The True Conservatism

Reading The American Conservative magazine has been an illuminating experience for me over the last couple of years. The conservatism that the writers of the magazine often describe is not the grotesque, cartoonish, venal version of Fox News or Karl Rove or Rush Limbaugh, or of the cheerful, thoughtless bromides-generating WSJ editorial pages. I found American Conservative version of conservatism unexpected and refreshing.

This latest article is a good summary of that worldview. The author doesn’t waste any time weeding out the usual suspects:

(Fans of Ayn Rand or Milton Friedman will want to stop reading here and flip to the next article. If Ronald Reagan’s your hero, sorry—you won’t like what’s coming. Ditto regarding Ron Paul. And if in search of wisdom you rely on anyone whose byline appears regularly in any publication owned by Rupert Murdoch, well, you’ve picked up the wrong magazine.)

So I continued reading.

As human beings, our first responsibility lies in stewardship, preserving our common inheritance and protecting that which possesses lasting value. This implies an ability to discriminate between what is permanent and what is transient, between what ought to endure and what is rightly destined for the trash heap. Please note this does not signify opposition to all change—no standing athwart history, yelling Stop—but fostering change that enhances rather than undermines that which qualifies as true.

As someone who became weary of the ubiquitous and dogmatic neoliberal notion of self-determination as an ultimate virtue, no matter the price to society, I can appreciate the idea that not all change is good. If everyone wallows in and celebrates his own uniqueness then what is left of social bonds and social contract? Wall Street and DC are great examples of what can go wrong when everyone thinks he’s unique and special and should be celebrated for his aptitude and sheer will.

But this kind of conservatism celebrates community. It’s antithetical to the idea encapsulated by Margaret Thatcher, who is also considered a conservative, that “There’s no such thing as society.” It attacks the current market culture, the hunger for profit as destroying the individual (ironically, individual is so worshipped in the right-wing circles, but only when he consumes or buys guns) and turning him into a mere consumer.

Conservatives take human relationships seriously and know that they require nurturing. In community lies our best hope of enjoying a meaningful earthly existence. But community does not emerge spontaneously. Conservatives understand that the most basic community, the little platoon of family, is under unrelenting assault, from both left and right. Emphasizing autonomy, the forces of modernity are intent on supplanting the family with the hyper-empowered—if also alienated—individual, who exists to gratify appetite and ambition. With its insatiable hunger for profit, the market is intent on transforming the family into a cluster of consumers who just happen to live under the same roof. One more thing: conservatives don’t confuse intimacy with sex.

Further, it acknowledges the futility of the culture wars and dismantling of the safety net – the two biggest platform planks of the current “conservative” flag bearer, the Republican Party.

So forget about dismantling the welfare state. Social security, Medicare, Medicaid, and, yes, Obamacare are here to stay. Forget about outlawing abortion or prohibiting gay marriage. Conservatives may judge the fruits produced by the sexual revolution poisonous, but the revolution itself is irreversible.

The solutions offered by the author can find resonance in the entire political spectrum, including the far-left and far-right. He sites the environment, excessive militarism, deficit reduction (this one, I think, can wait) as issues that require national attention, although he doubts that the modern-day Republican party will jump at the chance to champion anything that doesn’t involve the coddling of the well-to-do.

It probably won’t, but at least someone on the right is talking about it.

The Winning Mindest Wins. Everybody Loses.

Conservatives love to ascribe laziness to large swaths of the population. They think the prudent thing to do is to give the lazy moochers a kick in the butt. A kick in the butt to do what? People who are unemployed are not lazy, contrary to a widespread conservative belief. The mistake, or rather the convenient excuse, of the libertarians/conservatives is that they apply their own abilities and their own career trajectory to all the others. They think “if I can do it, so can anyone.” This is the fork in the road, this is the basis of all other aspects of their political philosophy: low-taxes on the rich, ripping of the safety net, worshipping of self-reliance, as if there are no children, single mothers, elderly and the disabled in this world – only white frat-boys, stomping the ground in their bullpen, eager for a race. “Let the best one win!” they yell, knowing full well, even before the race started, that they are the best. Wouldn’t you want to participate in the race if you knew in advance that you’re going to win? And then, they attach philosophy to their own abilities. Then, after they won, they create a narrative that they won fair and square, missing the fact that their skill is the result of their current proximity to the trough, not the way they got there. This is the idea behind “Trading Places” – it doesn’t take a special pedigree to be a trader. One just needs a platform and a nice suit. But still, they pontificate about their scrappy childhood and the bootstraps and hard work and risk-taking and wallow in their own narcissism, followed by a humble-brag “I’m just a regular guy” mandatory display of modesty. Is then there’s any surprise that people like Tom Perkins think only the winners should be allowed to vote? They think that it’s validated by them winning the race.

