A Letter to a Conservative Friend

An email I sent to a “conservative” friend recently whom I’ve had some charged debates with regarding the current economic crisis. I’m not suggesting I have any answers, but wanted to put this out there in case anyone has anything interesting to add or fix:

If you are interested, let’s do this in the spirit of scientific investigation (not debate teams!), in which we are all looking for the truth together and not defending any territory or tribe. I, for one, will disavow myself of any attachment to the Dem Party (and really never had any) and try hard to distance myself from my own ideologies. And let’s be specific and NOT argue debate philosophy. Rather, let’s find out how far apart we really are on today’s topics. I have an instinct that we’re not nearly as far apart as our rhetoric implies…

btw: I should note for the record that my politics have evolved dramatically over my life from devout Catholic, to apathetic youth, to idealistic communist, to Ayn Rand libertarian (10 years), to die-hard capitalist (10 years!), to whatever I am now (independent, science-based, anti-party, anti-lobby, anti-tribe, pro-rationality, socially liberal, humanitarian, atheist, globalist).

PRIMARY ASSERTION

No complex system is perfect and all require constant refinement, refactoring, and the periodic overhaul. Supply-side economics, free market capitalism, and a free society are the foundations of American success. However, in the last 25 years: a) the policies of deregulation w/o a safety net, b) extremely costly wars and bloated military budget, c) Wall Street cronyism, and d) extreme electoral influence by a small number of people, have broken the delicate balance of our once great nation, and have created a national debt, electoral process, and social imbalance (i.e. declining middle class) that are untenable. And the good news is that the changes needed to return to balance are not radical overhauls (e.g. communism), but common sense, practical changes that re-factor a system that has spun out of balance. The basic tenets of free market capitalism and a free, social meritocracy are still the foundation.

Moreover, to suggest that accelerating the current supply-side policies via MORE deregulation and privatization (i.e. dismantling government) without safeguardsthat protect citizens from industrial side-effects, appears to be based on simple stubborn ideology. Furthermore, blaming government and welfare families, cartooning liberals, chastising social security, and insulting immigrants–an undeniably strong element of the conservative position–has norationalbasis and unless I am mistaken, it’s an insidious tactic to scare conservative voters and create “target enemies” to distract attention from over-stepped, but theoretically sound, policies.

I don’t see why conservative politicians and people can’t agree with the MANY conservative economists who are saying: “We stand by our belief in free markets and supply-side economics and we will not stray far from them, but things have gotten out of control and we need fix it a bit so that we don’t destroy the middle class, have rigged elections, or hurt our citizens with industrial waste. We’re uncomfortable with big government as the solution, but recognize that we need SOME unbiased, science-based authority to protect our citizens and prevent cheating.”

Before you react, keep in mind that I–and the majority of liberals–am not suggesting that we shift towards Communism or any crazy ideas. Rather, we believe STRONGLY in a free market, free expression, capitalist meritocracy, and simply want to address the shortcomings that have developed in recent history. The conservative answer to our current disaster has been: “trust us, we’ll get rid of the big government–which caused these problems–and we’ll make even more money by getting regulations off our back, not pollute or poison anyone, let the “creators” (see Ayn Rand) rule the day, and when WE get rich, YOU get rich!” And as a big fan of free markets and capitalism, I find this argument shallow and frankly stupid.

“Friedman vs. Keynes”

Milton Friedman established some of the core ideas that now embody the current conservative economic position. Specifically, his well-respected theories on the merits of “free markets” and less government intervention are the cornerstone of this debate imo. (Of course, he was not nearly as radical as today’s GOP position, but let’s agree that his ideas are foundational.) But, Mr. Friedman was also a liberal and an early Keynesian, and recognized that there were areas that government (or some authority) needed to balance the free markets and protect everyday people. So, my first question to you is: Do you agree that the deregulation reforms over the last 25 years enacted by Dem and GOP congresses/presidents are a major contributor to our current financial meltdown or not? Before you answer, I’d like to acknowledge that this alone did not cause the crisis; the two wars, gigantic military budget, lowered taxes, and globalization effects are certainly primary factors as well.


Note: I believe that one of our core disagreement is what is the best way to ensurethatbusinesses don’t hurt people, i.e. regulation. The conservative argument has been that free markets regulate themselves because the economic system provides harsh feedback loops that discourage bad behavior and reward good behavior. I fundamentally AGREE that this is the best policy IFF its effective! However, over the last 25 years, the Dems and GOP have executed a dramatic systematic deregulation policy, BUT did not ensure that there were effective industry-based self-regulation policies in place. So, to be 100% clear, I am strongly attracted to the idea of self-regulation and trusting the markets, but it seems apparent to me that self-regulation (and even our current government regulation) has become a big joke. A good, albeit old, example imo is cigarettes: where was the self-regulation or self-correcting markets in this case?

