Good Capitalists versus Vindictive Republicans
by Neil H. Buchanan
"Sen. Scott calls for Biden to resign over inflation." It is a cliche to say that something "made me laugh out loud," but wow. Had anyone been nearby when I came across that Washington Post headline this morning, they would have been startled, to say the least. That Rick Scott is one of my home state's US senators made the bitter humor even more pungent.
Scott, the former governor of Florida and admitted Medicare fraudster, is now spending his time in Washington pushing a Contract on America-like wish list of regressive policy proposals that his leader Mitch McConnell is trying to ignore until after the midterms. That he views himself as qualified to speak about economic policy is amusing in and of itself, but the detachment from reality that has him calling for the President of the United States to resign because of relatively high inflation is beyond deranged. At this point in his presidency, Ronald Reagan had presided over much more inflation than Joe Biden has, but sure, Biden should resign!
This small story, which does not even qualify for the news cycle equivalent of fifteen minutes of fame, offers as good an opportunity as any to talk once again about the Republican Party's war on capitalism. Strap in.
The larger context, of course, is that Republicans have long claimed to be the party that knows how to manage the economy. The mainstream press lets them set the terms of the debate, and we end up with a self-reinforcing narrative in which reporters hound Democrats with questions about why they oppose the oh-so-obviously-correct Republican economic agenda. The country's economy does better under Democrats than Republicans, but why let reality get in the way?
Inflation is a gift that keeps on giving for Republicans. It is technical and confusing, but it annoys regular Americans and thus can become a theme of Republicans' attacks -- leading to Scott's inane attempt to grab attention. Republicans are, by their own admission, trying not to run on any specific policy proposals at all in this year's midterms. Even so, their railing about inflation is in its own category of non-specificity in that there is nothing in the Republican playbook that we could identify as their unspoken plan to fight inflation -- other than cutting taxes on the rich, which is their answer to everything.
That is, we know without having to ask what Republicans would do about, say, fiscal policy: if the President is a Democrat, push for deficit reduction; and if the President is a Republican, run up the deficit (and spend the funds unproductively). They claim not to want to use "activist" policy to guide the economy out of recessions or overheating, because that would mean the government was "picking winners and losers," or something. But what is "the Republican plan to reduce inflation," in the sense of what we know about Republicans' long-term concerns and commitments? Raise interest rates? Well, that is what Democrats advocate when inflation is out of control (and, for too many Democrats, even when it is not).
If we had any confidence in Republicans' supposedly core beliefs, repeated again and again by conservative think-tanks and academic economists who cycle in and out of Republican campaigns and administrations, we would expect them to conclude that inflation is currently a global problem on the supply side of the economy (as in supply chains), which would mean that laissez-faire should rule the day. Of course, that is not what they are saying.
Most of that, however, can be attributed to the most basic political hackery. Something bad is happening, so blame it on the other guys. Propose either vague solutions or none at all. Repeat as necessary. My concern here is with a deeper issue, which is that the party that views itself as the champion of capitalism -- bravely defending free markets from the socialistic hordes on the "radical left" -- either does not understand capitalism or simply does not much like it. Most likely, it is quite a bit of both.
More than a decade ago, I published a Verdict column with the provocative title, "Whatever
Happened to Making an Honest Buck? Wall Street Attacks Elizabeth Warren
Because She Believes in Capitalism More Than They Do." I have followed up on that idea from time to time, with the basic idea being that Republicans are in favor of people who call themselves capitalists rather than capitalism itself, whereas even the most progressive Democrats are in favor of making market capitalism work as well as possible.
Again, my home state's junior US Senator inadvertently captures the gist of the problem by defending his former company's ripoff of Medicare with this: "I refuse to apologize for my success." Even setting aside that his success was fraudulent, and that it was a direct siphoning off of public funds -- that is, not profits generated by building a better mousetrap and waiting for the world to beat a path to its door -- he views attempts to change the way companies interact in markets as an attack on success. Whose success? His success, and the success of other people who have won the money game under the current rules.
But under a different set of rules, there would be different ways to be successful, and different people would achieve success. And even if that last part were wrong, and we lived in a world where Rand's notion of truly great men dominating the rest of us as a matter of both justice and inevitability were actually true, that would merely mean that some men (ahem) will rise to the top under any set of rules. That they are succeeding under current rules would thus be all the more reason not to resist changing them.
