Friday, April 11, 2014

And what about your guy?

Republican voters, as they probably should, take every opportunity to blame the uncertainty spawned by the present administration's policies for the historically slow rebound from the last recession. I seldom pass up such opportunities myself. Republicans are see themselves as the champions of free markets. Which is a very good thing to be the champions of.

Ah, if that were only true. For if it were, Republican voters would be every bit as condemning of, well, Republican politicians as they are of Democrats when it comes to the present lack of job growth.

Here's a snippet from Jonah Goldberg's article on the subject (HT Don Boudreaux):
For a century or more, progressives have believed in public-private partnerships, industrial policy, "Swopism," corporatism and other forms of picking winners and losers. The winners always promise to deliver the "jobs of tomorrow" in return for help from government today. (Solyndra is running behind on keeping its end of the deal.)

Many Republicans are rhetorically against this sort of thing, but in practice, they're for it (even Ronald Reagan supported trade protections for Harley-Davidson). This is especially true at the state level, where GOP governors are willing to do anything to seduce businesses their way. Texas is a good example. Gov. Rick Perry has been heroic in keeping taxes and regulatory burdens low. But he's also helped his friends — a lot. Few on the right in Texas care, because Texas has been doing so much better than the rest of the country.

GOP politicians can't have it both ways anymore. An economic system that simply doles out favors to established stakeholders becomes less dynamic and makes job growth less likely (most jobs are created by new businesses).

Side note: Speaking of politics and job growth, here's Democrat Jamie Dimon, in his latest letter to shareholders, emphasizing one of the benefits to his firm of the new banking regulations:
We still worry about the cumulative effects of all the changes, which cannot be known. It is our nature to worry more about the downside than to guess about the upside; however, some of these changes actually might be good for JP Morgan Chase (and other banks). It could be that these changes make it harder for new competitors. 

Yep, he actually said it!

He then goes on to suggest that the greater restrictions could give JPM's non-US competition an edge. Well, not to condone our policy makers' accidental gift to Chinese banks, but, since competition---be it domestic or international---means greater choice, greater opportunity, better terms for savers and borrowers, more jobs and economic growth, so be it...

As for Republican side notes: There are plenty: We can talk about Mitch McConnell, an outspoken Solyndra critic who has lobbied heavily for government aid to clean energy firms in his own state, and he's not the only one. We can talk about Eric Cantor, and a number of others, who support one of the most egregious examples of corporate welfare ever devised, the Export-Import Bank. In case you're unaware, the Ex-Im Bank exists for the purpose of handing taxpayer money (resources) to companies like Boeing, through insurance, loan guarantees, and direct loans to foreign entities for the sole purpose of purchasing the favored institutions' goods. Talk about risky lending! Talk about picking winners and losers! Talk about incentivizing all manner of inefficiency! Talk about buying political favor! Talk about utterly screwing the taxpayer! We can talk about President George W. Bush and the U.S. Steel Industry (his tariffs on foreign steel). We can talk all day...

A couple more Democrat side notes: In 2008, Senator Barak Obama rightly called the Ex-Im Bank “little more than a fund for corporate welfare.” A mere four years later, President Barak Obama, after signing a bill extending the life of the bank, said “We’re helping thousands of businesses sell more of their products and services overseas". I suppose, I'm sure in fact, that if, say, President Mitt Romney had signed such a bill, and made such a statement, Senator Barak Obama would have said to the President, words to the effect, "You're stealing our taxpayers' money and handing it to your political supporters by financing their overseas customers." We can talk about President Barak Obama and the U.S. Steelworkers Union (his tariffs of Chinese tires). We can go on and on....

Here's the problem:

Subsidies (they come in myriad forms) are essentially the taxpayer unwittingly fattening the margins of politically powerful institutions, allowing them to stay in business while pricing their competition out of the market, and their competitors' employees out of their jobs.

A tariff is an especially sneaky form of subsidy, in that the politician, rather than directly taxing the consumer and directly subsidizing the favored industry, accomplishes the same by forcing the consumer to pay more for certain items than the global market demands. Which of course means less discretionary income that would have otherwise supported local enterprises (and the folks who work[ed] for them), less saving and investment, and less business for the U.S. exporters who sell to the foreign markets we buy from---markets that, to make matters even worse, are likely to retaliate by slapping tariffs on American-made products.

The net effect of rampant bipartisan cronyism is to, albeit subtly, hamstring the economy---thus limiting the opportunities for (stealing from) the average citizen and, as Goldberg puts it, bolstering the argument for redistribution:
Politically, the longer we're in a "new normal" of lousy growth, the more the focus of politics turns to wealth redistribution. That's bad for the country and just awful politics for Republicans. In that environment, being the party of less — less entitlement spending, less redistribution — is a losing proposition.

So then, Republicans, if you are truly for free markets, and if you'd like to see your party, not to mention your country, succeed going forward, you need to turn your focus onto the destructive acts of cronyism practiced by your very own representatives, as well as the opposition...


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