OTHER TOPICS WORTH EXPLORING: Influence of “lobby” groups on the electoral process, redistricting and voter fraud, immigration.

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3 thoughts on “A Letter to a Conservative Friend

  1. I think you’re mis-stating the conservative objection to regulation.

    I believe that attempts to regulate are doomed; the people being regulated have a HUGE incentive to apply pressure to the system so they get what they want. You can start with a perfect regulatory system with competent regulators working for the Common Good… and two administrations later you’ll end up with lazy regulators who basically let the people they’re regulating tell them what to do and CongressCritters who don’t want to rock the boat because they’re getting millions of dollars of campaign contributions from the regulated industries.

    Or let me put it another way: do you have any idea what is in the Dodd-Frank financial regulations? Do you have any incentive to make your voice heard? Do you think Wall Street knows, and do you think they’re making their voices heard?

    See “public choice economics” and “regulatory capture” for the academic research backing that up.

    In my view, the most heavily regulated industries in this country are banking/finance, health care, and education.

    And the industries that are destroying our economy are banking/finance, health care, and education.

    Maybe that is just a coincidence. And maybe if Congress and the President got together they could change regulations and make sure the bankers weren’t playing “heads we win, tails you lose” any more, doctors were paid based on whether or not they made their patients healthier, and teachers were paid based on whether or not their students learned something.

    I think even if it was possible for all that to happen, 20 years from now we’d slip back into the same broken system we have now.

  2. Maybe I’m missing something, but this looks like a nihilistic rant. I learned nothing. Did you see the part “let’s do this in the spirit of scientific investigation (not debate teams!), in which we are all looking for the truth together and not defending any territory or tribe”?

    1. Many people smarter than me have come to same conclusion that I have: We tried major deregulation and it failed! The smoking gun on our banking/financial meltdown is deregulation. I must be missing something, cuz this seems obvious.

    2. I don’t see where I misstated the conservative position: conservatives hate government regulation bureaucracy and believe that regulation needs to come from within the system via private watchdogs and market feedback loops.
    ==> As I said, this theory makes a lot of theoretical sense to me and I am attracted to it, but it has little chance of succeeding. I contend its intrinsically worse than bureaucratic government regulation. In the end, it comes down to choosing which flawed system is better for the greater good of society: a) industry self-regulation and market auto-regulation, which requires industry to temper profits and regulate itself (yeah, right) or that the markets will naturally regulate via feedback loops, b) government regulation, which is historically bloated, bureaucratic, and sometimes gets too close to the industry they are regulating (i.e. corruption). I strongly believe that #2 is easier to fix (and has had many historical successes), while #1 is laughable (even though its a better idea on paper).

    In the end, I believe that there are three camps in the anti-regulation ideologies:
    1) “Theoretical academics”, willing to experiment with society at the expense of ordinary citizens lives (see cigarettes). While their intent is good, the stakes are too high. This camp is safe from the downside of their mistakes because they are educated, easily employed, and reasonably wealthy. I think you fall into this camp. 😀
    2) “Every man for himself”-ers who believe that the world is a fight game: the strong survive and the weak work for the strong. They don’t believe that the govt has a role in protecting its citizens from biz. Ironically, this group is often in favor of spending large amts of $ to protect us from external enemies. I content that these people like to use govt to protect them from things THEY are afraid of, but not things they think they are immune from, i.e. selfish bastards.
    3) GOPers whom hate government to a point of being irrational. This is a relatively new development in the GOP platform and primarily a tactic to win elections, i.e. the best defense is a strong attack.

    I believe that our difference of opinion comes down to “who’s job is it to protect citizens from business.” I’ve heard many intelligent libertarians (like yourself) speak about this topic with great passion, and each time I come to the same conclusion: you are gambling with the lives of a lot of people with a theory that has been untested on a large scale. My empathy for our less fortunate and unprotected citizens trumps my distaste for government bureaucracy.

  3. RE: spirit of scientific debate:

    I feel like you’re not looking at the science– again, lookup the research on regulatory capture, and, more generally, the whole field of public choice economics.

    It is easy to say “Perfect Regulation Will Solve Everything.” My point is that regulation is never perfect, and attempts to regulate often lead to huge failures that REALLY hurt ordinary people. I like Arnold Kling’s suggestion to change the system so that failures are small and frequent instead of very large and infrequent. Silicon Valley is a great example of a lightly regulated “fail fast” culture that works pretty darn well. I think decentralized systems are more robust.

    I agree with your characterization of different types of conservatives.

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