Does Free Market Ideology Drag Down Republicans?

Many people seem to believe something like the following:
“A pure free market isn’t a popular idea, including among Republican voters. Therefore, advocacy of purely free markets is a political liability for Republicans. Trump’s primary and general election wins prove that.” Often, these people are called “reform conservatives,” or reformocons for short.

It’s true that a purely free market is not a popular idea, but debate over whether to have a purely free market is far removed from actual political battles in the U.S.

These battles don’t consist solely of Democrats proposing popular regulations or spending programs and Republicans opposing them on ideological grounds.
Rather, when there is organic, grass-roots disagreement over a particular economic intervention, Republicans will tend to side with the popular resistance to the policy. So, yes, the end result is Democrats offering “something” and Republicans offering “nothing,” but when Democrats are offering things that many or most people oppose, this only makes sense. Similarly, Democrats don’t advocate every possible state intervention. The parties fight over things that are actually controversial, rather than always taking the statist or anti-statist position.

On some issues, competition for the median voter, along with various forms of status quo bias, insure that the parties aren’t very far apart. Politicians seem to think we want broadly free markets with a lot of spending on social security and Medicare, a minimal safety net, and labor and environmental regulations. There’s battles in the trenches between the 49-yard-lines, but no major differences.

So, what does that leave the parties fighting over? There are some issues that energize the bases much more than voters in the middle. When we look at specific issues, I don’t find that many of them fit the general narrative that free markets are dragging Republicans down. Hillary Clinton wanted taxpayer-funded abortion, and the Republicans don’t. Democrats want to take action against global warming, Republicans don’t. No reform conservative would likely claim that these issues are hurting Republicans. Global warming often brings coal workers and their friends and relations over to the Republicans, and the majority of voters agree with Republicans on taxpayer-funded abortion. Many other “base issues,” Roe v. Wade, gun control and religious freedom, don’t really fit the narrative, either.

Then there’s health care, the exception to the rule of general agreement on the role of government in the economy. Democrats passed Obamacare; Republicans rejected it. Republicans want to pass some sort of repeal-and-replace, and Democrats don’t. Here the Republicans were taking the popular position until 2017, when their own bill proved unpopular. So the lesson is that whatever interests the status quo entrenches will fight hard for it, and the majority of voters will side with them and against disruption. Thus, bases should force their Parties to enact extreme and unpopular changes in an effort to permanently change the status quo; lost Congressional seats become fallen soldiers in a victorious war. (Victorious until the other party does the same thing, at least. The paradox is that if Republicans act on this theory and pass their health care bill, they will have disproven it, by showing it didn’t really work for Democrats. And if Republicans act against the theory, by chickening out, they will have vindicated it in the case of Democrats.)

For every “reform conservative” who complains that Republicans won’t do anything for white working-class voters, there’s ten progressives who lament that white working-class voters want to be self-reliant, and don’t want the government to do anything for them.

Trump’s famous deviations from Republican orthodoxy consist mostly of his opposition to entitlement cuts and free trade.

But the entitlement position isn’t really a deviation. Republicans as a Party have always tried to be as conservative as they can get away with on entitlements, and no more so. Otherwise, they’d never win elections. Much of the time, they have not pursued entitlement cuts or reform at all.

GW Bush and Tom Delay passed an enormous prescription drug entitlement and won in 2004. Then, Bush bet the ranch on social security privatization and lost in 2006. The thinking in the latter case was that entitlements were a long-term problem, and the best way forward for future generations was investment. Medicare was known to be the bigger long-term problem, but for social security there was at least something positive to offer the public – personal accounts. So Bush was taking an arguably rational risk.

Social security reform proved a political failure and moved off the agenda, but meanwhile debt became a more salient issue both with the public and inside-the-beltway. Led by Paul Ryan, Republicans turned their focus to the bigger crisis, Medicare (since solving the little one hadn’t worked anyway.)

Now, entitlement cuts were unpopular. But in cases where there really is a looming debt crisis, voters and politicians face a complicated set of incentives; a simple rule of “don’t support anything unpopular” doesn’t really work. Voters want to make sure politicians only raise taxes on people like themselves, or cut spending for people like themselves, as much as is necessary, and no more. One never knows when Republicans are pushing entitlement cuts for ideological reasons, and only claiming it’s necessary for the deficit. And vice versa for tax increases.