If you view society as a competitive construct, as many social Darwinists do, then it is a natural conclusion: The winner gets to claim the prize and to write rules and history books. Thus the pitting of citizens one against the other at the altar of “competitiveness” is a normal course of events. The suckers lost, too bad. That’s just life. And that would be fine, too, if only the winners knew moderation. Here, the winners would be wise to stop and take, or rather give the suckers, a breather. But the winning mindset and moderation do not go together. The game is in full swing, we can’t just stand up and leave. If we don’t take that last stack from the sucker at the table then someone else will. It’s just the cruel truth. Who can stop a train at full speed? We would rather just jump on the bandwagon.

And what or who can play the role of a moderating hand at this point? Where is that ‘invisible hand” that restores the balance, applies breaks to a runaway train? Where is the mitigating factor of supply and demand, the efficient markets, the equilibrium that we learned about in Econ 101? There’s no push and pull, no regression to the mean. The “pull” is nonexistent, or has been sidelined, or denied meaningful levers. The classic argument is that if the customers don’t like the product they will stop consuming it or go to another provider. But what if, at this point, the product that we’re talking about is a bare minimum of food, shelter and basic health care? Are those customers really in the position to dictate anything, to refuse to buy food, to refuse to pay rent? Where the hell are they gonna go, what the fuck are they gonna eat?

The train won’t stop on its own. It can either crash into a wall or go off a cliff. The winners will be playing musical chairs till the very end, because they will always think to themselves: “I can get out just in time. I’m the winner.”

 

Another Glaring Inconsistency in Right-Wing Thinking

In his recent article conservative intellectual Thomas Sowell explores left-wing ideology shortcomings.

At least as far back as the 18th century, the left has struggled to avoid facing  the plain fact of evil — that some people simply choose to do things that they  know to be wrong when they do them. Every kind of excuse, from poverty to an  unhappy childhood, is used by the left to explain and excuse evil.

Before I even read further an obvious retort popped into my mind: If people are so evil then how can this kind of mindset reconcile with the free-market ideology which the very same conservative camp promotes under the idea of rationality. Can people be irrational when it comes to social behavior and then suddenly become rational when it comes to making economic decisions?

Why has evil been such a hard concept for many on the left to accept? The basic  agenda of the left is to change external conditions. But what if the problem is  internal? What if the real problem is the cussedness of human beings?

I’m on the Left and I accept evil, and I recognize that people will do evil things just because they can, regardless of their difficult childhood or any hardships. So why then are we supposed to assume a laissez faire posture when it comes to guns and markets. Aren’t these the very people who can’t engage in self-control, in self-discipline, in self-policing? Or, does Thomas Sowell imply that there are two different sets of people – ones that warrant the social control mechanisms (ghetto folk) and the ones who don’t (financial industry)?

And then he steers into the usual conservative talking points about the degradation of family and sex life.

I’m almost embarrassed for Thomas Sowell. I watched his appearance in the 1970s (on Youtube obviously) on the Firing Lane – the late William F. Buckley’s political debate show, the kind of high-brow intellectual discussions that don’t exist anymore. I was impressed with what he was saying, how he was saying it (the topic was Affirmative Actions) and I did not find him unreasonable at all. He got me thinking. And now this.

It’s sad to see an intellectual turn into a shill.

Inflation of Labor

Republicans now are rediscovering the “middle class”. Rubio made sure to make “middle class” the focus of his SOTU reply. It’s a welcome about face in a party that just a few months ago was celebrating business owners (as opposed to people who work for them) on Labor Day. It wasn’t surprising: the current Republican dogma coalesced around the idea that only business owners work hard; everyone else is either lazy or not entrepreneurial enough. In Republican mind, whoever didn’t become business owner or “made payroll” is implicitly a lesser member of society, a leech and a moocher.

