The Reality Behind the 2010 Election: It’s the Economy
October 29th, 2010 // 4:00 am @ Oliver DeMille
The economy is struggling, and it is driving the election. As so many have said since the Clinton campaign made it popular in the 1990s, “It’s the Economy, Stupid!”
And many Americans believe the economy will continue to decline. If it does, the Obama Administration has very few tools to respond.
The White House has based its entire economic policy on an ideological belief in government spending and intervention, but further economic downturn will require it to take serious action.
What can it do that it hasn’t already tried? How much more can it spend? And at what point will it accept that such spending isn’t delivering fixes to unemployment and the economy as promised?
If the government increases spending, promotes more stimulus, raises taxes or increases regulations (or all of the above — which is what it has done so far), it will run into major difficulty.
So far none of these have fixed the economy. The nation now ranks Democratic leaders at their lowest rating ever compared to Republicans (42 percent to 52 percent).
And the major issues fueling dislike of the Obama agenda are unemployment (now 9.6 percent), the healthcare law and other increased government regulation, and massive government spending.
Some economists, like Paul Krugman, say the problem is that the stimulus should have been much bigger in the first place — since now there is very little support for more government spending.
The White House seems to agree, and it is preparing to raise taxes on big business. The problem with this strategy is that very few small businesses have a lot of extra cash right now. Big business, in contrast, has a lot more extra cash than the whole of government stimulus.
Unfortunately, with the Obama Administration promising to end tax cuts to big business, these companies are unlikely to hire or spend their cash on hand. And if President Obama does raise taxes on big business, they are likely to simply hold their cash or spend it in other countries.
A lot of corporations are seriously considering moving more of their operations abroad to find more favorable environments for profit. Many have already made this move, taking jobs and money with them.
Some countries are aggressively advertising their low tax rates to lure international investors. For example, a full-page ad in The Economist reads:
“Fact: the Gulf’s lowest taxes are in Bahrain. As are the region’s lowest living and operation costs. Which leaves more of the cake for you and your business.”
A lot of nations are using similar campaigns to lure investment, while the U.S. is actively adopting policies which drive capital away.
Why would businesses that can afford to move stay in the U.S. to face more White House attacks and increasing taxes and regulations?
This not only won’t help our economy. It will increase unemployment, make credit harder to obtain for small businesses, and convince consumers to buy less. In short, it will significantly hurt the economy.
The Obama plan claims to help small business, but in fact its proposed policies will do the opposite. One Harvard economist points out that our debt load is now even worse than that of Greece, which has just experienced major economic collapse and is being bailed out by international banks.
Open For Business?
The impact on the elections is obvious. If a lot of Republicans win, they will have more influence to argue for more business-friendly policies. But there is no guarantee they will do so.
After all, the Bush Administration significantly out-spent the Clinton Administration before it. No matter what happens in the election, the Obama team needs to take a different route if they want to reboot the economy.
Two years into Ronald Reagan’s presidency, the economy was struggling and unemployment was above 10 percent. Reagan pushed to cut taxes, reduce government spending, and, perhaps most importantly, sent out the message — over and over — that government needed to be reduced and that private business was the hope of the economy.
In retrospect, spending actually increased under Reagan, but his consistent message of promoting business, support for business growth and free enterprise, and the need to cut government and spending made business feel safe.
He spoke optimistically of business on all levels, and lauded the opportunities provided by free enterprise and free markets.
The result? Businesses hired and entrepreneurs went to work. Commerce soared. Growth quickly soared to 8 percent (the Obama “recovery” was around 1 percent) and unemployment rates came down. The 1980s became an era of economic boom, which grew into the roaring 1990s.
Too often the opposite message is coming from Washington. The White House repeats its “unfriendly to business” message over and over, calling businessmen “fat cats” and telling young people to work for non-profits and not go into business.
It constantly promotes increased government spending and ever-expanded regulations which drastically increase the cost to start and build businesses. It has publicly attacked the Chamber of Commerce, the ultimate small-business advocate, and in general it has sounded angry and dangerous to business.
Now, in the name of “helping small business,” it is increasing taxes on big business and people who succeed in small business — many of those above the $200,000-$250,000 threshold are small entrepreneurs.
And, as I said above, many big businesses which hold a lot of cash are making plans to take it abroad. These realities are a serious problem.
Americans now believe Republicans (49 percent) “would do a better job of dealing with the economy than Democrats (38 percent).” But what exactly is the Republican plan? It is unclear.
Americans seem to believe that at least Republicans will stop increasing taxes and regulations on business, and perhaps be a lot more friendly and welcoming to business.
