Political Center: Open for Lease or Buy

This week marks the point at which everyone woke up in their canoes and heard the sound of the waterfall up ahead waiting for President Obama and the Democrats this Fall.

Where did it all go wrong? After all he was supposed to inaugurate The Emerging Democratic Majority, as John B. Judis and Ruy Teixeira prophesied back in 2002.

Democrats were "progressive centrists," wrote Judis and Teixeira. Democrats wanted to "supplement the market's invisible hand... to ensure that the public interest is served... government regulation of business... strengthen social insurance programs... shield workers from... insecurities... stronger social safety net." But they were centrists that wanted government "to steer, not to row" with "incremental, careful reforms" that would improve health coverage without a takeover of the private health-care market.

Democrats were the party of the transition "from urban industrialism to a new post-industrial metropolitan order" in three main areas. In work, Democrats represented the new professionals, "crafts workers... frustrated by the imposition of market imperatives". In values Democrats represented "a libertarian ethic of personal life." In geography Democrats represent the new "postindustrial metropolises... peopled by the new professionals who live according to the ethics of postindustrial society."

The happy prophesy of Judis and Teixeira shows how easy it is to write an optimistic scenario and how hard it is to put it into practice.

Obama & Co talked a good line about a centrist America, but when it came to governing, they said "we won" and rammed old style patronage "stimulus" and radical health care takeover through Congress. They talked about the postindustrial future but in practice have demonstrated just how important the industrial-era labor unions are to their political makeup with huge payoffs to government employee unions, auto unions, and now maritime unions. They have written a financial reform bill that puts the government's visible hand in complete control of the financial system.

And at the back of it all is the delusion that government is a beneficial force, a "visible hand" that can serve the public interest. No it can't, at least not most of the time. Government is force. Politics is power. That is why the founders created a limited government.

Democrats in January 2009 were like Hitler's army in June 1941 with nothing but the open country of suffering Russia before them. They could have nailed down a huge new majority coalition if they had pursued consensus politics and befriended the moderates.

They could have had a bipartisan stimulus, but scorned to throw a few crumbs to the Republicans to get a bipartisan majority. They could have crafted "incremental, careful reforms" to health care and got big bipartisan majorities for their pains. But they didn't, and now, out of the long grass has suddenly emerged a vast counterattacking army that nobody even knew existed in November 2008. Just as Stalin got the Russian people in their tens of millions to fight against the Nazis.

Now the Democrats are staring into the face of the biggest political disaster of our times.

The consequences of the great Democratic Failure of 2009-2010 are incalculable. But one thing is certain. The center ground of US politics is vacant. For Lease or Buy. Any offers?

The Heir to Hayek?

What with Glenn Beck popularizing F.A. Hayek and The Road to Serfdom, not to mention Jonah Goldberg's Liberal Fascism, any sensible conservative would be looking around for more red meat to throw on the barbie.

Look no further. I think I just found the heir to Hayek. His name is Alasdair MacIntyre.

The common theme with Beck and with Goldberg is that the root of all evil is the Progressive movement that flourished at the turn of the 20th Century, especially in the decade just before World War I. And as many writers remind us, for instance Tiffany Jones Miller today on NRO, the Progressives all went to school in Germany in the half century before 1900. They came back with a Prussian faith in bureaucracy, in Hegelian progressive evolution, and government social insurance programs just like Bismarck's.

The trouble with Hayek is that he is not so good with the sound bites, meaty phrases that encapsulate his ideas for a popular audience.

But now I am reading Alasdair MacIntyre's After Virtue and many parts of it read like Hayek, only better. Chapter 8 is entitled "The Character of Generalizations in Social Science and their Lack of Predictive Power."

OK, the title is not too pungent. But MacIntyre tackles the Hayekian theme that social scientists do not possess the predictive knowledge of natural science.

The fact is that social scientists long for the predictive power of natural science and they often act as if they have, or are about to, realize that goal. In fact they cannot, because of the peculiar relationship between the individual and society. We individuals want to to be "in some degree opaque and unpredictable." This is necessary, for

each of us... aspires to preserve his independence, his freedom, his creativity, and that inner reflection which plays so great a part in freedom and creativity, from invasion by others.

