Conservatives

A great part of Obama's speech last night:

The people I’ve met in small towns and big cities across this country understand that government can’t solve all our problems – and we don’t expect it to. We believe in hard work. We believe in personal responsibility and self-reliance.

But we also believe that we have a larger responsibility to one another as Americans – that America is a place – that America is the place – where you can make it if you try. That no matter how much money you start with or where you come from or who your parents are, opportunity is yours if you’re willing to reach for it and work for it. It’s the idea that while there are few guarantees in life, you should be able to count on a job that pays the bills; health care for when you need it; a pension for when you retire; an education for your children that will allow them to fulfill their God-given potential. That’s the America we believe in. That’s the America I know.

This is not altogether different from the rationale behind the New Deal, the philosophy of shared responsibility that gave us the Golden Age of shared prosperity (albeit shared mostly among white men). FDR (with apologies to regular readers who may have seen me highlight this quote too many times already):

In every land there are always at work forces that drive men apart and forces that draw men together. In our personal ambitions we are individualists. But in our seeking for economic and political progress as a nation, we all go up, or else we all go down, as one people.

This is also a break from the recent past. Clinton conditioned public action on whether people "worked hard and played by the rules." So progressives had to prove that people were doing that. The best we seemed to do was enact social policy that motivates people to "work hard." But these times call for much more ambition.

This frame could serve a progressive agenda well, I think. The central question it raises is not what "they" are doing to fulfill their end of the social bargain, but what "we" are doing for our part. Is our nation ensuring that "no matter how much money you start with or where you come from or who your parents are, opportunity is yours"? Is there a basic level of security for all Americans? This is the debate that we need to have about poverty and inequality. We can talk about "opportunity" and "security" all we like but unless the questions are about what we are doing, I don't think we'll have the conversations we want.

Moreover, this vision is rooted in a belief in national solidarity and fraternity. People who work to undermine our common bonds, in our politics and in the economy, don't share this belief. That's why this part of the speech was unsettling.

I trust the American people to realize that while we don’t need big government, we do need a government that stands up for families who are being tricked out of their homes by Wall Street predators; a government that stands up for the middle-class by giving them a tax break; a government that ensures that no American will ever lose their life savings just because their child gets sick. Security and opportunity; compassion and prosperity aren’t liberal values or conservative values – they’re American values.

Leaving aside the questionable and unnecessary attack on "big government." On the one hand it's probably smart to connect these values with the American creed, but couldn't he have just said that these are both liberal and American values? That progressive values are American values? As it is, he's implying that conservatives share these values. And they don't. Many of them don't believe that Americans are brothers and sisters. They hate liberals, resent minorities, and flout their responsibility to the public. Those don't sound like American values to me.

Like the debt weighing down the economy, conservative economics today rests on speculation and doesn't have much real-world value. Jeff Madrick on Milton Friedman's economics:

The second barrel was Friedman's articulate popular policy writings. What did remain of Friedman's philosophy (aside from one academic contribution, the overstated natural rate of unemployment philosophy) was his deeply held, well-articulated and simplistic view that government regulation was almost always bad for us.

Competition was the great disciplinarian of market excess, wrote Friedman, obeying such predecessors as Friedrich van Hayek, author of The Road to Serfdom. By 1999, even Bill Clinton and many a Congressional Democrat fully supported the elimination of key financial regulations established in the New Deal.

As night follows day, what happened was a return of the excesses of the 1920s. Competition is not enough to ward off excesses. Free floating prices do not automatically stabilize economies. Financial markets in particular encourage excess naturally, a point made by the more profound economist, Hyman Minsky.

Friedman's followers will seldom admit that much of his public policy was not supported by genuine empirical research, unlike his monetarism. At least, because Friedman did the homework, one could debate with him on the groundwork of his views in these areas. In my view, the empirics never supported the stronger propositions he made.

But in the area of public policy, it was largely ideology. It was mostly an exaggerated application of Adam Smith's invisible hand: we would all be better off if we just maximize our profits.

Friedman's conservatives really are in a bad way. It seems almost unthinkable now, but it wasn't that long ago that conservatives could credibly claim that their ideas served the public interest. After all, it took conservatives to understand the power of the market, the non-economic forces that shape our lives and life chances, and the limits of governmental intervention. But today's brand of conservatism sees few situations where their ideas don't apply (i.e. tax cuts to remedy every problem). And they just don't have an answer to the current economic crisis. Indeed, they've been lining up behind progressive solutions.

Why? Because progressives know how to deal with things like this. They have a unique and valuable perspective. They see the power of government, the economic forces that still shape our lives and life chances, the volatility, unfairness, and self-destructive side of capitalism. These insights have tremendous public value now.

But at the same time, the state of the conservative movement should serve as a cautionary tale. The time spent wandering in the desert offered insight into how progressives lost their way, and these lessons shouldn't be forgotten. The conservatives who rediscover their better instincts will be waiting.