Meanwhile, each Party, knowing there is a need to resolve the debt crisis one way or another, whether the public likes it or not, have strong incentive to insure that the crisis is solved on its own terms. They have less incentive than usual to worry about their proposals being unpopular (plus, the public is more willing than usual to consider tax hikes/spending cuts under such circumstances).

The fact that crisis situations force the Parties to try extra hard to impose their own terms on the solution is why the Democrats went ahead and passed Obamacare, and why Republicans went ahead and pushed Medicare reform.

“But you just said the Parties weren’t ideological, that they’re just instruments of public opinion.” But public opinion isn’t quite coherent enough to govern. The Paul Ryan Republicans aren’t being ideological in the sense of ignoring the particular problems of the time and just imposing their Reaganite, one-size-fits all model, as reform conservatives often say. Ryan’s budget was precisely an attempt to respond to existing problems.

Of course, no grand bargain on the debt came about, deficits went down, the moment passed, and it became impractical to try to solve the long-term problem. It made sense for Republicans in 2016 to nominate a candidate who promised not to touch entitlements.

This would fit with my general story of Republicans responding to circumstances. It’s an instance of political markets operating efficiently. The problem is, that efficiency required a hostile takeover of the Republican Party.

It may be (I don’t know) that Marco Rubio could have stopped Trump by matching his promise not to cut entitlements. If so, there’s a reformoconish case to be made here: the mainstream of the Republican Party was too stuck in its 2010-12 political strategy, and that moved it away from the mainstream of voters.

The Tea Party had pushed the Republicans into that strategy, and now it made it hard for them to get out- Rubio had to worry about Cruz capturing votes if he went soft on the debt. But the Tea Party initially achieved its power because it tapped into mainstream anger- over bank bailouts, Obamacare, and worries about mounting deficits. It wasn’t a case of zombie Reaganism or rich donors controlling the Party. The problem wasn’t that mainstream Republicans were stuck in 1980, but that they were stuck in 2011.
Trade and the minimum wage are issues where free market ideas really do seem to drive the Republican positions. Polls showed that the Tea Party wasn’t that into free trade, for instance. Republicans’ pre-Trump position on trade seems to hurt them with at least some swing voters. But they haven’t always followed them. Bush tried to buy Pennsylvania with steel tariffs in 2004, and it didn’t work. The reality may be that people in manufacturing communities are just generally dissatisfied with the course of the economy, and that no policies can overcome that dissatisfaction.

In the case of the minimum wage, Republicans’ position hurt them with a majority of voters.

The trade and the minimum wage have something in common: on these issues, voters favoring economic intervention can view themselves as not wanting a handout for anyone. They see protectionism and the minimum wage not as handouts, but as just deserts. A free marketer will argue that someone’s labor is worth what the market will pay for it. But lots of people think hard work has a kind of moral worth, and that anyone who works ought to get a “decent” wage. Similarly, someone favoring tariffs wants people to be paid for working, not to receive welfare.

Trade opponents have a hard time electing politicians who will fulfill any anti-trade promises, though, because Presidents conclude that it will damage the U.S. economy, and voters will turn on them even if they thought they wanted protectionism. (; also, Caplan, Myth of the Rational Voter.) For the same reason, if Democrats took complete power, they would be unlikely to move the minimum wage up to the outer limits of what the public would support ($15 is the “left-wing” position in the Democratic Party Overton Window, but by the standard of public opinion it isn’t left-wing at all.)
Reform conservatives don’t usually clamor for trade restrictions, although they do favor immigration restrictions. Nor do they tend to push minimum wage hikes. Instead, their favored policies include increased child tax credits and wage subsidies. But I don’t know that free market dogmatists are holding these ideas back. Rubio had a tax credit proposal in the primaries but evidently concluded he couldn’t get people interested in it and didn’t make a big deal about it, and who’s to say he was wrong? Rand Paul railed against it and got 2.8% of the vote or whatever, and Rubio defended it fiercely under this attack, but I don’t recall Cruz or the rest of the field raising the issue.


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