Why conservative economics doesnt work




















In fact, markets would be more accurately visualized as a multiplicity of hands all engaged in a vast wrist-wrestling contest…with many of them controlled by governments. They use the term free market not as a philosophy to follow but as a rhetorical device—albeit a hugely effective one—to skew public opinion toward conservative economic policy. The question is not whether government should be involved in the marketplace.

It is. Progressives lack an easily explained, competing economic theory. We need a convincing progressive vision of what makes our economy work, and what would make it work better. Progressives are for fair markets. By fair, we mean markets that are balanced—with government as a counterweight when necessary—so that weaker individuals and organizations compete on a reasonably equal basis against more powerful ones.

It is balanced markets that do the most to lower prices, spur innovations, and encourage the kind of hard work that benefits all of society. Unbalanced markets weaken competition by giving special advantages to certain companies or specific industries. In an economy in recession with millions of people out of work through no fault of their own, unemployment insurance is the last line of defense for many families to keep up with the rent or mortgage and put food on the table.

The Census Bureau estimated in September that unemployment insurance helped keep 3. But with long-term unemployment—those out of work and actively seeking work for more than 27 weeks—reaching a record high of 46 percent of the unemployed in the spring of and falling only slightly since then as more people became unemployed—it is clear that 26 weeks of eligibility for normal unemployment insurance is inadequate.

Unemployment insurance benefits would need to be extended again in Extending unemployment insurance is also good economic policy that benefits everyone. When the economy slows down, unemployment insurance payments kick in to support consumer spending, helping to steer the economy back in the right direction. And unemployment insurance is one of the best policy tools available for stimulating economic activity. Tax cuts favored by conservatives are only one-fifth as effective at boosting the economy.

It is important to note that extending unemployment insurance for workers in the Great Recession was not a political matter until President Obama took office. Under President Bush, conservatives did not object to emergency unemployment compensation in June , nor did they object to extending emergency unemployment insurance in November as the recession deepened.

The first extension passed the House on a to 2 vote and the Senate 92 to 1. The second extension passed the House to 28 and the Senate on an unrecorded voice vote although the vote for cloture passed 89 to 6. Conservatives also supported unemployment benefit extensions under President Bush in , as well as during three other earlier recessions.

Part of the Recovery Act extended emergency unemployment insurance through December 31, As that deadline approached and unemployment still remained unacceptably high, Sen. Jim Bunning R-KY surprised his colleagues by blocking extension of unemployment benefits for days.

Bunning eventually capitulated in the eleventh hour, allowing reauthorization. Then, in June , Sen. Bunning was joined by several more of his conservative colleagues including Senate Minority Whip John Kyl R-AZ , who claimed most of his party shared the sentiment in again blocking the reauthorization of extended unemployment benefits.

Conservative obstruction resulted in the expiration of extended benefits for the long-term unemployed on June 2. Robert Byrd R-WV. Still, conservative obstruction forced unemployed workers to go seven weeks without benefits. The deficit spikes under the pledge because massive tax cuts lie at the center of its budget, which extends all expiring tax provisions and makes several big new cuts. Revenues would fall to Adam Hersh is an Economist at the Center.

Seth Hanlon , Michael Ettlinger. Download the full brief pdf Download to mobile devices and e-readers from Scribd The Great Recession dealt a crushing blow to the well-being of the American people, but our economy had actually been in a tough spot for many years.

Conservative economics in the 21st century The one-note economic strategy of President George W. Bush, of tax cuts focused on the wealthy, was an abysmal failure yielding the worst investment growth, employment growth and income growth in post-World War II U.

These policies and their failure were not surprising from a president devoted to a conservative, supplyside, economic philosophy. Conservative members of Congress have stuck to this tried-and failed economic approach.

Although the American Recovery and Reinvestment Act has created and saved millions of jobs, and warded off a second Great Depression, it would have been more effective but for changes that were made in the Senate to garner conservative votes.

Time after time since the beginning of , conservatives have delayed or stopped additional measures to improve the weak economy. Assistance for small business, employment training, support for private sector job creation, infrastructure investment and many other proposals to move the economy from weak recovery to strong growth have been blocked or delayed by conservatives in Congress.

Adam Hersh Senior Economist. Kalen Pruss. You Might Also Like. Sep 20, Scott Lilly. Oct 4, Louis Soares. Mar 21, Seth Hanlon , Michael Ettlinger. These politicians are often happy to reinforce this view by citing their business acumen and denigrating the experience — or lack thereof — of their opponents.

Think of Mitt Romney as multi-millionaire businessman versus Barack Obama, former community leader. In Australia, Prime Minister Malcolm Turnbull has positioned himself as a successful manager of economic transition in advance of the next election.

Would there actually be any evidence for the view that conservatives are better managers of the economy? The key performance indicators KPIs in this context are economic growth and, possibly, inflation. And you might think it obvious that conservatives outperform their progressive counterparts given their penchant for deregulation and tax cuts.

That would have been my guess before looking at the data. However, in a new paper , Princeton professors Alan Blinder and Mark Watson have actually looked at the data and they find a striking difference in the performance of the US economy under Democratic and Republican presidents. And the Democrats perform much better than their conservative counterparts. The ability of markets to fix our big economic problems on their own has also declined in recent decades. The right answer to a lot of the big regulatory questions of the s, such as on trucking, banking, and broadcasting, was "just get out of the way.

Today's big federal regulatory questions are about sectors where markets are hugely dysfunctional, either inherently or because of inevitable government intervention.

In health care, banking, education, and energy, "just get out of the way" isn't a suitable answer. But Republicans have come to view it as inherently un-conservative to develop mixed public-private solutions in these markets. Amusingly, Sullivan responds to my disavowal of the conservative title by insisting that I really am a conservative, whether I know it or not — a "conservative Whig ," to be specific.

No, I'm not. I've never quite understood Sullivan's attachment to the term "conservative. I don't believe those things and neither does Sullivan, so I'm not a conservative and neither is he. What members of the Whig party favored in England in the s doesn't enter into the question. I've had a lot of similar conversations over the years with libertarians who are upset that the left somehow got control of the term "liberal. The obvious question, then, is what business I have trying to tell the Republican Party to change or be less conservative.

After all, aren't Republicans entitled to first principles that differ from mine? They are. But conservatism isn't a first principle, and it increasingly runs counter to the stated first principles of Republicans.

I'm a utilitarian, so my first principle is "make people better off. But the justifications we most often hear for conservative economic policies are utilitarian ones — that they foster economic growth, create jobs, and make people wealthier. Those are empirical claims, and Republicans ought to change their policy prescriptions if they turn out to be false.



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