What About a Stimulus That Works!

Everyone agrees that what the world needs now is Stimulus.

But what kind of stimulus should it be? Should it be a tax rate cut, as Republicans and conservatives would recommend? Or should it be spending on stuff like infrastructure, as Democrats and liberals would recommend, and as President-elect Obama seems to prefer?

Harvard economics prof Greg Mankiw has some ideas on this. And like a true economist, he grades the different approaches by their “multiplier” effect. Here is what he means:

One way to think about the issue is the size of the fiscal policy multipliers. The multipliers measure bang for the buck—the amount of short-run GDP expansion one gets from a dollar of spending hikes or tax cuts.

That’s a fancy way of saying: If I spend a dollar on stimulus, how far would it go?

Guess what. Republicans are right and Democrats are wrong.

In their new blog, Bob Hall and Susan Woodward look at spending increases from World War II and the Korean War and conclude that the government spending multiplier is about one: A dollar of government spending raises GDP by about a dollar. Similarly, the results in Valerie Ramey’s research suggest a government spending multiplier of about 1.4.

Oh goody. The spending stimulus goes down like a lead balloon. But what about the prescription of eevil mean-spirited Republicans?

By contrast, recent research by Christina Romer and David Romer looks at tax changes and concludes that the tax multiplier is about three: A dollar of tax cuts raises GDP by about three dollars.

Well now. That is what you call a real bang for the buck, as they say Out West.

But this is exactly what conservatives would expect. What matters, we conservatives believe, following the 1870 marginal revolution in economics, is economic decisions on the margin. The way to stimulate the economy is to reduce the marginal cost for workers to work and investors to invest. You do that by cutting marginal tax rates on labor income and capital gains.

This is not rocket science. It is 140 year old science.

But liberals aren’t interested. If they were to accept the ideas of marginal economics then they would have to dismantle their vast, tottering patronage and client state.

Naturally, they won’t do that. Because their liberal client state is the foundation of their political power.

You’ll recall that all power corrupts, and absolute power corrupts absolutely. When you live by political power you get Chicago politics and politicians like Gov. Blagojevich (D-IL).

Something to think about, Mr. President-elect.

Politics and Programs and Corruption

Everyone is chuckling about the criminal allegations made against Illinois Governor Rod Blagojevich (D). His blatant determination to “sell” the vacated US Senate seat of President-elect Barack Obama for value received is so over the top that you can’t help but laugh. Even the Wall Street Journal was able to crack a grin.

Of course, the president-elect had nothing to do with this. Nothing.

But liberals, isn’t it time to look in the mirror as little? If you chaps insist on gathering up 35 percent of the national output every year and running it through the political system, this is what you get.

All that money sloshing around, not doing very much except rewarding supporters, sets up the occasion for corruption. It’s not helping people, it is stealing from people.

Now you might say that to make the United States into a patronage state, where people get their livelihood from their association with a great lord, is no bad thing. Indeed you could argue that the world as always worked this way and always will. Political rulers naturally fall into the role of patron, and the voters and minor party functionaries naturally fall into the role of client.

But I don’t think that liberals really believe that the patronage state is really the highest and best form of political association.

Conservatives certainly don’t. That’s why we are ashamed of the corrupt Republicans who spent the last eight years trying to stay in power instead of trying to reform government programs. And why we weren’t that sorry to see the Republican Congress defeated in 2006.

Conservatives believe in an America of trust and honesty, where government is limited and Americans get their livelihood from serving each other rather than by becoming the client to a great political lord.

Our Liberal Dominator Hierarchy

Is the bad old days of the feudal era and the patriarchy, if you can remember back that far, the world was ruled by Dominator Hierarchies.

But the progressive educated elite offered itself in the nineteenth century to end all that. No, in the future we would all be gently led into a new era of equality and end the marginalization of groups oppressed by the dominators and the marginalizers.

That’s what they told us. Now let’s think reality.

Was there ever a Dominator Hierarchy like our modern progressive educated elite that rules today? It occupies the commanding heights of the culture. Its ideas dominate the activities of government. And the mighty barons of the corporate world are summoned to bend the knee at its congressional levees (the Louis XIV kind, not the Louisiana kind). We are even seeing a return to sumptuary laws, as the lower orders are learning that they should not travel around in big, wasteful SUVs but in modest transportation more appropriate to their station.

usgovernmentspending.com, of course, is an eternal witness to the liberal Dominator Hierarchy’s implacable power. Just take a look when you have a moment.

Want to opt out of the centrally administered program of government pensions at $900 billion per year? Good luck chum.

Want to opt out of the centrally administered program of government health care at $950 billion per year? Out of luck, chum. The Dominator Hierarch plans to increase the level of compulsion.

Want to opt out of the centrally administered program of government education at $875 billion per year? You can, of course, but you still have to pay your share anyway. And the Dominator Hierarch is planning to extend its power and control to pre-kindergarten.

Want to opt out of the centrally administered program of government welfare at $465 billion per year? Good luck, chum.

Notice the level of compulsion and domination here? We have just reeled off 20 percent of GDP in force and compulsion, and we haven’t even got to defense and policing yet.