Republicans love to keep their focus on inflation: there was no shortage of dire warnings coming from the right quarters about inflation that was just around the corner. The inflation that they had in mind never materialized, but in the meantime the other type of inflation – labor inflation has been devastating the communities for decades but received little attention of the doomsayers.

Back in the day, the time that many conservatives are nostalgic about, the 1950-60s, it was possible for a man with a high-school diploma to work at a factory and get paid enough to provide a middle-class lifestyle for his entire family. For a man with a college degree the career paths were wide-open and his chances of successful employment were even more robust. To achieve and maintain a middle-class lifestyle one didn’t need a double-income family and didn’t need to leave home and 6am and get home at 12am and be available on weekends. Since then “success” has been redefined. To be considered successful these days you have to negate your own self and turn into a machine.

Toiling away from paycheck to paycheck and working harder and longer hours is required nowadays just to keep one’s head above water. The world where business owners work 24/7/365 and everyone else works from 9 to 5 with an hour break for lunch is a fantasy. Let’s examine a minimum wage worker working shifts at Walmart. If he or she works 8 hours a day they would make roughly $15K a year. I would argue that if this person is presented with an opportunity to work longer hours or find another part-time job, say, at nearby Taco Bell, he would take it. Many do. We’ve all heard stories about people working 2-3 jobs. Or let’s even take an average Wall Street employee: no matter how entrepreneurial they might feel about themselves – they are still just glorified salary workers (with bonus). They are expected to be on-call 24/7 checking their blackberries at night and on weekends and they have acquiesced to this way of life as a default and some, in some masochistic way, even consider it a badge of honor. Working hard and especially reveling in your hard work is as American as apple pie. Our entire way of life now is treating the best-case scenario as a base-case scenario. In other words, there were times when working 8-hour days meant to be average and working 12-hour days and weekends meant to be successful. Now, for many, to work 12-hour days plus weekends is a given, a base-case scenario.

Humans have a great adaptive mechanism – we can get used to many things and we can accomplish remarkable feats especially if we’re in a survival mode. But we can only stretch our productivity so much, and after a certain point more workload becomes detrimental to an individual, counterproductive for companies, and eventually damaging to society. We physically can’t work more than 24 hours, we can’t be at 2 places at the same time, we can’t win on every trade. At some point there will be no room left to push harder. The benefits of longer hours and constant availability are becoming marginal. To take success onto the next level from what is considered successful career today is to become superhuman, develop magical powers or to rig the game. And if you have no way of doing it – you’re just an average, talentless, lazy schmuck. But don’t dare to complain about it – to complain is un-American.

There’s clearly an inflation of labor for those holding a wage job. Over the years the normalcy of 8-hour work days turned into 10-hour work days and then into 12-hour work days, but the benefits are failing to keep up with the contributing effort. The jobs for which a high-school diploma was sufficient, now require a college degree; and where before a college degree would provide job security for life, a graduate degree is required and yet it is no longer a guarantee of lifelong employment. It’s hard to say which came first: inflation of college degrees or inflation of labor. Surely, today this labor inflation can be attributed to high unemployment rate, but this phenomenon was prevalent even during the roaring years prior to the 2008 collapse.

The “moochers” that Republicans keep talking about are stretched too thin. They are one accident, one blown tire, one missed paycheck away from not being able to keep afloat. It is only in the imaginary world of self-declared “makers” everyone else lives off of the fruits of their labor. In the real world, “makers” expect everyone to be on call at all times for pennies and then have the chutzpah to accuse them of being lazy. Well, at least some in the GOP, who actually have to win elections rather than exercise their wits at the expense of an average Joe, are rediscovering that such attitude is damaging the brand. I’m following their transformation with great interest.

Why laissez-faire advocates are wrong to resist regulations.