Whom Do Voters Support?
Perhaps the most significant reality is that Democrats and the Obama Administration now have a 60 percent disapproval rating among independents.
Of course a lot of Republicans support Republican politicians and a lot of Democrats support Democrats. But President Obama was swept into office by independents, and now most of them no longer support his policies.
Independents are mostly for fiscal responsibility, lower taxes and lower levels than the current government intervention in the economy. Indeed, many of them supported Candidate Obama because they disliked the Bush Administration’s high-spending, over-regulating policies.
It seemed to independents that Candidate Obama promised new leadership and a new direction for Washington. Many independents have been shocked and dismayed by the Obama Administration’s move to the left. But they could have supported this surprise if there wasn’t such a lack of new-era leadership.
For example, as an independent, I expected President Obama to be liberal. I closely read The Audacity of Hope (affiliate link) before the election and I was clear that he would govern from the left.
But I also thought he would bring a new brand of leadership — a fresh, charismatic, Generation-X-style emphasis on American growth and vibrancy rather than old-line Washington politics.
Unfortunately for all Americans (left, right and independent), that did not occur.
Many independents feel abandoned by President Obama less for his liberalism than for his return to “Washington politics as usual.” This shift occurred within days of inauguration, and his popularity among independents has consistently fallen ever since.
We live in an era where the key to winning elections is to combine support from your base (liberal or conservative) with the support of independents.
This is true nationally and in most locales as well. For Democrats, who will get the bulk of Democratic votes no matter what, the goal right now should be to bring in independents by pushing through many tax breaks and finding ways to deregulate business requirements.
When asked who they will vote for in the 2010 Congressional election, 62 percent of registered independents said they support Republicans; 30 percent plan to vote Democrats.
This is a huge split in American politics, where voting differences are usually 1-3 percentage points and a 6 percent split is a landslide.
As a result, many current Democratic candidates are frequently using the phrase “I’m independent.” As the election season kicked off right after Labor Day, the Obama Administration changed its message —apparently to attract independent voters.
President Obama said in his speech on September 8th that it is American business which drives the economy, and Timothy Geitner said the same day that American businesses are very innovative and able.
This change is a good move for the administration, but President Obama still managed to include disparaging remarks about privatization and Wall Street.
Despite the fact that there may be truth to what he says, it is the tone of anti-business that reverberates. He may get past this bias in the weeks and months ahead, but will it last after the election?
From an independent perspective, it doesn’t seem like it.
Business really does drive the economy, and we need to genuinely embrace and support this.
Independents are tired of the constant attacking between parties. Instead of Republicans attacking President Obama and the White House attacking Republicans, why can’t either just get serious about enacting policies that actually help small business?
It’s the Economy!
Our leaders must find ways to significantly help business.
Proposed tax cuts for small business, payroll tax holidays, and not taxing research and development are good starts with bipartisan support. The Obama Administration deserves praise for these proposals. But a lot more is needed.
If the government is going to spend money regardless of what the voters want, the current push to spend it on infrastructure is probably the best plan.
Still, spending $50 billion of taxpayer money is quite an expense. And nearly all infrastructure contracts will go to big firms, further excluding and in places even hurting many small businesses.
Unless private business is convinced to rebuild the economy, one business at a time, government spending will just make the problem worse.
Harvard economist Niall Ferguson responded to President Obama’s new plan by pointing out that the $50 billion of infrastructure expenditures will do little or nothing to boost the economy since the plan is built on faulty economic reasoning that is good for politics but bad for the economy.
In contrast, Ferguson argues, we should be studying how Reagan and Thatcher successfully battled and overcame major recession in both the U.S. and Britain in the 1980s. Even experts from left agree that the proposed Obama plan won’t do much to help the economy.
President Obama’s speech included numerous jabs against Republicans, which many independents agree with. But it didn’t include much that could really help the economy.
This has many independents frustrated. It feels too much like more politics, not better leadership.
For example, the proposal to put freezes on non-security spending is a good idea, but it rang hollow, sounding more like a political debating point than something the president really cares about.
If he gave it the same support as health care, and kept pushing it with tenacity and refusals to give up on the idea, many independents would be impressed.
Instead, it seemed to come across like the right thing to say in this election season, but prone to be ignored in favor of big government spending after the election.
If that isn’t true, if the Obama Administration really does follow through on this proposed freeze on the non-essentials, many independents will swing back to supporting President Obama.
But I think that most independents will wait until after the election to see if this happens.
