A bad year for Fiscal Conservatives? Or not so much?

Conservative candidates suffered humiliating losses in this year’s elections. Fiscal Conservatives such as Lincoln Chafee lost.  Democrats threaten to govern from the center, turning conservatives into a minority of the minority. Milton Friedman, the patron saint of free-market economics, died on Nov. 16. Just yesterday, Sen. Charles E. Schumer (D-N.Y.) declared to the New York Daily News editorial board that “Reaganomics is dead.” 

Many would thus assume that this has been a bad year for fiscal conservatives, but this simply isn’t the case.  While all Republicans had a lousy year, fiscal conservatives gloom was lost on Election Day, when the GOP lost control of Congress.

The last few years of the Bush administration and its rubber stamp Congress have been marked by large tax cuts to the rich and very much so increased spending.  This is not fiscal conservatism.  Follow me to a simple household example.  Your parents give you a $20 dollar allowance.  For the sake of example, this is the tax you collect from your parents.  You then spend money on programs, that is at the mall.  If you calculatedly give your parents a tax break, by reducing you allowance to $10, (like the Bush tax cuts) and then at the same time increase spending at the mall, or in real terms agenda programs and wars, you end with large deficits.  That is to say, if you spend more then you bring in; you destroy all the ideals of fiscal conservatism. 

While the coming of the devils, (the newly elected Democratic majority) must seem like a horror to fiscal conservatives, in truth the new Congress will be much more in line with fiscally conservative views.  Democrats have for ages been labeled as over spenders, who increase too many taxes.  However there has been a shift to the right in the mainstream Democratic economic platform.  For example there is a group of Democratic House freshmen who won seats in conservative districts, including the Florida seat that was held by disgraced Rep. Mark Foley, and Tom DeLay’s former seat in Texas are much more fiscally conservative then the Republicans they replaced.  Further mainstream Democrats have made many promises to balance the budget and work to reduce the debt, most likely via reductions in the Bush tax cuts, and Bush spending on Iraq and other programs, similar to previous Republican platforms.  Fiscally conservative Republicans such as Lincoln Chafee and Olympia Snow have been abandoned by their party.  The small government and limited spending fiscal conservatives have been abandoned by the Republicans as the entire partisan political system has shifted to the right over the past twenty years, and now fiscal conservatives can find themselves more in line with Democrats. 

Also with the GOP now in the minority, they will have to return to their “budget hawk,” fiscally conservative role, only further benefits fiscal conservatives.  “Now that Republicans are in the opposition, they’re going to be the most saintly budget hawks you can imagine,” said American Enterprise Institute economist Kevin A. Hassett.  As soon to be former Speaker of the House, Dennis Hassett put it, “being in the minority requires increased fiscal responsibility.”  The point is, fiscal conservatives can look to a bright future because of the Democratic check to the Bush spending programs.

This was obviously a bad year for Republicans, but for Fiscal Conservatives the coming of the Democrats should be seen as a god send.

 

A look at ‘08

I will be spending the last few days of the semester examining the field for the Presidental nomination in 2008 in relation to Globalization.

 Today…Mitt Romney, your Republican Pro-Globalization Choice for President in 2008

Probable candidate for the Republican Presidental nomination, Mitt Romney has made many staff moves this week aimed at bolstering his Beltway Cred by hiring economic advisors.  One of the major challenges that has faced Romney is bolstering his “street cred” inside the Beltway that is showing the chattering politicos in the nation’s capital that he is ready to make a serious run for the White House.

Romney signed economic advisers R. Glenn Hubbard, N. Gregory Mankiw and Cesar Conda to his team in recent days.

R. Glenn Hubbard, dean of the Columbia University Graduate School of Business, and N. Gregory Mankiw, a scholar at the American Enterprise Institute, are both prominent Globalization and Free Trade writers.  Hubbard chaired Bush’s economic council from 2001 to 2003 and was succeeded by Mankiw, who served until 2005. Mankiw stirred up a controversy for the president in 2004 when he said the outsourcing of jobs was “probably a plus” for the U.S. economy in the long run. Many economists agreed with that view, but the comment revealed Mankiw’s lack of political instincts.

This I think shows Romney’s campaign goal of establishing himself as the Pro-Globalization candidate despite the potential political costs.  This will separate him from other leading Republican cantidates such as John McCain and Rudy Guilianni. 

Romney has said he will announce his future intentions in early 2007. Everything points to an announcement of a presidential bid at that time, and looks like he will be the pro-Global candidate of the next presidential cycle.

