David Frum, "When did the GOP Lose Touch With Reality?"

• BoatShoes

  David Frum (lifelong republican) has a new piece that I think explains largely how I feel about the GOP. I was raised in a small business family of Republicans and yet what is coming out of the Republican Party these days doesn't sound like the party of ideas in the William F. Buckley days.
  
  http://nymag.com/print/?/news/politics/conservatives-david-frum-2011-11/
  
  It's too long to post the whole article but I thought I'd post some.
  

  It’s a very strange experience to have your friends think you’ve gone crazy. Some will tell you so. Others will indulgently humor you. Still others will avoid you. More than a few will demand that the authorities do something to get you off the streets. During one unpleasant moment after I was fired from the think tank where I’d worked for the previous seven years, I tried to reassure my wife with an old cliché: “The great thing about an experience like this is that you learn who your friends really are.” She answered, “I was happier when I didn’t know.”
  
  It’s possible that my friends are right. I don’t think so—but then, crazy people never do. So let me put the case to you.
  
  
  
  I’ve been a Republican all my adult life. I have worked on the editorial page of The Wall Street Journal, at Forbes magazine, at the Manhattan and American Enterprise Institutes, as a speechwriter in the George W. Bush administration. I believe in free markets, low taxes, reasonable regulation, and limited government. I voted for John *McCain in 2008, and I have strongly criticized the major policy decisions of the Obama administration. But as I contemplate my party and my movement in 2011, I see things I simply cannot support.
  
  

  Backed by their own wing of the book-publishing industry and supported by think tanks that increasingly function as public-relations agencies, conservatives have built a whole alternative knowledge system, with its own facts, its own history, its own laws of economics. Outside this alternative reality, the United States is a country dominated by a strong Christian religiosity. Within it, Christians are a persecuted minority. Outside the system, President Obama—whatever his policy *errors—is a figure of imposing intellect and dignity. Within the system, he’s a pitiful nothing, unable to speak without a teleprompter, an affirmative-action *phony doomed to inevitable defeat. Outside the system, social scientists worry that the U.S. is hardening into one of the most rigid class societies in the Western world, in which the children of the poor have less chance of escape than in France, Germany, or even England. Inside the system, the U.S. remains (to borrow the words of Senator Marco Rubio) “the only place in the world where it doesn’t matter who your parents were or where you came from.”

• Footwedge

  I can't stand David Frum. He...of "Bush can do no wrong" fame. Same verbal diarhea as Clifford Mays...with the mindset of
  the "more people we kill, the more lives we save" nonsense....as it relates to war. Frum is a bizarro world chickenhawk wacko to the nth degree. As are the majority of writers at the Weekly Standard.
• Cleveland Buck

  

  Frum is just upset that his socialist, militant wing of the party is losing control and there are more and more libertarians infiltrating the GOP.
• dwccrew

  

  More like when did all of DC lose touch with reality. Answer......long, long ago.
• gut

  dwccrew;997382 wrote:More like when did all of DC lose touch with reality. Answer......long, long ago.

  Pretty much when they discovered the depths of debt financing are apparently unlimited. That way both Dems and Repubs could win - Dems could fund their socialist programs and Repubs got to cut taxes.
  
  One wonders how the US ever survived without all these entitlement programs. It must have been an awful, awful place to live!
• believer

  

  gut;997469 wrote:One wonders how the US ever survived without all these entitlement programs. It must have been an awful, awful place to live!

  It was terrible because the people had to earn their own living and rely on each other rather than Uncle Sugar to survive.
• BoatShoes

  Cleveland Buck;994617 wrote:Frum is just upset that his socialist, militant wing of the party is losing control and there are more and more libertarians infiltrating the GOP.

  I just wish there was a way for you to experience how awful a libertarian United States would be. Libertarianism is just as crazy as marxism. You won't get marxism without tyranny and you won't get libertarianism without anarchy.
  