The president’s speech was excellent in many ways, and independents should be glad that he is now saying some of the right things. It felt like the return of Candidate Obama.
But therein is the problem. Is it just campaign rhetoric? The contrast between Obama’s campaign persona and his Head Democrat persona is so dazzling that it’s more challenging than usual to hope that Mr. President will lead out.
And why did he say a lot of the right things about fiscal responsibility but only get passionate when he was criticizing Republicans or talking about increased government spending?
It’s the Economy, Really!
The Democratic narrative seems to be that without the stimulus the recession would have been much worse.
But many independents don’t buy it. They didn’t like many of President Bush’s policies, but they are just as frustrated with the current administration’s strategies.
They believe the stimulus was a flop and healthcare and other massive regulations have seriously hurt the economy. They blame both Obama and Bush for the current economic mess.
But since Bush is out of the discussion, their frustration is pointed at President Obama.
American independents aren’t the only ones who feel that the Obama Administration’s stimulus and massive spending/regulating strategy has worsened the economy.
Some international analysts, for example, say: “[The stimulus] has not worked. The whole thing has failed. And that is why America, of the big economies, is the one that is now teetering on the brink.”
Some say, “I think in Europe it’s very clear the direction the Europeans are going down, which is to basically start bringing public debts and deficits under control. Obama is still worried about the polls….Personally, I think the best thing they could do is probably just sit on their hands in the U.S. …”
If the plan is to spend more, tax more and increase regulations, then I agree — let the politicians sit on their hands and do nothing!
But what if, instead, they cut taxes, deregulated small business, changed the healthcare law to incentivize business investment, and extended an olive branch of friendship and thanks (yes, genuine gratitude) to entrepreneurs and business for their vital contributions to our prosperity?
Doing nothing, as good as it may sound to Tea Partiers and some independents, is not enough. Washington needs to reverse the bad-for-business policies accumulated since 1987 — or at least during the Bush/Obama growth of anti-business policy since 2001.
If this sounds impossible, we may be in for a very long period of economic struggles.
In Conclusion: It’s the Economy!
The future of the economy depends on the willingness of small business to take risks and the willingness of big business to hire, spend and invest.
Until our national leaders are willing to cut government spending, lower taxes, reduce government interventions in almost every sector of business, and show more genuine friendliness to business, our economic problems will continue.
Whatever the results of the 2010 election, Washington has got to make friends with business. We simply must make those who spend their lives in business feel safe and excited about building, hiring, investing, growing and spending. Otherwise, deepening economic troubles are ahead.
We desperately need real leadership in Washington, leadership which will actually incentivize, promote and reboot the economy.
The best-case scenario would be for the Obama Administration to lead out in this direction. After all, they’ll be in the White House for at least the next two years.
This pro-business outline (cut taxes, significantly reduce regulation on business, get government spending under control, and make friends with business) should be the guiding principle to every voter in every election across the nation this year.
We need to pay little or no attention to political party and instead elect leaders who will help kick-start, encourage, and stimulate the economy.
This is a true mandate, and our national future depends on it.
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Oliver DeMille is the founder of the Center for Social Leadership, and a co-creator of TJEd.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Business &Current Events &Economics &Government &Prosperity
Overcoming Hamilton’s Curse: Specific Solutions that Only Entrepreneurs can Provide
September 23rd, 2010 // 4:00 am @ Oliver DeMille
Click Here to Download a Printable Version of this Article
When America decided to follow Alexander Hamilton’s economic model instead of the Jeffersonian system, a number of changes occurred which now haunt our generation.
Jefferson envisioned a nation of small farm and shop owners that spread around leadership and prosperity, while Hamilton preferred a mercantile system with a few wealthy owners employing the large majority of the populace.
Hamilton felt that an increase in wealth among the leading families would make up for the reduced freedom and less-widespread prosperity under a mercantile economy.
After all, this was the model used by the most powerful nations in Europe.
Ironically, we have now reached a point where the greatest challenges we face are caused by the mercantile system and can likely only be solved by an entrepreneurial mindset.
Funny how history pulls these types of pranks.
Failed Solutions
Unfortunately, the two main sides emphasize government solutions (more government-provided jobs and stricter regulation against corporations and bonuses) versus big-business mercantilism (hire and fire as best fits company projections, and move operations abroad to less hostile regulatory environments with cheaper labor—or in other words, business as usual).
A third view comes from frustrated populists who want Washington to get its act together and fix the economy.
All three of these views miss the point.
Wall Street, Washington, and Main Street still seek Hamiltonian solutions: “Big institutions should fix things for us.”