Kaine continues Globalization excellence…

Last week, Virginia Governor Tim Kaine, visited various European countries to discuss trade deals with Virginia.  Governor Kaine encouraged moving jobs and products to Virginia and touted Forbes magazines recent findings that “Virginia is the best state for business.”  What we have here is a Democratic Governor acting on globalization.  Tim Kaine has become the model politician on Globalization by recognizing the cost of globalization, but outweighing them with the benefits.  It’s not fair to assume that there isn’t’ a cost, but it is unpractical to not reap the benefits. 

Republican’s buddy, Milt, dies.

Economist Milton Friedman Dies at 94

Milton Friedman, the Nobel Prize-winning economist who advocated an unfettered free market and had the ear of three U.S. presidents, died Thursday at age 94.  Friedman died in San Francisco, said Robert Fanger, a spokesman for the Milton and Rose D. Friedman Foundation in Indianapolis. He did not know the cause of death.  “Milton’s passion for freedom and liberty has influenced more lives than he ever could possibly know,” said Gordon St. Angelo, the foundation’s president and CEO, in a statement. “His writings and ideas have transformed the minds of U.S. presidents, world leaders, entrepreneurs and freshmen economic majors alike.”  In more than a dozen books, a column in Newsweek magazine and a TV show on PBS, Friedman championed individual freedom in economics and politics. The longtime University of Chicago professor pioneered a school of thought that became known as the Chicago school of economics.  His theory of monetarism, adopted in part by the Nixon, Ford and Reagan administrations, opposed the traditional Keynesian economics that had dominated U.S. policy since the New Deal. He was a member of Reagan’s Economic Policy Advisory Board.  His work in consumption analysis, monetary history and stabilization policy earned him the Nobel Prize in economics in 1976.  “He has used a brilliant mind to advance a moral vision _ the vision of a society where men and women are free, free to choose, but where government is not as free to override their decisions,” President Bush said in 2002. “That vision has changed America, and it is changing the world.”  Friedman favored a policy of steady, moderate growth in the money supply, opposed wage and price controls and criticized the Federal Reserve when it tried to fine-tune the economy.  A believer in the principles of 18th century economist Adam Smith, he consistently argued that individual freedom should rule economic policy. Outspoken and controversial, Friedman saw his theories attacked by many traditional economists such as Harvard’s John Kenneth Galbraith.

Failed lessons in History

Seems our wise source on Globalization has some comments on the War in Iraq.

November 8, 2006

Tolerable or Awful: The Roads Left in Iraq
New York Times, THOMAS L. FRIEDMAN

“Our only two options left today in Iraq are “tolerable” and “awful.” “Good” is no longer on the menu. When you read stories from Iraq saying that all we need to do is get rid of all the police there, get one-third of the soldiers in the Iraqi Army to actually report to duty regularly, and replace all the ministers who are corrupt, you know why “good” is not on the menu anymore. It’s time to make a final push for the tolerable, and if that fails, quit Iraq and insulate ourselves and our allies from the awful. This can’t go on…The U.S. would also be able to extract itself from the Abu Ghraib type occupation syndrome and could start combating Islamist radicalism by being the best America rather than the worst.” Finally, Iraqi instability would push oil to $80 a barrel. That would mean more people buying hybrid cars and investing in alternative energy, so that we end our dependence on this region sooner. These are our real choices in Iraq now: tolerable and awful. It’s time we choose. No more expending lives and treasure for nothing good. The only way we can pursue good in the world again is by either shrinking our presence in Iraq, if Iraqis will step up, or leaving entirely, if they won’t.

What the heck? Leave Iraq unstable for our own economic and environmental gain? You’ve got to be kidding me. Here is where an economic journalist obviously failed history class. No matter how opposed you are the war in Iraq, or even if you think we should get out, at least understand that history dictates that if we leave now, we will only be creating a larger problem for our grandchildren. I was against the war in the beginning, I am still against the war, however the change need now, is change in how we go about things in Iraq. I realize that the cost in both dollars and lives rises every day, and something needs to be done to fix this. Perhaps with a change in the Congress new ideas will come about. However, if we throw our hands up and completely give up now, we only create a much larger problem for the future.

THE GEM!!!

Not only does my expert study matter, but Ben Bernake Chairmen of the Federal Reserve agrees with my conclusions!!!