My critique of unregulated markets does not stem from the fact that I long for a planned economy. Quite the contrary: I criticize the unregulated markets because their occasional failures revive the delusional far left theories that we all thought were put to rest a long time ago.  And when the free market advocates ran out of defensive arguments and when the evidence shows how wrong they were, then they are exposed to and defenseless against the public furor that, especially after what we’ve been through in the past 5 years, has a justifiable tendency to overreact. People like myself, who criticize the laissez faire system, are routinely portrayed as socialists by those who are too lazy to think. But we all witnessed, over the past few years, that there’s a point where competition and innovation give way to inertia, abandon, hubris and self-delusion. If such factors could be measured numerically, a replica of a Laffer curve would be appropriate to describe the predicament, where X axis is a number of innovations and Y axis is social utility of such innovations. At some point the relationship between the two breaks down and becomes negative.

Many supporters of free markets don’t see a problem here. When crises, like financial crisis of 2008 happen, they view it as a system glitch that would be self-corrected if only the government minded its own business. Some of my readers surely think that I’m a closeted Commie (although I’m merely a Keynesian), but there were times when I thought Milton Friedman, like Clapton, was God! I am, however, also a person who is moved by empirical evidence and if I see that there are too many exceptions to a theory then I begin to question the validity of such theory. Right now I see that people are not rational; that markets do not always self-correct; that there’s not always equal access to information between the transaction parties; that people can use agents that are self-interested, etc. All of this is enough, at least to me, to pause before marveling at the virtue of free markets. Milton Friedman was lucky that during his lifetime the economic circumstances seemed to confirm the superiority of his economic theory. I’ll quote:

“Friedman was also the beneficiary of the postwar economic boom and of global economic conditions that readily resonated with his ideas. During the period between the late 1960s and the mid-1970s, ‘his ideas seemed irresistibly prescient, and those of his numerous opponents repeatedly wrong’. Friedman did not face a world where economic planning enjoyed ideological hegemony. In such circumstances, his free-market liberalism was of the moment and his receipt of a Nobel Prize in 1976 merely confirmed this.”

Some conservative thinkers, even back in the 1970s when the free-market capitalism was clearly proving itself to be a superior social and economic order, realized the long-term fragility of this theory. Friedrich Hayek, the author of the conservative bible “The Road to Serfdom”, understood it even during the heyday of laissez-faire ideas. He realized that in the absence of the Soviet Union and its planned economy as an example of what not to do, there has to be a moral foundation for capitalism’s values. But there was none.

Irving Kristol (the father of William Kristol who founded the conservative Weekly Standard magazine) too criticized market advocates for promoting materialism and for fighting an ideological war that has largely been settled and urged conservatives back in the 1970 to begin to build a moral basis for capitalism. He noted that the new battle should be fought around values, that is, social values.

Conservatives tried to do that in subsequent decades, but the alliance between social conservatives and free market advocates always had an artificial feel to it, like a marriage of political expediency, not of natural compatibility. The former believe that the human nature is wicked and must be somehow controlled or restrained (either by religion or by some other methods); the latter believe in human rationality and ability to make the right decisions. It’s like mixing oil and water. It’s breaking right now before our very eyes.

If conservatives are so afraid of collectivist ideologies and believe that those will never go away completely, they have to build a solid defense against them rather than mock them. One day accusing your opponent of being a socialist might not suffice. In the 60s, 70s and 80s, the existence of a real life collectivist experiment made it possible for conservatives to demonstrate their moral superiority with ease, but now that the Soviet Union is gone the burden of proof is on the conservatives themselves. I suggest that the first step to build such a defense should be to embrace regulations. Free market advocates are afraid that by embracing regulations they will somehow admit the imperfections of their ideology; thus they are incapable of looking at regulations as a tool that can come in handy when confronted by hardcore Commies. (Note: I, of course, don’t think that Commies are coming – conservatives do). The obstinacy with which conservatives cling to free markets ideology makes them weaker when facing opponents that under normal circumstances can be easily defeated. Their tactics and strategies seem tone-deaf and oblivious to widespread public anger, both on the right and on the left. The equivalent of such tactic on the left would be a complete denouncement of a capitalism system. But those kinds of far-left voices, while existing on the fringes, are forcefully rejected by the mainstream Democrats who merely advocate a regulated capitalism and a modest increase in taxes, not a collectivist utopia. Keynesianism can be a salvation, not an inhibitor. If socialism, the real socialism comes to America, ironically, it will be the Democrats that are best equipped to fight it, not the Republicans.

