiny metal objects are magical, and they make everything alright.
Noah, please quit writing for a wide audience. It's dumbing down your writing and attracting stupid commenters to your blog.ReplyDelete
Congress hacks aren't intellectual leaders. Sumner & Warstler & Cowen & Tabarrok are more representative of "conservative reform ideas":ReplyDelete
1) Eliminate corporate & capital gains taxes and most income taxes. Replace with comparable consumption tax (financial sector employees would have to treat investment income as if it were wages).
2) Eliminate most of the welfare state with GI/CYB "Auction the unemployed"
3) Realign most regulatory agencies (e.g. FDA) to a defined, reactive role. We shouldn't have to wait 10 years for large drug trials on new medicines, that can come in parallel to a "trial period".
4. NGDPLT NGDPLT NGDPLT NGDPLT
1) Great, since the rich consume much less than everyone else that means the tax burden will fall on the middle class and working classes. Piketty just came out with a new book you should read about why this is a bad idea.Delete
2) Starving people in the streets - great if you are a sociopath, not so great if you would rather not step over bodies on your way to get a coffee in the morning. A UBI is where it's at if you want to chop out the bureaucracy.
3) Throw out the precautionary principle in favour of "Well Freedom Industries just spilled a massive amount of some chemical in the water, but we don't actually have any data on what it is yet, we'll find out soon, just don't turn on the tap for a week or two ok?"
4) I guess, maybe, whatever.
"Sumner & Warstler & Cowen & Tabarrok"Delete
Step 1: First assume a spherical societyDelete
Step 2: ...
Step 3: Liberatopia!!!
Obama is governing like a Rockefeller Republican while having convinced most lefties that he is a big-time liberal. Why any moderate conservative will go back to the GOP is beyond me...unless the DNC nominates someone like Elizabeth Warren.ReplyDelete
Every President since Nixon has been a corporate friendly, Wall St friendly, neoliberal. Clinton's Administration was as Republican as Reagan's, maybe more so. NAFTA, DADT, DOMA, welfare cuts, and many, many bank and finance deregulations.
I think maybe Noah is confusing progressive with Democrat/conservative with Republican.
To what extent is "new conservative ideas" paradoxical? Conservatism is inherently opposed to change and progress. The fusion of libertarian ideology with conservative social principles is an unnatural marriage and will not last forever. Traditionalist moral precepts are far more compatible with a locally-focused economic agenda. The American Right has lost its focus on subsidiarity in favor of demolishing the State at the Federal level. Subsidiarity does not imply that all forms of political affiliation are undesirable, just that our associations ought to be handled at the most local scope feasible. Social change should not be handed down by dictate from the Supreme Court and social programs should be managed by people who live among their beneficiaries. This helps avoid dealing in abstractions about the indifference curves of people whom policy makers are frankly indifferent about. Problems that can be managed on a human scale should be, as building communities is far more stable and sustainable than aiding individuals. The biggest issue with conservative agendas today is the threat of austerity with nothing to fill the void.ReplyDelete
You seem to start with the idea that the Conservative Idea of tax cuts once worked. It didn't, except to make the rich richer. And I think you know that perfectly well.ReplyDelete