But if we are to execute long-term projects of creativity we need to operate in a social environment that provides predictability.

We are thus involved in a world in which we are simultaneously trying to render the rest of society predictable and ourselves unpredictable.

In this environment it is likely that knowledge about the social realm will be "characteristically, and for the most part" rather than universal law-like predictions. This means that organizational success and predictability are mutually exclusive. If I want to execute on a creative project I would have to create a predictable organization. But a predictable organization is not good at executing on a constantly changing creative goal.

Since organizational success and organizational predictability exclude one another, the project of creating a wholly or largely predictable organization committed to creating a wholly or largely predictable society is doomed and doomed by the facts about social life.

Now comes the clincher.

The effects of eighteenth-century prophecy have been to product not scientifically managed social control, but a skillful dramatic imitation of such control. It is histrionic success which gives power and authority in our culture. The most effective bureaucrat is the best actor.

Now, is not MacIntyre making exactly the conservative case against Obamism? Do not liberals always and everywhere create a skillful dramatic imitation of social control. Except when something real happens, like an oil spill, and it turns out that dramatic imitation is not quite the same thing as effective action?

We know already that the welfare state is bound to fail in a vast burial mound of unfunded liabilities, about $100 trillion at the last count. It is based on confident predictions that you can predict the shape of rational bureaucratic programs decades of into the future, completely disregarding the fact that people will start to use their unpredictable cunning to game the system, to use its predictability and its bureaucratic rules against it.

But you knew that.

Double Dip and Hayek vs. Keynes

It all comes down to "swimming baths" versus productive investment. That's my take from the latest round in the Hayek vs. Keynes wars. In dueling letters to The Times of London in 1932, teams of battling economists proposed solutions to the Great Depression. Wrote Keynes and his pals:

If the citizens of a town wish to build a swimming-bath, or a library, or a museum, they will not, by refraining from doing this, promote a wider national interest.

Hayek & Co. countered with this:

We are of the opinion that many of the troubles of the world at the present time are due to imprudent borrowing and spending on the part of the public authorities.

But the key to ending depressions, it seems to me, is to fix the balance sheets of underwater market participants. The reason you get panics is that, when asset prices decline, parties with highly leveraged balance sheets find themselves underwater. Counterparties sensibly lack confidence in these compromised actors and avoid transactions with them. That's why the infamous TARP was implemented: to fix the balance sheets of the banks so that they would have positive equity and other people would trust them. Once it was clear that TARP had succeeded the markets turned and confidence was restored.

Now, of course, we have a different problem. The huge fortune thrown at "stimulus" by the Obamis has brought into question the balance sheet of the United States itself. Has the enormous increase in the National Debt put the governments of the United States underwater?

And that returns us to the Hayek vs. Keynes argument. Does spending on municipal luxuries and "shovel-ready" projects really help? Capitalism teaches us that prosperity issues out of profitable enterprise, work that produces more value than it consumes. The record of municipal enterprise is that local politicians spend money on things the voters and the special interests want, not on things that makes the city more prosperous. Most government projects are money-losing white elephants.

The Hayek method, practiced by Ronald Reagan and George W. Bush, is that sound money and a good investment climate with low tax rates sets the stage for rapid recovery. But our liberal friends just don't want to believe that.

They may have to learn the hard way. As Poor Richard put it in 1743:

Experience keeps a dear school, yet Fools will learn in no other.

That's Benjamin Franklin for you.

The Liberal End Game

Ever get that fin de siècle feeling? I do. I feel that the liberal era is thundering to a close. In all kinds of ways. Like the following:

• Elect a president on the basis of symbolism not on proven leadership ability.
• Pass Doofus health-care reform that destroys the medical industry.
• The over-the-top advocacy for Keynesian "stimulus" by tame economist Paul Krugman. When you have a really good idea, it doesn't need that Big Push to keep it going.
• Liberals wondering about free will. Dr. Helen wryly observes that the liberal elite suddenly have their doubts about the existence of free will. My my, how convenient when a Democratic administration wants to make all our decisions for us.
• Liberals clueless about conservatives. In liberal media these days they seem to need a reporter to cover the "conservative beat." Jonah Goldberg passes on a suggestion from Byron York. "Have the conservatives cover the liberal beat and the liberals cover the conservatives." My! What a concept.
• Financial reform authored by the political firm, Dodd & Frank, that helped create the problem.