  I used to do missionary work in Haiti back in the day and that is what the world is like in libertarian societies. There, The schools are privately run, so they cost too much and teach almost nothing. Sanitation is privatized: Trash gets collected regularly among the rich but not in the shantytowns. Medical care is privatized: The rich get good care, the poor pay steep prices for old medicines. Public transportation is privatized: That's why most Haitians walk and carry their goods on their heads. And nothing, but nothing, is regulated. 60% of the population is under 25 because, as Hobbes warned, life there is nasty, brutish and short.
  
  There, most of the populace gets to stare through barbed wire fences watching the rich play on their cruise ships and private beaches.
  
  The best way to go is a regulated capitalist economy with a strong safety net and a government that responds effectively to the fluctuations of the business cycle supported by a system of taxation wherein wealthier individuals pay a greater proportion to support public expenditures as Adam Smith, the original capitalist, (and originator of progressive taxation in the minds of some economists), believed.
  
  "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion." Wealth of Nations, Book Five, Chapter II.
  
  You've said before Smith was great but there have been men after him...nutbag ideologues like Marx and Hayek who were wrong about everything.
• BoatShoes

  And let me just say before someone chimes in "countries with welfare states fail too look at Europe!" If you look at the reporting on the topic people keep talking about "run away social spending" as the cause but it's just not true. Both Spain and Italy are in deep shit now and their debt as a percentage of GDP had been declining since 1996 and Spain was even running a budget surplus in 2007 before the financial crisis. Only Greece's economy was profligate and its size about the size of a large City in America. The problem is of course the Creditor nation's like Germany believing falsely that you should use contractionary fiscal policy in response to contractions in private spending. Which is of course wrong. Now interest rates are up even in fiscally sound countries like Finland and Austria. The lesson; even if you're fiscally responsible during the good times, the deficits that arise during bad times cannot be prevented if the incorrect fiscal and monetary policies are applied during those bad times!
  
  This is Jean Claude-Trichet, head of the ECB in June 2010:
  
  "the idea that austerity measures could trigger stagnation is incorrect...In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation. I firmly believe that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”
  
  And here is the Obama saying the same nonsense during the debt ceiling debacle.
  
  “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”
  
  The combination of austerity-for-all and central bankers morbidly obsessed with inflation makes it essentially impossible for debtors (be they homeowners, students, our countries) to escape from their debt trap and is, therefore, a recipe for what we have happening before our very eyes. In Europe it's sovereigns, in America it's homeowners and college graduates. We need more expansionary fiscal and monetary policy in both Europe and America.
  
  But, the national discourse is being dominated by deficit disciplinarians and inflation obsessives. And the worst part is they're largely being driven by political ideology rather than what we know will work.
• Cleveland Buck

  

  BoatShoes;997689 wrote:I just wish there was a way for you to experience how awful a libertarian United States would be. Libertarianism is just as crazy as marxism. You won't get marxism without tyranny and you won't get libertarianism without anarchy.
  
  I used to do missionary work in Haiti back in the day and that is what the world is like in libertarian societies. There, The schools are privately run, so they cost too much and teach almost nothing. Sanitation is privatized: Trash gets collected regularly among the rich but not in the shantytowns. Medical care is privatized: The rich get good care, the poor pay steep prices for old medicines. Public transportation is privatized: That's why most Haitians walk and carry their goods on their heads. And nothing, but nothing, is regulated. 60% of the population is under 25 because, as Hobbes warned, life there is nasty, brutish and short.
  
  There, most of the populace gets to stare through barbed wire fences watching the rich play on their cruise ships and private beaches.
  
  The best way to go is a regulated capitalist economy with a strong safety net and a government that responds effectively to the fluctuations of the business cycle supported by a system of taxation wherein wealthier individuals pay a greater proportion to support public expenditures as Adam Smith, the original capitalist, (and originator of progressive taxation in the minds of some economists), believed.
  
  "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion." Wealth of Nations, Book Five, Chapter II.
  
  You've said before Smith was great but there have been men after him...nutbag ideologues like Marx and Hayek who were wrong about everything.

  What are you talking about? There is almost no government in Haiti. Anarchy is not libertarianism. Libertarians believe that you need a government to protect property rights (and therefore civil rights). No one protects property rights in Haiti. There is nothing libertarian about it. You can't have a free market economy if no one protects property rights.
  