Funny thing, isn’t it? All this noble largesse isn’t free, and it isn’t voluntary. The Dominator Hierarchy has decided what is good for you and your job is to say how much you like it.

The charming thing about this implacable liberal Dominator Hierarchy, the most complete and powerful, perhaps, in all history, is that it experiences itself as an enlightened successor to a Dark Age of Domination, called to witness to the evils of domination and to gently minister to a grateful people its new order of diversity and inclusion.

But then, what is new about that? Every tyrant thinks himself a savior. The only fiend in all history that revelled in his evil was Othello’s tormentor, Iago. But he wasn’t real, just a fiction.

Wal-Mart's FEMA Actually Delivers

Liberals hate Wal-Mart. Well, they do. They hate Wal-Mart because it puts Main Street businesses out of business. They hate Wal-Mart because it’s non-union and it doesn’t offer first-dollar health insurance.

But Wal-Mart delivers Always Low Prices, Always. And that helps all people on low incomes. Funnily enough, Wal-Mart is doing fine in the current recession while Whole Foods is tanking.

And Wal-Mart is a good corporate citizen where it counts. Like in the aftermath of Hurricane Katrina, as the Suburban Emergency Management Project reports.

You see Wal-Mart has an Emergency Operations Center at its Bentonville, AR headquarters. Whenever there’s a natural disaster Wal-Mart mobilizes to deliver. Part of Wal-Mart’s planning involves replenishing stores when there is a disaster alert. Wal-Mart has over eight Disaster Distribution Centers in its complement of over 100 distribution centers nationwide.

So when Hurricane Katrina struck, Wal-Mart was ready, even including an inspirational message from CEO Lee Scott to Wal-Mart associates.

This company will respond to the level of this disaster. A lot of you are going to have to make decisions above your level. Make the best decision that you can with the information that̢۪s available to you at the time, and, above all, do the right thing.

As soon as possible Wal-Mart was trucking in supplies into the devastated area. Of course it wasn’t easy. The public sector, at all levels of government, was slow getting moving. Also, governments had contracts with private-sector companies other than Wal-Mart who weren’t able to mobilize as efficiently. Pretty soon Wal-Mart found itself supplying government agencies with which it didn’t have a contract. But Wal-Mart delivered.

â€Å“Phillip Capitano, mayor of the New Orleans suburb of Kenner, reported, â€Å“The only lifeline in Kenner was the Wal-Mart stores. We didn’t have looting on a mass scale because Wal-Mart showed up with food and water so our people could survive.” Similar reports of Wal-Mart’s prompt and effective involvement came from community leaders across the Gulf Coast.

There’s no doubt that Wal-Mart has an interest in good PR, in building public support for its brand. So Wal-Mart is only helping Wal-Mart when it helps out in a disaster.

But let nobody forget that CEO Scott set the tone from the top: “Above all, do the right thing.”

Rebuilding the Conservative Story Part III: Elevator Story

We’ve spent the last couple of days talking about the conservative story. What is our Vision? What is our Mission? Now it’s time to define our elevator story.

Every enterprise needs an Elevator Story. It’s the spiel you give to someone in 30 seconds or less when they say: What do you do? Now that conservatives in their political instantiation in the Republican Party have been roundly defeated, we have to ask ourselves: What is our story? What’s the point of being a conservative?

If you’re going to tell a story then you should tell a story. You should start by setting the stage, define the essential conflict, point towards a resolution, and describe the happy outcome. So here goes.

Setting the Stage:
In America today, government is cruel, corrupt, unjust; and it just costs too much.

Isn’t this just about how conservatives feel? The current welfare state, in which the American people cough up for $900 billion of government pensions, $950 billion in government health care, $875 billion in government education, and $470 billion in government welfare, every year, is an abomination. Never mind the corrupt patronage system. There is the cruelty of a system that has destroyed the family in the underclass, the injustice of a system that screws the working poor and rewards the non-working poor. It. Is. Wrong.

The Conflict:
Liberals created this monster. Liberals believe that compulsory government programs are the way to help the poor and comfort the afflicted.
But they are wrong. Government is not compassion. Government is force. You cannot solve social problems by force.

This is the basic touch point between liberals and conservatives. Liberals believe you can solve social problems with government programs. Conservatives believe that you must solve them person-to-person, face-to-face. That issues out of the meaning of the word compassion, literally, “suffering with.” Running a government program with tax dollars to help the poor isn’t “suffering with.”

The Resolution:
Society is not social force; it is social cooperation. That’s why we must reform the welfare state into the welfare society.
In the welfare society the American people, not liberal experts, will be in charge of their own health care, their children’s education, the comfort of the afflicted, and the decent provision of pensions.

Liberals believe in the welfare state; conservatives believe in the welfare society. That issues out of the basic conservative belief, initially voiced by Edmund Burke, that “To love the little platoon we belong to in society, is the first principle (the germ as it were) of publick affections.”