“Further progress in global economic integration should not be taken for granted, however. Geopolitical concerns, including international tensions and the risks of terrorism, already constrain the pace of worldwide economic integration and may do so even more in the future. And, as in the past, the social and political opposition to openness can be strong. Although this opposition has many sources, I have suggested that much of it arises because changes in the patterns of production are likely to threaten the livelihoods of some workers and the profits of some firms, even when these changes lead to greater productivity and output overall. The natural reaction of those so affected is to resist change, for example, by seeking the passage of protectionist measures. The challenge for policymakers is to ensure that the benefits of global economic integration are sufficiently widely shared–for example, by helping displaced workers get the necessary training to take advantage of new opportunities–that a consensus for welfare-enhancing change can be obtained. Building such a consensus may be far from easy, at both the national and the global levels. However, the effort is well worth making, as the potential benefits of increased global economic integration are large indeed.“

This all goes back to our Govenor Tim Kaine’s stance, which I previously blogged about. While we can’t control everything about globalization, our polcies here in the United States should reconize globalization for what it is, embrace it, but not forget those who give up jobs and growth for the rest of us. Also, I think I have found a good way to organize my expert study, tell me what you think of the outline.

I. Discuss the breakdown of United States politicans on the issue of Globalization, suggesting politically why they fall either way.

II. Discuss the points argued by the two sides and arguements used.

III. Show how neither side is 100% right, and how they are actually not nearly polarized as some would beleive.

IV. Discuss how the two sides can become the policy makers Bernake advocates for.

Lost?

I feel like I have a bunch of reserach, and a lot of ideas and points to make for this expert study but with no clear way to do so.  Any ideas?

Does any of this matter?

The Nov. 10th Business Week, in a commentary piece titled, “Can Anyone Steer This Economy?” challenges 110th Congress Democrats to affect any change in our nations economic policies. “Don’t expect to have levers here at home to control globalization. Imports are now 17% of U.S. GDP,” it lectures; “foreign investors now finance 32% of domestic investment, four times more than a decade ago. Now many of the levers affecting the U.S. economy are located not in Washington but in Beijing, London, and even Mexico City.” So does my expert study matter? Can US politicians stop globalization? Probably not. But they can embrace it in such a fashion that leads to its growth, while ensuring growth for all Americans not just the rich. This is the general conclusion of my expert study – that American politicians who are polarized on either side of the globalization issue need to recognize that they really actually agree quite a bit with the other side and come to a middle ground so that we all can benefit. Globalization and free trade are great, especially if you offset the human costs.

Elect Libertarians????

Or at least maybe that’s what Hart thinks we should do? As my previous posts clearly relate, the Democrats tend to be at least in campaign rhetoric terms against globalization. However Hart pointed out to me that many Republicans are as well. Hart cited the “Made in America” push by many conservatives. It is true, that even Republicans and conservatives are sometimes politically against globalization. Paleo-conservative American opponents of globalization, such as Pat Buchanan, argue against globalization from a point of view of economic nationalism. Against outsourcing, Republican opponents of globalization phrase their opposition in nativist and xenophobic terms. The industrialized world must protect itself against the Global South, Buchanan argues, because the so-called Third World is racked with disease and the peoples there lack a Western culture. Economic globalization, therefore, will result in the “Death of the West”. In all reality however, I believe that Democrat and Republican alike use globalization, which is really a non-issue to fire up partisan rhetoric. This is puzzling as even we, the motivated students of Professor Greenlaw’s Globalization seminar have barely grasped globalization. So why then, can it be used so well politically? Why is it the issue that ousted Mike Dewine in Ohio? The truth is, the people of this country are highly uneducated about globalization, and perhaps if they better understood it; globalization as a polarizing issue in elections would cease to exist. Maybe then we could actually progress forward, Democrat and Republican together, to increase our economic opportunities while realizing the real life costs that have been driving voters

Another Research Review

Take This Job and Ship It: How Corporate Greed and Brain-Dead Politics Are Selling Out America. By: Senator Byron Dorgan

Go figure, a US Senator’s critique of Globalization misses the core of the anti-Globalization argument. Shortly before this years election, U.S. Sen. Byron Dorgan (D-N.D.) published Take This Job and Ship It, a serious public attack on “free-trade” policy, which is unique for a sitting Federal elected official in the post-1989 period of globalization, de-industrialization, and financial bubbles. Despite his clear and serious intent, Senator Dorgan misses the core of globalization—the worldwide erosion of productivity, technological and industrial progress, and advanced economic infrastructure, paired with the cost to constituents here in America, as he focuses mostly on corporate take over of the world. Senator Dorgan’s book is an earnest attack on the de-industrialization crisis which he claims has wrecked the U.S. economy, without using the best arguments and without presenting solutions. He claims that his book is an attempt to document the wreckage “to make the facts match,” not merely to wave hands at it politically, yet he advocates for rapid Congressional policy against free trade. The book, despite impressive breadth of research, is not intended as an academic review; it is written in a tone of populist agitation, and its intention is Congressional action. It continues with the theme we’ve recently seen of fiery political rhetoric, without a real compressive plan to actually effect change. My expert study will hopefully bring about a better stance for politicians to take.