  I'm not even opposed to progressive taxation or safety nets, although those would be done best at the state level where people have more control over their elected officials. Government safety nets just have to be as general as possible, because once the government gets involved in specific industries they distort the market and drive up prices and drive down quality for everyone.
  
  You can call guys who disagree with your mainstream education "nutbag ideologues", but guys like Mises and Hayek have been absolutely right as to the unsustainability of centrally planned economies like we currently have.
• Cleveland Buck

  

  BoatShoes;997745 wrote:And let me just say before someone chimes in "countries with welfare states fail too look at Europe!" If you look at the reporting on the topic people keep talking about "run away social spending" as the cause but it's just not true. Both Spain and Italy are in deep shit now and their debt as a percentage of GDP had been declining since 1996 and Spain was even running a budget surplus in 2007 before the financial crisis. Only Greece's economy was profligate and its size about the size of a large City in America. The problem is of course the Creditor nation's like Germany believing falsely that you should use contractionary fiscal policy in response to contractions in private spending. Which is of course wrong. Now interest rates are up even in fiscally sound countries like Finland and Austria. The lesson; even if you're fiscally responsible during the good times, the deficits that arise during bad times cannot be prevented if the incorrect fiscal and monetary policies are applied during those bad times!
  
  This is Jean Claude-Trichet, head of the ECB in June 2010:
  
  "the idea that austerity measures could trigger stagnation is incorrect...In fact, in these circumstances, everything that helps to increase the confidence of households, firms and investors in the sustainability of public finances is good for the consolidation of growth and job creation. I firmly believe that in the current circumstances confidence-inspiring policies will foster and not hamper economic recovery, because confidence is the key factor today.”
  
  And here is the Obama saying the same nonsense during the debt ceiling debacle.
  
  “Government has to start living within its means, just like families do. We have to cut the spending we can’t afford so we can put the economy on sounder footing, and give our businesses the confidence they need to grow and create jobs.”
  
  The combination of austerity-for-all and central bankers morbidly obsessed with inflation makes it essentially impossible for debtors (be they homeowners, students, our countries) to escape from their debt trap and is, therefore, a recipe for what we have happening before our very eyes. In Europe it's sovereigns, in America it's homeowners and college graduates. We need more expansionary fiscal and monetary policy in both Europe and America.
  
  But, the national discourse is being dominated by deficit disciplinarians and inflation obsessives. And the worst part is they're largely being driven by political ideology rather than what we know will work.

  They can't borrow anymore. I know you love the idea of printing money and robbing the poor and middle class of their purchasing power, but that won't work either. We have printed trillions for them and it still doesn't work.
  
  I just have a question for you, how sustainable is an economy based on borrowing money to spend on consumer goods that do not produce the wealth which would enable us to pay back the money we borrowed?
• gut

  BoatShoes;997745 wrote:We need more expansionary fiscal and monetary policy in both Europe and America.

  Are you not aware of the historically low interest rates, even quantitative easing, being pushed by central banks around the globe? Monetary policy is about as "expansionary" as it gets. Fiscal policy being expansionary is kind of an oxy-moron, the idea that you tax or take on debt to spend more is expansionary makes no sense. Why has Keynesian economics failed recently but, arguably, worked in the past? The answer likely is more subtle and nuanced within policy and expectations than the actual tax/spend record.
  
  Keep in mind, also, that the Keynesian model was never expected to work because "rational" (an obvious bias in economic assumptions!) people offset "stimulus" effects in expectation of future tax increases, which never really happened. So I think you can say Keynesian economics will work sometimes or in the short-run, but it's not sustainable nor can it be a matter of policy. Fool me once sort of thing. Expectations are such that deficit spending isn't going to work because people now see that as unsustainable and are taking actions that counter the "stimulus", as predicted with classic theory.
• sleeper

  

  The GOP lost touched of reality when they started acting like Democrats.
• gut

  My opinion is capitalism is far and away the best. However, "true" capitalism can't exist any more than "perfect information" (a central tenet in many economic theories) can. Therefore, an optimally functioning capitalist economy needs to remove frictions and information asymmetries assumed not to exist in theoretical models. And so that would be your justification/need for some level of govt intervention, which would dictate a focus on correcting frictions (govt seems mostly to only add more) and information/transparency issues. Big part of the problem, however, is there needs to be extensive cost/benefit analysis but the govt typically responds with overboard knee-jerk reactions (in both directions).
  
