Wednesday, October 28, 2009

The party of no party

It's a sign of the decadence of American politics that two smart people can basically agree almost completely about what direction the country should take, and yet still find themselves on opposite teams.  Truly, divide and conquer has succeeded.  Mark Thoma responds to Luis Zingales:

Luigi Zingales is worried that populist anger might fall into the hands of evil Democrats rather than Republicans who would, of course, use this strong populist force for good:

Pro-Market Populism Is GOP's Out, by Luigi Zingales, Commentary, ...[T]he financial crisis has created significant discontent. In a survey taken last December, 60% of Americans declared themselves "angry" or "very angry" about the economic situation.
If Republicans ignore this popular anger, as the party establishment did last autumn, they leave a powerful and potentially disruptive force in the hands of Democrats. The Democrats could channel popular anger into protectionism, 90% tax rates and onerous new market constraints.
In Republican hands, populism could become a strong force for positive change.

And Republicans would do this by adopting Democratic ideas:

The Republican Party has to move from a pro-business strategy that defends the interests of existing companies to a pro- market strategy that fosters open competition and freedom of entry.
While the two agendas sometimes coincide, they are often at odds. Established firms are threatened by competition and frequently use their political muscle to restrict new entries into their industry, strengthening their positions but putting their customers at a disadvantage.
If standing up for markets means -- running down the list above in order -- reducing market power, regulating financial markets, eliminating subsidies, breaking up too big to fail firms, providing a robust safety net, overcoming income inequality, fixing schools, increasing the availability of student loans, providing retraining, and providing health care, then the answer is Democrats.

When are we going to come around to the realization that there is not now, nor has there ever been, a pro-market, pro-competition party.  Along the way, the US has had a few truly reform minded officials who understood that markets are one of the greatest social technologies humankind has invented (up there with language and low-rider jeans subsidies) -- but we have never had a "pro-market" party.  One side wants private monopolies, and the other wants public monopolies.  No politician seeking re-election is in favor of competition, because competition benefits everyone diffusely, whereas the mechanism of re-election requires concentrated financial support.  It is utterly non-sensical to say that either the Democrats or the Republicans are going to defend free markets.  The nature of our political process makes championing the good of society an exercise in extinction. 

We must abandon tweedledee and tweedledum and found a pro-market party that takes publicly funded elections to be its first principle.  The two ideas are as revolutionary as they are inseparable.  Kinda like evolving a left hand to match the right.

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