I cannot stress this enough, so I will repeat myself. After you accuse me of being a socialist know this: I’m trying to help the supporters of free markets. If the foundation of their ideology is weak, we all risk sliding into an alternative social order. If you can’t demonstrate that your system of belief is superior you only have yourself to blame if the assortment of Commies will have a stronger case (and public opinion) on their side. That is a major reason I support a stronger regulatory environment – not because I’m anti-business or anti-capitalist – but because I want to protect market participants from inadequate behavior that can discredit their philosophy and expose them and eventually the public to a harmful outcome.

Conservatism reduction to the absurd.

One can feel sorry for Boehner: he tried to strengthen, if only from the PR perspective, the Republican position pre-fiscal cliff, only to be humiliated by his own crazies.

Boehner introduced a Plan B to Congress that included tax cuts for those making under $1mln a year. The plan was simple – to pass it with the partisan vote of 218 Republicans, so that bill would act as a fallback position/some leverage to present to the public when the fiscal cliff happens on January 1st. Of course, everyone, including Boehner, knew that this bill has no chance of passing Senate and being signed by Obama; the whole purpose of this bill was to show the public: “See? We also have a plan! That cuts taxes for 99.8%! But Democrats refuse to cooperate!”  The passage would at least somehow give the Republicans a piece of legislation to wave in front of critics and to give the public, who doesn’t have time for details, the impression that something is being done. Well, they failed even at that due to the crazy wing, for whom to raise taxes on millionaires is anathema and for whom having even slightly better PR position is worse than maintaining their ideological purity. Plan B failed to pass the House.

Which only clears the way for Obama to let the “cliff” proceed. Come January and accompanying spending cuts and increased taxes, both sides will be ready to do something about it for real. Obama will introduce a tax cutting bill, goes across the country to promote “tax cuts and recovery” theme, dares Republicans not to pass it, they grudgingly acquiesce, and Obama and the Democrats will become known as tax cutters and the promoters of economic growth.

Obama has already chipped away at the traditionally Republican domain of  strong foreigh policy by killing Bin Laden. Now he’s trespassing into the holiest of the holy of the Conservatism – fiscal responsibility. He leaves them no ground to stand on. What do they have left? What do current conservatives stand for? Obama smartly touches everything that they hold dear and they begin to despise the very positions that they previously held simply because they view them as contaminated. But all Obama does is govern as a center-right politician and that drives them nuts, because Obama is not supposed to be that. He’s supposed to be a caricature that they have internalized.

I do feel sorry for conservatives. Traditional conservatives used to have very good ideas that I find compelling: fiscal responsibility; personal responsibility; foreign policy restraint; right to privacy; respect for social contract and social cohesion, patriotism. But now they seem to have been reduced to the absurd with their unyielding zeal: fiscal responsibility means holding the country they allegedly love hostage; personal responisbility means you’re on your own even if you did everything right; foreign policy means calling for sending troops to every conflict worldwide; right to privacy does not include the right to reproductive privacy; social contract means worshipping the rich as “job creators”, and patriotism took a form of jingoism.

Current political disagreements are not between left and right, not between liberal and conservative. It’s between practical and ideological, reasonable and absurd. If it is Obama who will save the conservatism from its impostors, so be it.

Conservatives are having epiphanies on tax rates (although not at WSJ).

Here’s the kind of article that I would only expect to find on the pages of Wall Street Journal. A tired and refuted by numerous studies argument for lower taxes on the rich. You see, the author argues, the rich pay a larger share of all income taxes (even more than they paid in 1950s) and thus their taxes should be cut.

In 1958, approximately two million filers (4.4% of all taxpayers) earned the $12,000 or more for married couples needed to face marginal rates as high as 30%. These Americans paid about 35% of all income taxes. And now? In 2010, 3.9 million taxpayers (2.75% of all taxpayers) were subjected to rates that were 33% or higher. These Americans—many of whom would hardly call themselves wealthy—reported an adjusted gross income of $209,000 or higher, and they paid 49.7% of all income taxes.

This is what puzzles me most in such arguments – consistent and probably deliberate refusal to look at other factors of such disproportion, such as increasingly barbell-shaped nature of income distribution. Also, notice how artfully the author uses those making $209,000 to make a point about the rich paying too much taxes, and then turns around and points out that they are not rich at all. Lumping together those making $209,000 and the 0.01% is convenient for 2 reasons: You get to show how large a share of taxes paid by that group while still making an impression on the layman reader that it is the 1% that pay 50% share of all taxes. What share of that 50% is paid by the middle class (and I do consider those making $209,000 middle class) is not explored at all.

