"Conservative" Economic Policy Dies a Timely Death

Obituary: Conservative Economic Policy, Jared Bernstein, TPM Café, Oct 19: Conservative economic policy is dead. It committed suicide.

Its allegiance to market solutions, tax cuts and spending cuts, supply-side nonsense, manipulative and corrosive ties to industry and the rich, have left it wholly unable to cope with the challenges we face. Its terribly limited toolbox simply cannot address the economic insecurities and opportunities generated by today's global, interconnected, polluted, insecure, dynamic, bubble-prone economy.

What's more, progressives have developed an alternative policy set with the flexibility to combine market forces with the necessary regulation and redistribution to address these challenges. Whether that agenda will ever see the light of day is another question.

… The fundamental flaw with conservative economic policy is its reliance on markets for problems that markets can’t solve. It is widely recognized, for example, that consumer-driven health care … does not begin to address the challenge of health care reform. Similarly, while we can all agree that globalization has many positive attributes, simply calling for more "free trade" doesn't address either pervasive income losses to many Americans or the unfulfilled promise of trade to the poor in developing countries.

A related flaw is the inability of the empty conservative toolbox to deal with the critical economic questions of the day. How much regulation is necessary to both foster growth and innovation while avoiding the rampant speculation that has infected key sectors, such and housing and financial markets? The conservative answer is "none," and that's obviously wrong. The last two economic recoveries have been crippled by bursting speculative bubbles. But the trick, of course, is correctly calibrating the regulatory agenda.

On inequality, … [There is] nothing in [conservative ideology's] toolbox to address inequality. To the contrary, their tax policies exacerbate it.

And while education provides a critical leg up, it cannot be the sole policy solution for inequality …. When the benefits of (accelerated) productivity growth are flowing almost exclusively to a narrow sliver at the very top of the wealth scale, something else besides "enhanced returns to skills" is going on.

… Too much power rests in the hands of too few right now, and they have used their political and financial power to pursue violent, shortsighted foreign policy, steer the lion's share of growth their way, and avoid dealing with the challenges of global warming, health care, and inequality.

So we are left with a riddle: how can conservative, economic elites be both powerful and dead at the same time?

It's because they are zombies: their ideas that are dead but their political and economic clout remains prodigious and threatening. They can still win elections. But they cannot govern—they're proving that with every new failure of the government they demonize but still dominate. … Yet zombies are always dangerous, and while the tide appears to be turning against them, their defeat is by no means a sure thing. …

In my decades of life as a progressive economist, I've never seen such an outpouring of good ideas. … But good policy solutions by themselves won’t win the day. I remain deeply nervous that progressives will fail to tap this uniquely clear moment of the failure of conservative policy. And the stakes are very high. If we squander this opportunity—if we fail to get the majority of the electorate behind the progressive ideas touted above, or we fail to push wavering centrist democrats toward these ideas—we may not be able to repair the damage. I don't mean to be alarmist, but we must stop the zombies before it's too late.

Comments

[bailey]

And, when did we last see an administration that forwarded a conservative economic policy?

[Dave Iverson]

I grant you that what we've seen for the last 30 years (or so) from both sides of the political aisle seems anything but "conservative".