Saturday, January 31, 2009

Cross the Free Market Off the List for Andrew Sullivan

Incredulously Andrew Sullivan still claims to be a conservative. Yesterday he wrote a write up of his evening at Claremont McKenna and says that his thoughts around the bailout have "crystallized." Here's what he said.

At Claremont-McKenna College last night, my thoughts on the stimulus package vote this week crystallized a little - they can do that when a bunch of feisty undergraduates are asking good questions. On the one hand, I'm delighted that the GOP has rediscovered fiscal conservatism after a long period of Bush insanity. On the other hand, they may have chosen the one moment in recent history when fiscal conservatism could be disastrous. Yes, I can understand why Obama's bizarre idea of having Rahm Emmanuel deal with the House GOP back-fired (shouldn't he just run the White House?). But I also see that Obama won the last election, the public rightly expects a real boost to demand, and more tax cuts simply won't do enough.

So what to do? This is the smartest GOP approach I've seen yet:

Instead of fighting Dems on the dollar amount of spending, knowing that we would lose that fight in any event, we could have stood with Obama and called for large high-tech infrastructure projects that would employ large numbers of minorities in construction and white collar suburbanites in development. These projects (high speed rail corridors as an example) would also capture the imagination of the green close-in suburbs that are turning viciously against the GOP and have the strategic benefit of jamming up the young Dem members (Webb/Warner/Hagan/McCaskill) who depended on these voters for their victories.

Bring on the long term infrastructure investment.

On the contrary, Mr. Sullivan, the public expect the country to get out of its economic downturn. Keynesian spending just won't do it. Why is "fiscal conservatism" "dangerous" now? Looks like someone has his ideological blinders on again... (Does he ever take them off?)

I sincerely doubt Obama was elected because he was going to help boost demand. If he really wanted to do that, he would lower taxes. It's called the Laffer Curve, Mr. Sullivan.

And how is that proposal of the green spending a good idea for the party or the country? It fails for two basic reasons.
1.) Most conservatives I know are global warming skeptics. As in, we need to be convinced.
2.) There's little evidence that the cost per passenger mile of rail would be cheaper than car transport. So how would that be "long term infrastructure investment"?
A quick note to Sullivan: something doesn't become conservative simply because you say it is.


Anonymous said...

" Looks like someone has his ideological blinders on again... (Does he ever take them off?)"

Avoid staements like this in the future, Charlie- unless you wish to come off as comedic.

Also: worthless post. Do you even know Sullivan's positions? I suppose he's a liberal ideologue to you?

Charles Johnson said...

Thanks for the pointer, but I think I'll stick with it.

But for someone who disingenuous claimed that much of the problem with Iraq was our military spending, he should have been asked why the stimulus, which is more than 2 times the amount of the entire Iraq war, was really justified.

Bill said...

That lowering taxes will stimulate demand is a basic Keynesian insight. Laffer didn't discover this. His argument was that you could lower taxes and also increase tax revenue, but this only works if the tax rate is too high in the first place.

Charles Johnson said...


You are exactly right. Keynes was very different from modern day "Keynesians" of which Sullivan said he was.

Laffer himself said that he wasn't the one to discover the so-called Laffer Curve, but I like the term, so I'm sticking with it!

generic said...

I'm pretty sure the laffer curve was disproved some time ago (or what bill said).

and global warming skeptics can be lumped right in with theists and other unfortunately retarded people.
i see so much intelligence on this blog (good writing, eloquence) even though i usually disagree completely.

but some things (science, religion, values) are so far off the rational radar that i don't know what to do with myself. also, i'd love to have a god argument with anyone on here. that's when everything really starts to hit home.

Charles Johnson said...

I don't think the Laffer Curve was disproved.

On the global warming question, I would happily debate anyone on it at any time.

I'm a "don't care about"-ist on the religion question.

Anonymous said...

Most economists acknowledge the Laffer curve, but there's little consensus that we're past the rate of taxation at which maximum revenue is generated.

Bill said...

Anonymous is right.

Anonymous said...

Also, how many Econ classes have you taken? Read up on multiplier effects and then come back and admit that tax cuts have a significantly lower expansionary effect.

Scott said...

Yes the Keynesian multiplier formula shows that increases in government spending should translate into more growth than a decrease in taxes, but did it occur to you that the formula may be inherently flawed? I think that is what Charles is getting at. The formula doesn't take into account how much gov't waste is involved, or how much of what the gov't spends is spent on non-growth promoting projects.

Basically, if the industry can't hold up in the free market, then it shouldn't be propped up by gov't because that just creates a long term spending obligation for tax payers. The best way to allow the free market to decide is to take the gov't out, and to allow consumers to spend more of their income.