I went to a cool meet-up/happy hour between students from my Georgetown MSFS program and Tufts’ Fletcher School last week. I had a great conversation with one of their students about how potentially there’s now an intellectual mismatch between the Republicans and Democrats.
During the last election, it was interesting that so many hardcore Obama supporters and Democrats were also sharing and passing along information about Ron Paul. Ron Paul, a strict libertarian from Texas, had almost no mainstream coverage, but gained quite a bit of traction online. It was predictable that he’d appeal to progressives and the tech geeks who often fall into the Libertarian category, but he was also going viral with liberals.
During my conversation with the Tufts dude, it occurred to us that maybe the Republicans were no longer the intellectual foil to the Democrats.
I might argue that Democrats are happy to find an opposing view to debate against, and that is why Ron Paul appealed so much to them. Clearly Paul differs from the Democrats on many issues (not the least of which being adherence to a return to a gold standard), but the two parties actually do share a lot of the same sentiments (which, also, are shared by most of the rest of the world), and there was quite a bit of common ground for both sides.
Meanwhile, the Republican party, which has painted itself into a corner, being a white party (although not necessarily a rich white party), advocating radical Friedmanite/Rand/Reagan/whatever free-market ideology even after a clear failure of those principles. They advocate fiscal responsibility after having jacked up the country on worthless money and a military-industrial complex. Their patron saint, Greenspan, admitted flaws to his model and even advocated for a fiscal stimulus plan. Milton Friedman died recently. It could even be argued that people are catching wise to Jeffrey Sachs.
“I believe that people react to incentives, that incentives matter, and that prices reflect the way things should be allocated. But I also believe that market economies sometimes have market failures, and when these occur, there’s a role for prudential — not excessive — regulation of the financial system. The two things that Greenspan got totally wrong were his beliefs that, one, markets self-regulate, and two, that there’s no market failure.”
How could Mr. Greenspan have been so naïve, I ask, hoping to get a rise. “Well,” says Mr. Roubini, “at some level it’s good to have a framework to think about the world, in which you emphasize the role of incentives and market economics . . . fair enough! But I think it led to an excessive ideological belief that there are no market failures, and no issues of distortions on incentives. Also, central banks were created to provide financial stability. Greenspan forgot this, and that was a mistake. I think there were ideological blinders, taking Ayn Rand’s view of the world to an extreme.
“Again, I don’t want to personalize things, but the last decade was one of self-regulation. But in the financial markets, without proper institutional rules, there’s the law of the jungle — because there’s greed! There’s nothing wrong with greed, per se. It’s not that people are more greedy now than they were 20 years ago. But greed has to be tempered, first, by fear of losses. So if you bail people out, there’s less fear. And second, by prudential regulation and supervision to avoid certain excesses.”
It is not that the Republicans do not have important points to make — but they’ve been infiltrated by evangelists and neo-cons. The Libertarians resemble the Republican party of old. And the debate between those Republicans and the Democrats has long been a productive one.
I might argue that the Republican party is in danger of dying if it does not internally reform itself. It might be smart for the Democrats to start engaging the Libertarians as their new counter-part for a strategy for the American vision of the future.
The latest stimulus discussion is distressing. Republican governors are talking of rejecting stimulus. That is, they’re advocating turning down free money! At the expense of their own states, which are struggling to pay state and local payrolls and guarantees.
That ideology of a radical free-market without government intervention will not die easily. As bad as the economic crisis and business shutdown has been so far, I think it will inevitably get far worse, and will be felt more deeply by the people, who so far have seen job losses but not a complete collapse of the support system and a failure of their government to provide them services. That endgame is still a strong possibility since it doesn’t appear that there’s an appropriate sense of urgency to do things like restructure debt, restructure institutions, and rid accounting books of toxic assets.
So, obviously the Democrats have their heads up their asses too, as they’ve been just as bureaucratic as the Republicans since Obama was sworn in, but if they were to dismiss the Republicans and engage the Libertarians, they might be able to pull off the traditional and moderate Republicans into the Libertarian fold and get rid of the festering cesspool of idiocy, racism, inbreeding, and economic ignorance that currently exists within the Republican party elite.