This end-of-an-era stuff gets me all tingly. It's the same excitement I get watching the YouTube video of the SS Liberal riding up the beach at Alang, India, headquarters of the global ship-breaking industry.

Faith in America

Enough with the pessimism already, writes Ross Douthat in The New York Times, and I agree.

Yes, the Obama administration is bungling everything, and the recovery will be tepid at best. But it's unlikely that the economy will swoon into a double-dip recession. And yes, the decline in M3 is troubling. For sure the mega-tax increase that is scheduled for January 1 is an act of economic folly. As is the proposal being floated around to implement a VAT tax.

Actually, the experts are always worrying about a double-dip recession at this stage of the business cycle. So there!

They are right to worry, of course. The stupidity of the political class knows no bounds. And almost everything the political class does is harmful to the economy. Why? Because pretty well everything the political class does takes money out of the hands of people who are doing something constructive and productive and hands it over to people who are not.

But this is America and America is different. Here the people rule--or at least they manage to throw the bums out from time to time--and this nation of immigrants is born of people who had the courage to up sticks and try life on another continent.

Think on the bright side:

• President Obama is not the political genius we were sold in 2008. He seems to be a rather pedestrian, rather inarticulate leader who seems to be good at dividing the nation rather than assembling a consensus for his program.
• Democratic Underground, the liberal blog site, is banning criticism of Obama. Wow! That it should come to that!
• The election of a Republican Congress in 2010, or something close to it, will make it very difficult for President Obama to gun the economy for reelection in 2012. It was FDR's shameless policies in 1935-36 that set up the horror of the 1937 recession.
• The American people are in full revolt. And here's hoping that young people, who voted 67 percent or so for Obama, will soon start to appreciate they were sold a bill of goods.

This is not going to be a revolution. The walk back from Obamism will be slow and painful. Because we are Americans and we are conservatives. And we don't believe in reckless, divisive change.

We just believe that America is the last best hope of mankind on Earth. Lincoln said in his Second Inaugural that America was the "last best hope of earth." Ronald Reagan amplified his words to "last best hope of man on Earth."

America is the Great Exception. And long may it continue.

A SCOTUS That Thinks Like America

Our liberal friends make a big deal about diversity. But true to their values, they are not interested in a real diversity of thought and spirit, but only a diversity of the members of their political coalition, organized around race, class, and gender identity.

Still, with the anticipated elevation of Solicitor General Elena Kagan to the bench, the US Supreme Court is going to be singularly unbalanced, even by liberal standards. There will be three liberal women on the court. What about liberal men? OK, I suppose they are represented by Stephen Breyer, a former aide to Edward Kennedy. They should be so lucky.

You have to admit that the women span the gamut of liberal womanhood. There is the liberal ACLU activist, Ruth Bader Ginsburg. There is the liberal quota minority hack, Sonia Sotomayor. And now there will be the liberal university and executive branch administrator, Elena Kagan. That must be very satisfying to liberals. Three feminist role models. All on the Supreme Court. You go girls.

Only thing is, liberals are way overrepresented on the Court. According to Gallup, self-identified liberals represent 20 percent of the population. So that would make a maximum of two liberals on the bench. At 44.44 percent, liberals are more than double their share of the population. Instead we have three liberal women alone. What about a conservative woman, girls?

There are, of course, four conservatives on the Court, Roberts, Scalia, Thomas, and Alito. But that's OK, because conservatives represent about 40 percent of America. We sure could use a conservative woman in that bunch, if you ask me.

