Friday, February 5, 2010

Inside the Whale

The theme of underliberalskin is partly a comment on life as a conservative lived in the heart of liberal country (Cambridge, MA, USA). In this sense it has something in common with Orwell's "Inside the Whale" (with no serious attempt to compare myself to Orwell). And in part it is a reflection on the events that have led the "educated classes" so horribly astray in the last half century. That is, I want to explain as best I understand what are the irritations, the bogeymen and, most of all, the daydreams of the everyday liberal. In that regard, I will return again and again to (a) the triumph of von Mises, Hayek, Friedman and the Chicago school of economics; (b) the ascent of Ronald Reagan; (c) the fall of communism; (d) the attempt by Al Gore to steal the presidential election in 2000 and last (e) the all-encompassing desire to be the one who "saves the planet."

To get the narrative rolling, I start with one fact. As documented by Yergin and Stanislaw in "The Commanding Heights," the essential failure of Soviet communism was the abolishment of the price system. Aside from undermining the relationship between consumers and producers, the command economy undermined the relationship of businesses to businesses as well. When one business (i.e. one Soviet production unit) contacted another one to obtain raw materials, manufactured items, etc. required for their business and their product, there was no consistent method for determining what one business should charge another business. The entire close-knit fabric of production came unraveled. As a result, when the Soviet economy was fully examined after its fall, it was discovered that the gross domestic product of the entire Union (with some 300 million inhabitants) was comparable to that of Denmark (5 million) or South Korea (35 million). The utter failure of the world's premier command economy is now documented and theoretically, philosophically understood in depth. This is the origin of the Chicago School of Economics. We are living in a period where economic theory represents a footnote to the Chicago School and where liberal philosophy is entirely based on exceptions to the rules of price as information and freedom as prosperity.

Margaret Thatcher, in her moment of the Lady is not for turning, famously held up a copy of Hayek's "Road to Serfdom" and exclaimed "this is what we believe!"


Thursday, February 4, 2010

Paul Ryan's revolution

There was never really a credible argument to be made that Republicans and conservatives had no ideas with regard to how to solve problems with healthcare, taxes, and the fiscal train-wreck that the nation's entitlement programs are heading toward. Individual private Social Security accounts, lowering business, capital gains and individual income tax rates, capping medicare payments for those still ten years or more away from retirement, providing a health insurance tax credit, etc. etc., are thoughts that conservatives have been thinking for years. The amazing thing though about Paul Ryan's H.R. 6110 (introduced with Tom Coburn and others in the Senate) is that it boldly puts the ideas all into one place. If ever the word audacious was appropriate for our political world this is surely the time.

In short (and believe me, this is short), H.R. 6110 institutes a "qualified health insurance" tax credit, reforms the Medicaid and SCHIP programs, reforms Medicare and makes it fiscally sound, (re-)introduces private Social Security accounts, eliminates the death tax, allows taxpayers to opt into a simplified system with only two tiers and, aside from the healthcare credit, essentially no deductions or credits, fully repeals the alternate minimum tax, eliminates taxes on interest, capital gains and dividends, reforms the business tax and slashes spending overall. Oh and by the way it insures the 47 million Americans currently without coverage and sends a nice basket of fresh fruit and chocolates to every household in the nation.

As Glenn Reynolds would say, read the whole thing.

Here's the point: it is now all on record. It's all in one place. You ask us for ideas, this is what we want.

Let me try to explain why "audacious" does not sufficiently cover this situation. Conservatives have been trying to get each of these things through Congress for years and have, in the best of political times seen their legislation die a slow death (think Bush and Social Security reform).

Question: is this a good idea ? politically, I mean. This bill contains cuts to Medicare, private Social Security accounts, repeal of the death tax. These have all been transformed into Reptilian bogeymen over the past twenty years. You can be sure that some Democrats in some districts will be waving this bill like a bloody red flag before November: "HEEERRRREE is what they want to do to your medicare !!" "WHHERRRRE will be your precious monthly retirement check the next time the market crashes ???" From thirty thousand feet it looks like a target-rich zone.

But I, for one, don't care. I like it. It has been said and it is good. I would love to have been in the room when Nancy Pelosi first laid eyes on the "Findings and Purpose." Surely she laughed that annoyed-civil-servant laugh of hers and said: "they've got to be kidding." But it had to bring a little clammy coldness to her hands and feet to think that "they actually have the temerity to ask for all this stuff ???"

Additional thoughts here, here and here. Thoughtful (albeit errant) post from the proverbial other side of the aisle here.