When you are thinking about politics it is best to take advantage of our better angels than to work against them. And we humans are, first of all, social animals that must live together rather than apart. So conservatives believe that “social problems” must be solved by people in their little platoons--family, neighbors, friends, associations, and charities--and not by bureaucrats. That's not easy, of course. It means that we can't just pay our taxes and complain about the government. We have to get involved and help people.

The Outcome:
With conservative reforms America will truly become that shining city on a hill, “still a beacon, still a magnet for all who must have freedom.”

So there is our Elevator Story. The current situation is intolerable. Liberals are to blame. The solution is to get government out of the way and put people back in. And the future is glorious, just as Ronald Reagan promised.

Rebuilding the Conservative Story Part II: Mission Statement

Yesterday we triumphantly designed a Vision Statement to guide conservatives during our rebuilding process. Today, as promised, we are releasing a Mission Statement to the world.

As everyone knows, in the subculture of off-site team-building meetings, the Vision Statement is a gauzy, uplifting, inspirational definition of the goal of an organization. The Mission Statement is more down to earth. It answers the question: What are we trying to do today?

How hard can this be? The conservative Mission Statement is short and concise:

We fight to reform a cruel and unjust welfare state.

Yes, I know that there is the War on Terror, and in the week after the brutal massacre of the innocents in Mumbai, who can forget it for a moment? But actually, I don’t think that the War on Terror is the front-and-center thing that conservatives must do.

I believe that we can count on our liberal friends to do the right thing by the War on Terror. They just have one little problem. They don’t want Republicans to get all the glory. They want to fight the war in their own sophisticated, nuanced way. Republicans just don’t know how to do nuanced, they know.

But conservatives are called to reform the dreadful, cruel, corrupt, and unjust welfare state, or we are called for nothing at all.

Let us repeat the words of David Cameron, leader of the British Conservative Party:

There is such a thing as society. It’s just not the same thing as the state.

In that statement, Cameraon (the lightweight?) encapsulates the whole thrust of conservative thinking. We all want to help the least amongst us. We want to comfort the afflicted. The question is: How? Shall we do it will rational, expert-driven bureaucratic programs from the cental government? Or shall we do it as individual people, joined into voluntary assocations, working together to help our fellow Americans?

Conservatives say that the rigid, compulsory, expert-led, bureaucratic way is not the way to help people. In fact, if you try to help people with government programs and bureaucracy, you get this:

Do you see the same thing that I am seeing? A little over one generation ago, about one in eight of the children of the uneducated were denied the basic human right to live with mother and father. But thirty years later four out of ten children of the uneducated were denied this right, and lived in a single-mother home.

Want to know how this happened? The welfare state did it. Liberals who drive the intellectual foundations of the welfare state and who manage the great bureaucracies of the welfare state did this.

And it is wrong.

That is why I say that the mission of the conservative movement is short and sweet:

We fight to reform a cruel and unjust welfare state.

Tomorrow: the Conservative Elev    ator Story.

Rebuilding the Conservative Story Part I: Vision Statement

Before we get to the specifics and the personalities of the glorious conservative future—will it be Sarah Palin or Bobby Jindal—let’s do the due diligence. Let’s start with a Vision Statement.

Yes, I know, all that off-site team-building stuff is awfully trite, but it has a point. It forces you to think about: Who we are, and what do we want, and why?

So let’s start with a Vision Statement. Here it is:

We believe in an America that lives and works together, with limited government, under God.

Alert readers will notice that we are covering the three sectors of Michael Novak’s The Spirit of Democratic Capitalism. Well of course we are. What did you expect? We are talking about the Greater Separation of Powers between the economic sector, the political sector, and the moral/cultural sector.

So when we talk about an America where we “live and work together” we are evoking the system of voluntary cooperation under law that we call capitalism. But we are trying to evoke a little more than that, because the notion of free enterprise is too guy-like. We must include the girl side of voluntary cooperation, and that means the community of women working together, sharing and caring. In the guy side, we are battling all the other guys for market share. Competition instead of cooperation. But for the girls we want to think of cooperation before competition. So we fudge it.

When we talk about an America with “limited government” we are talking about an America where the government doesn’t get its fingers into every pie as it does today. It would be an America where four of the five biggest government programs would not be: government pensions, government healthcare, government education, and government welfare. Instead the two biggest programs would be defense against enemies foreign, and defense against enemies domestic. Look at usgovernmentspending.com to get a feel for what that might look like.

When we talk about an America “under God” we are talking about an America where the dominant belief system is transcendent. We mean that the answer to the meaning of life, the universe, and everything is not solvable by a secular religion of heaven on earth. Life is a mystery, and the meaning of life is not given to us. So we develop a faith in the value of life and the meaning of life, typically symbolized by the notion of God. “God” in this sense is a declaration of humility. We will not solve the meaning of life by reason, or experimentation. Of course that will not stop us from reasoning, or from experimenting to get a better understanding of life, the universe, and everything. But we understand that every time we advance human knowledge a step, the ultimate answer recedes a step. All we do is raise the stakes.

So there it is. Step One in rebuilding the conservative story.

We believe in an America that lives and works together, with limited government, under God.

Next up: A new conservative Mission Statement.