The real gap on the Court is moderates, people who switch from one view to another, as the mood takes them. Anthony Kennedy is the only moderate on the court, and all I can say is that moderates are sadly underrepresented. For one thing, the lack of moderates reduces the potential for suspense and excitement. You never know where a moderate is going to come down on any particular issue.

It's time that moderates get all riled up about this. After all, do they really want liberals making all the decisions for them, including three movement-liberal women?

I'll tell you what I think, as we head into the Independence Day weekend. I think the present makeup of the Supreme Court it's cruel, corrupt, unjust, wasteful, and deluded.

It is wrong to have so many liberals on the Court.

Testing Regulation to Destruction

My weekly oped discusses the endgame of Keynesianism, a bad idea when it was introduced with Wordworthian bliss 75 years ago, and a bad idea as it gets tossed onto the ash heap of history along with the Obama administration.

As I wrote, there was never going to be an easy exit from Keynesian economics:

We won’t bury Keynesian economics until after Keynesian economics buries the liberals.

The way things are going, Keynesian economics is going to bury liberals something frightful.

But then there's another bad idea that liberals cherish, and that's in trouble too. The regulatory state.

For liberals, the free market is inherently flawed. It doesn't meet basic human needs in health care, education, care for the poor, and care of the environment. Government must do this. It must create programs to correct the mistakes of the market, and it must minutely supervise the operations of corporations and businesses to correct corporate greed. The result is a vast regulatory and administrative structure directing resources and behavior by political means rather than market means.

After a dispiriting 30 years of Reagan-Bush when regulation was stalled and even rolled back, liberals have enacted a veritable spring flood of regulatory legislation. ObamaCare places the whole of health care under minute administrative regulation. The proposed cap-and-trade places the whole energy sector under minute regulation. The Dodd-Frank financial regulation bill proposes an intensified administrative regulation of the financial industry. And then there's all the stuff under the radar.

Meanwhile we are seeing the administrative state in action in the Gulf oil spill. We can see that in the past the regulators for the offshore oil business has been too lax. It was clearly a case of regulatory capture. But now that we have a disaster on our hands, the regulators are tightening up. No barges can go out until they have fire extinguishers. Giant Dutch oil skimmers can't operate because they don't quite meet the standard for oily water discharge.

Notice the difference between the regulatory approach and Wal-Mart at Hurricane Katrina. CEO Lee Scott told his workers that in the emergency they would be making decisions way above their pay grade. Just do the right thing, he said.

Conservatives have a faith system when it comes to the regulatory state. Our faith comes from the scholarship of Friedrich Hayek the Nobel economist. Beginning with The Road to Serfdom and continuing through The Constitution of Liberty and The Fatal Conceit he argued that the bureaucratic, administrative state was bound to fail because it did not, could not, know enough to direct the economy.

Our free economy, he argued, was the result of human action but not of human design. A complex system like the global economy evolves out of the millions of actions and decisions of market participants.

What was needed, he argued, was general rules and responsibilities, expressed in the legal code. What the regulatory state always ended up producing was detailed procedures and administrative discretion.

We have seen, in the Gulf oil crisis, how the regulatory state fails. The regulatory process results in the regulated industry conforming to the regulation rather than conforming to prudent business or technical practices. It is the same as the complaint we hear about education under national standards and testing. Teachers teach to the test, not to the needs of the children.

The whole point of law is to deal with things when they go wrong. When you damage someone or something then you must pay to make them whole. Of course, that is impossible, so the law attempts to provide compensation in lieu of making the damaged party whole.

But government regulation assumes that if you can create bureaucratic procedures and permits then you can make everything right before the fact. Of course, there is a place for standards and permits. But ultimately, you have to rely on the judgement of the parties involved.

Our liberal friends are making a huge bet on their regulatory state as they capitalize on their liberal hour. According to conservative political and economic ideas, it will fail, and it will fail big. Only then can we start to repair the damage with a common-sense conservatism that trusts but verifies.

If only we didn't have to have a meltdown first. But then we were never going to get out of the liberal regulatory state on the cheap.

We won’t bury the regulatory state until after the regulatory state buries the liberals.

And that's no error.