The following is a simplistic and extreme example just to illustrate my point. Suppose we have a town with 100 citizens. 98 citizens are making $10,000 and 2 citizens making $500,000: At the flat rate of 35% the 98 guys’ share of total income taxes would be $10,000*98*0.35=$343,000 and the 2 rich guys’ share of total income taxes would be $500,000*2*0.35=$350,000 – more than 50%!! Outrageous, if you dismiss the fact that the 2 guys are making 50 times more than those 98 moochers.

Now imagine that the income is more evenly distributed: 30 guys make $10,000; 60 guys make $20,000 and 5 guys make $100,000 (notice that the size of the total pie didn’t change). Now the share of the top bracket would contribute 5*$100,000*0.35=$175,000. And the share that all others would contribute – I’ll spare you the calculation – $525,000. Could it be that the rich paid less total share of taxes during the times when the income distribution was more even? As was the case in the 1950s?

These back of the envelope calculations would be even more compelling if I used the true rates. In reality, the bottom 30 guys pay no taxes at all (because they are too poor to pay any taxes); the top 5 guys pay 15% (as in capital gains), and the burden of taxation is being carried by those 60 guys in the middle. Since those 60 guys work for a living – they still would pay 35% rate and would generate $420,000 in taxes; but the top 5 guys would pay only $75,000 in taxes. Not only the burden is being carries entirely by middle class, we are not even generating the same amount of tax revenues as we would if everyone paid the same rate.

At this point 2 clashing camps emerge: those who insist that the bottom 30 guys pay their share and those who insist that the top pay the same share as everyone else. I’m in the latter camp. In fact I would be willing to entertain the idea of a flat tax for everybody, as long as 2 conditions are met: capital gains are taxed at the same rate as ordinary income and the bottom guys are paid decent wages, so that paying 35% tax would not break their backs. But because I find that raising minimum wages to a satisfying level is an impossible feat (politically and practically), I, being realistic, simply advocate for raising the taxes on capital gains. And that’s where cries of class warfare begin to emerge. And that’s where I move to my next argument: Why is it that making money on money is supposed to be more sacred and revered than working for wages? Why are “entrepreneurs” (I use quotes, because I do not find anything entrepreneurial about investors who don’t produce anything and more often than not risk someone else’s money) more valuable members of society, as evidenced by tax rates, than teachers and nurses? If top bracket insist that they are “job creators”, shouldn’t Walmart workers, office workers, accountants, IT and other clock punchers insist on being called “business facilitators” and demand equal respect?

If this still seems like a sure path to socialism (or a “road to serfdom”) you have missed some recent epiphanies on the right. Here’s the quote from a recent American Conservative magazine article:

 A capital gains tax rate (making money off money) that is lower than the earned income rate (making money off work) is just not fair. Bestowing that rate on hedge-fund managers through a specially designed loophole is just not fair. Allowing the rich to take mortgage deductions for second and third homes, or for homes worth over $1 million, is just not fair. Allowing business owners like me to take myriad deductions that our employees cannot take is just not fair. But, most of all, allowing the wealthy to pay very low tax rates while interest on the war debt accumulates, deficits continue, and middle-class incomes deteriorate is just not fair.”

At conservative National Review magazine Ramesh Ponnuru seems to be getting a grip on reality: Especially refreshing is this passage:

“The Republican story about how societies prosper — not just the Romney story — dwelt on the heroic entrepreneur stifled by taxes and regulations: an important story with which most people do not identify. The ordinary person does not see himself as a great innovator. He, or she, is trying to make a living and support or maybe start a family. A conservative reform of our health-care system and tax code, among other institutions, might help with these goals. About this person, however, Republicans have had little to say.”

Even William Kristol at the Weekly Standard is seeing the light:

“After all, surely Republican members of Congress understand there’s something crazy about appearing to fight to the death for a tax code in which Mitt Romney and others pay a 14 percent tax on millions of capital income​—​while silently allowing the payroll tax on labor to go up from 13.3 percent to 15.3 percent for all the working stiffs?”