The specific challenges we face, however, don’t lend themselves to institutional fixes. Our current problems need precisely entrepreneurial-type solutions.
This isn’t the old debate of whether public or private programs are best. The truth is, that debate nearly always promoted institutional fixes.
What we need now are patently non-institutional innovations.
Major Challenges
Consider the major problems we are facing.
Most are the natural results of too much reliance on institutional size and power and not enough initiative, innovation, and leadership from “little guys.”
Of course, the few who are entrepreneurs do an amazing job against increasing odds.
But a major shift to the Producer Mindset is needed to overcome our current challenges—and more such challenges will continue to arise as long as we stay addicted to big institutions.
Specifically, the major concerns we’re facing in the years and decades ahead include the following:
- Running out of money for social security and many other entitlements.
- The flight of many in the entrepreneurial class to Brazil, India and other places with less regulation of small business.
- The wartime economy of China that is built to thrive in times of conflict (and struggles in times of peace).
- The end of privacy as government is pressured to oversee everyone and all things in the name of security and protection from terrorism.
- The end of America’s production base as industry continues to go abroad and we continue to train the world’s attorneys instead of more engineers and inventors.
- The growing gap between rich and poor in the U.S. and globally.
Also consider the following items that will peak and commence declining in the years immediately ahead, as outlined in the book Peak Everything: Waking Up to a Century of Declines by energy expert Richard Heinburg:
- Oil availability and cheap fossil fuels to drive the economy
- Fresh water availability per capita
- Easy, cheap, quick mobility
- Available land in agricultural production
- Political stability
- Safe, inexpensive food
Only one of these looming challenges (security against possible Chinese aggression) can be effectively solved directly by government as it is now constituted.
And even this could be beyond the government’s scope if attacks are not military but cyberwar¹ on, say, America’s financial records or utility providers.²
A truly free government emphasizing a free enterprise economy would help against all of these, by empowering entrepreneurial action, wealth, and innovation to meet each challenge.
Heinburg’s solution to these problems is “fifty million farmers,” which he describes as a drastic increase in the number of small farmers.
Such people, Jefferson predicted long ago, own their own land and bring initiative and tenacity to producing food and also free citizens.
While the problems we face are clearly greater than a mere shift to locavorism will remedy, the heart and mind of the citizen farmer is a good start.
In addition to farmers, we need millions of producers of all kinds applying entrepreneurial talents and skills to overcoming our biggest challenges.
Habits & Complexes
There are at least two major roadblocks hindering this needed Freedom Shift.
The first is habit. Our society has become habituated, at times addicted, to certain lifestyles.
For example, when the recession hit, people spent more money, not less, at McDonald’s. We are habituated to eating out, and tightening our belts in hard times has come to include eating even more french fries.
Perhaps our most debilitating rut as a culture is a dependence on experts. Until we kick this dependency, how can we rise above the statistics and become a nation of entrepreneurs and leaders?
The answer, as challenging as it is, is for entrepreneurs to show us the way, and to keep at it until more of us start to heed.
The second huge roadblock is our complexity. Indeed, we have reached a level of complexity where simplicity itself is suspect.
For example, the simple reality is that jobs migrate to less difficult nations. It’s the old Rule of Capital: Capital goes where it is treated well.
In nations that have become too complex, taxes and regulation cause at least a doubling of the amount employers must spend on labor.
Many experts call this “progress,” but the natural result is that many companies respond by sending their operations and jobs to less costly nations.
When this happens, complex nations react in an amazing way: They villainize the companies (“greedy profiteers”) rather than reducing taxes and regulations to entice companies back home.
Then they take an incredible extra step: They increase taxes and regulations even more on the businesses that stayed!
The result? More money flees and recession inevitably comes.
At this point, when the need is obviously to lure businesses, capital, and jobs back home with decreased regulation and taxes, nations that are too complex actually compound the negative situation as angry workers cry out for more regulations and controls.
Freedom, prosperity and stability all suffer.
As Ken Kurson put it,
“Our bipartisan addiction to spending and borrowing pairs with a hostility toward employers that makes real recovery difficult.”³
Or, as the Governor of Minnesota said:
“I was talkin’ to people this morning who run small businesses. Where’s their bailout?”4
People who point out how ridiculous this is are often labeled extremists or radicals. Simple answers aren’t often very popular in complex nations.
Sadly, only major crisis is usually enough to get people to listen to simple solutions.
Poor Complexion
Another example is found in the issue of health care.