Senator Warren has always challenged Wall Street to earn its money by being good at something other than duping people. Hidden fees, opaque insider deals, and much else in the Wall Street playbook are a matter of exploiting power advantages, not competing successfully in a free market. Former Harper's editor Lewis Lapham used to skewer America's corporate class by pointing out that they hate competition and always have. If anyone is trying to engage in so-called rent seeking, it is not liberals but the people who resist calls to clean up American business practices. Before Lapham, the great Harvard economist John Kenneth Galbraith made those same points from the 1940's onward.
All of which means that the Republicans' commitment to "the free market" has always been a bad joke. They are not trying to maximize profits (or wealth, or incomes, or anything else) in the aggregate, because they are trying to protect and enhance the ability of the already profitable to add to their hauls, no matter the consequences for anyone or anything else. At that task, they have succeeded spectacularly. Again, however, they did so at the expense of the system that they claim to revere. They prefer capitalists to capitalism.
Lately, however, this always-misunderstood abuse of capitalism for the purposes of accumulating power has taken some ugly turns, even by the standards that had long prevailed in conservative circles for decades. Shortly after the 2016 election, I wrote that "Trump Does Not Believe in Capitalism," by which I meant that he had shown that he did not even believe in the possibility that capitalism could work as advertised.
How so? Capitalism, at its core, is about win-win propositions. The most basic formulation of Adam Smith's invisible hand concept tells us that people make each other better off by pursuing their own self-interest, such as when businesses compete to sell better products for lower prices. Trump has made it clear that that game is for suckers. Winners are only winners if they can stick it in the face of the losers. International trade, long a core commitment of Republicans (who, to be clear, believed in an obscenely abusive version of "free trade," but never mind that for now), is in Trump's mind a mercantilist game of accumulation. Whichever country is importing more goods is the loser!
But it gets even worse. Trump also made a big show of using the government's power to force companies to do what he wanted them to do. For example, he used the public purse to bribe Carrier to keep a facility open in Indiana, choosing winners and losers on the basis of politics rather than profitability or even a larger sense of shared stakeholding. Sharing is for losers, too.
Taking Trump's contempt for capitalism yet another step toward oblivion, Republicans have now turned against "woke corporations," which used to be known as companies that compete for customers and workers by listening to "market signals." My customer base hates it when I sell racist books? I guess I will no longer sell racist books. But no, that is now to be punished by the state. In many states, companies were directly forbidden from doing what their customers and workers wanted to fight Covid-19, making everyone worse off.
And it is not as though Republicans are unaware of countries that have gone down this road and impoverished their citizens. Whatever the complicated truth is about, say, Venezuela, the Republican version of the story is that the citizens of that country are suffering because of the breakdown of the rule of law by a communist dictatorship.
But this is not at all a politically conservative point. A YouTube video titled "Why Is Latin America still Poor?," published earlier this year, powerfully shows that there is no reason for people to invest in wealth-producing activities when other people can easily turn win-win situations into predatory money grabs. It is not communist dictatorships that are the problem. It is dictatorships.
Again, this used to be what it meant to be a believer in capitalism as a concept. The left-center-right arguments in modern mixed capitalist countries were a matter of degree, asking how best to guarantee the integrity of the rule of law without artificially freezing in place any given set of rules that were imperfect in the first place or had been overtaken by events. Those arguments have been fierce, and there is a lot at stake, but the idea that governments could intimidate companies with raw power plays was almost universally viewed as repugnant.
I have not been able to track down the exact quote, but I have at various times come across the observation that humans are no more than six days away from a complete feral breakdown. That is, if you deprive people of what they need -- light, heat, water food, a place to excrete waste, sleep, air -- it would take at most six days (and in some cases, as little as a minute) for people to lose all restraint and begin to do absolutely anything to survive.
Capitalism -- by which I now clearly mean non-vulture capitalism, that is, the regulated corporations of the Twentieth Century that were enabled by sensible political decisions to create and profit from the material prosperity that we now enjoy -- is as fragile as humans, but the time frame is less immediate. It took a few decades for billionaires to become a relatively common phenomenon, but their emergence has set capitalism on a course toward internal collapse. The death spiral is simply more drawn out.
And because Republicans no longer believe in capitalism, they have no reason even to pretend to care about democracy. No longer arguing that capitalism leads to more democracy (China's post-Deng experience having killed that one), they have given up on the idea that capitalism and democracy need to be linked at all. The rule of law used to be a conservative touchstone. Now, as I pointed out in my two-part Verdict column last week, it is becoming clear that the people who call themselves conservatives in America would readily abuse any government power that might help them gain absolute control over the country.
All of that will destroy the economy and the Constitution. But at least the libs will be angry.