  Also, govt needs to be focused on infrastructure (broad definition) that will be needed for tomorrow's leading industries. This is different from propping-up an industry or giving subsidies (the typical or modern approach) - internet and telecom might be a simple illustrative example. It's why I support green initiatives while disagreeing with how our govt has executed there.
• Footwedge

  believer;997474 wrote:It was terrible because the people had to earn their own living and rely on each other rather than Uncle Sugar to survive.

  ....When boys were boys and men were men....we could sure use another one like Herbert Hoover again.
  
  Didn't need no welfare state....everybody pulled his weight. Gee our old LaSalle ran great....those were the days.
• fish82

  

  Footwedge;998338 wrote:....When boys were boys and men were men....we could sure use another one like Herbert Hoover again.
  
  Didn't need no welfare state....everybody pulled his weight. Gee our old LaSalle ran great....those were the days.

  LOL....I knew that was you! That explains your constantly crabby disposition.
• believer

  

  Footwedge;998338 wrote:....When boys were boys and men were men....we could sure use another one like Herbert Hoover again.
  
  Didn't need no welfare state....everybody pulled his weight. Gee our old LaSalle ran great....those were the days.

  Good one! lol Ironically those words in the All in the Family theme song ring true.
• jmog

  BoatShoes;997689 wrote: The best way to go is a regulated capitalist economy with a strong safety net and a government that responds effectively to the fluctuations of the business cycle supported by a system of taxation wherein wealthier individuals pay a greater proportion to support public expenditures as Adam Smith, the original capitalist, (and originator of progressive taxation in the minds of some economists), believed.
  
  "It is not very unreasonable that the rich should contribute to the public expense, not only in proportion to their revenue, but something more than in that proportion." Wealth of Nations, Book Five, Chapter II.
  
  You've said before Smith was great but there have been men after him...nutbag ideologues like Marx and Hayek who were wrong about everything.

  You just described what most conservatives want the government to be, except maybe if you took the word "strong" out of safety net. But other than that this is excactly what most conservatives want from their government.
  
  Some safety/social measures, enough for a civilized society, but not nearly the safety net we have now where you can go without a job for 2 years and still get paid by the government.
• Footwedge

  fish82;998520 wrote:LOL....I knew that was you! That explains your constantly crabby disposition.

  Who's the Meathead? You or me?
• fish82

  

  Footwedge;1003297 wrote:Who's the Meathead? You or me?

  I'll take one for the team and be Meathead.
• Bigdogg

  fish82;1003816 wrote:I'll take one for the team and be Meathead.

  
  Yes the same team.
• stlouiedipalma

  believer;1002416 wrote:Good one! lol Ironically those words in the All in the Family theme song ring true.

  I'm surprised that the Republican National Committee hasn't bought that song to use on their campaign advertising. What with all the talk of "taking back our country" this song would fit them to a "T". Yessum, let's go back to the good old days, where things weren't quite so "fuzzy" and everybody knew their place.
• fish82

  

  stlouiedipalma;1006090 wrote:I'm surprised that the Republican National Committee hasn't bought that song to use on their campaign advertising. What with all the talk of "taking back our country" this song would fit them to a "T". Yessum, let's go back to the good old days, where things weren't quite so "fuzzy" and everybody knew their place.

  Not to mention 4.5% unemployment.
• BGFalcons82

  

  fish82;1006145 wrote:Not to mention 4.5% unemployment.

  I think you've hit on something, fish. If 3,000,000 more people quit looking for work, the Dept of Labor can gleefully report the unemployment rate is indeed 4.5%. Wait...don't stop there. If 7,000,000 more people quit looking for work and rely on Uncle Obama for their stipends and food stamps, then we'll be at full employment!!
  
  Happy days are here again
  The skies above are clear again
  So, Let's sing a song of cheer again
  Happy Times
  Happy Nights
  Happy Days
  Are here again!!
• believer

  

  BGFalcons82;1006583 wrote:I think you've hit on something, fish. If 3,000,000 more people quit looking for work, the Dept of Labor can gleefully report the unemployment rate is indeed 4.5%. Wait...don't stop there. If 7,000,000 more people quit looking for work and rely on Uncle Obama for their stipends and food stamps, then we'll be at full employment!!

  Don't forget Aunt Nancy Pelosi. Always remember that unemployment benefits boost the economy.
• BoatShoes

  gut;997812 wrote:Are you not aware of the historically low interest rates, even quantitative easing, being pushed by central banks around the globe? Monetary policy is about as "expansionary" as it gets. Fiscal policy being expansionary is kind of an oxy-moron, the idea that you tax or take on debt to spend more is expansionary makes no sense. Why has Keynesian economics failed recently but, arguably, worked in the past? The answer likely is more subtle and nuanced within policy and expectations than the actual tax/spend record.

  Well, the ECB is not being very expansionary. Hell they raised rates! Monetary Policy is near its wits end but there is more that could be done such as targeting nominal gdp or a higher inflation target. Even if you want to be a fiscal hawk right now you can still be more of a monetary dove. This is the position being taken by Greg Mankiw; Romney's economic adviser.
  
  Also, your statement about expansionary fiscal policy being an oxy-moron is incorrect. You've gotten the implications of ricardian equivalence wrong. This is not surprising as even the chief economist at the World Bank did. Truly a dark age of Macro is upon us. Even if you have full Ricardian Equivalence temporary deficit financed tax cuts or direct spending can increase economic growth in the short term without offsetting cuts in future expenditures or offsetting future taxes.
  

  Keep in mind, also, that the Keynesian model was never expected to work because "rational" (an obvious bias in economic assumptions!) people offset "stimulus" effects in expectation of future tax increases, which never really happened. So I think you can say Keynesian economics will work sometimes or in the short-run, but it's not sustainable nor can it be a matter of policy. Fool me once sort of thing. Expectations are such that deficit spending isn't going to work because people now see that as unsustainable and are taking actions that counter the "stimulus", as predicted with classic theory.

  Again this is wrong. Friedman-Schwartz showed that overtime inflation expectations, etc. can get built in and thus take away the relationship between unemployment and inflation...thus the stagflation of the late seventies. Then the rational expectations crowd came along and took this analysis too far.
  
  Ricardian Equivalence might hold that a permanent increase in government purchases would lead to an increase in permanent taxes, which would cause private consumption to fall by an equal amount. But even if a temporary increase in government investment were squandered say on building a 200 ft great wall of mexico or a giant statue of Barack Obama standard lifecycle models of consumptions (e.g., Ricardian Equivalence) do not predict a fully offsetting reduction in consumption.
  
  Thus, if consumers have perfect foresight, live forever, have perfect access to capital markets, etc., then they will take into account the expected future burden of taxes to pay for government spending. If the government introduces a new program that will spend $100 billion a year forever, then taxes must ultimately go up by the present-value equivalent of $100 billion forever. Assume that consumers want to reduce consumption by the same amount every year to offset this tax burden; then consumer spending will fall by $100 billion per year to compensate and any expansionary effect of the government spending would be wiped out.
  
  But suppose that the increase in government spending is temporary, not permanent — that it will increase spending by $100 billion per year for only 1 or 2 years, not forever. This clearly implies a lower future tax burden than $100 billion a year forever, and therefore implies a fall in consumer spending of less than $100 billion per year. So the spending program IS expansionary in this case, EVEN IF you have full Ricardian equivalence.
  
  And, there's no evidence in the markets that people now think our deficits are unsustainable and are starting to make offsets. Deficit spending in response to depressed private investment has worked every where it has been tried even in England in the 1930's-40's when government debt as a percentage of GDP was >200%
  
  
  
  NOTE: perhaps you might argue "Well Boatshoes the chance of government spending going down is close to zero...so ricardian agents will adjust in the future!"
  
  There is lots of evidence, just in the last couple years, that government spending can indeed be temporary...see the stimulus bill, cash for clunkers, etc. Those programs were phased out and they did increase GDP and lower unemployment.