Health care costs consistently increase where voluminous regulations along with medical lawsuits cause huge malpractice insurance costs.
When government seeks to regulate and force the costs down, it must find a way to reduce litigation and payouts.
But in complex society, people want to have their cake and eat it too.
They want health care to cost less and also to leave doctors and insurance companies paying for incredibly expensive lawsuits.
How is it possible to get both? “The government should make it so,” is the answer of a complex society. But how? “The government should just fix it.”
This amazingly naïve view of things is the result of complexity. Far too many citizens don’t even expect to be able to understand the issue, so they leave it to the experts.
And once all is in the hands of experts, they are expected to solve everything without any pain or problem to the populace. After all, they’re the experts, right?
Those who benefit most from the costs of lower health care either need to forego the threat of so many lawsuits or be willing to pay higher prices.
But such simple answers don’t convince in complex societies.
One more example is interesting. Hamilton argued in The Federalist Papers that for society to be free the legal code would need to be long, detailed and difficult to understand.
He based this on the systems in Europe at the time. But these were the very systems the founders fought to abandon.
In contrast, Jefferson, Madison and many others taught that complex laws and legal codes were sure signs of oppression.
They agreed with Montesquieu, Locke and Hume and that laws must be simple, concise and brief, and indeed that the entire legal code must be simple enough that every citizen knows the entire law.
If a person doesn’t know the law, they argued, he shouldn’t be held liable for breaking it or freedom is greatly reduced.
In complex society, most attorneys don’t even know the whole law.
The Right Level of Complexity
The main criticism of simple societies is that they are often intolerant, controlling, and narrow-minded. This is an accurate and good criticism, and such simple societies are not the ideal.
Indeed, Madison shows the negatives of such societies in Federalist Papers eighteen through twenty.
He proposes that by establishing a large nation and a free constitution we can simultaneously establish both an open, modern, and progressive society and a free, prosperous, and happy nation.
Fortunately, we are not forced to choose between a stupidly simple nation and an overly complex one.
The ideal is a nation sufficiently complex to promote progress, toleration, cooperation, and growth and one with enough simple common sense to achieve freedom, prosperity, and opportunity.
This is the traditional entrepreneurial mix.
Whereas mercantilism values a few cosmopolitan elites employing a mass of less urbane managers and workers, in contrast the entrepreneurial challenge has always been to balance complex and intricate details with simple and effective systems and results.
In short, we need more entrepreneurs running more small, medium and large institutions in society.
Lifestyles of the Rich & Famous
The success of the next few decades will depend on certain types of people with certain skills and abilities.
The talents and habits of “The Company Man” came into vogue in the 1950s and helped create a society of professionals, experts and officials. This greatly benefited the final half-decade (1955-2005) of the Industrial Age surge.
But as the Information Age moved past infancy (1964-1991) and began its rebellious growth to adulthood (1992-2008), many became aware that change was ahead.
As the Information Age grasps maturity and takes over in the 2010s and 2020s, major alterations in society are inevitable.
The Company Man is now replaced by what David Brooks called Patio Man: Individualists who want personal freedom, enough income to pay the bills plus some extra spending money, a government that provides national security and keeps jobs plentiful, a nice house, a nice car each for him and her, a grill, a good movie tonight and friends over for the big game on Sunday.
At first, this was paid for by one working parent, then by both.
But unless something changes, this lifestyle is at an end for all but the wealthiest tenth of the population.
The thing which facilitated such a lifestyle in the first place was the prosperity generated by entrepreneurship, and the only thing that can maintain such a lifestyle and still pay off our society’s debts and obligations is a drastic increase in the number of entrepreneurs.
Period.
Specific Entrepreneurial Challenges
Let’s get specific. Either a generation of entrepreneurs will arise or the “Patio Man” lifestyle will end.
Very soon, the following must occur:
- Entrepreneurs must figure out how to cover their own retirement and that of their employees and many others so that when we run out of money for social security and other entitlements it just won’t matter.
- Entrepreneurs must figure out how to compete with the entrepreneurial classes of Brazil, India, and other places with less regulation of small business.
- Entrepreneurs must figure out how to rebuild a strong American industrial base to provide the basic foundational economic strengths of society.
- Entrepreneurs must figure out how to replace an oil-driven economy with cheaper and hopefully better and cleaner energy alternatives.
- Entrepreneurs must figure out how to provide inexpensive and quality fresh water, food, and mobility without cheap oil.
Researchers, experts, professionals, employees and governments do not have the ability to make these things happen. They will be needed to help accomplish these vital needs, but ultimately it will require the skills of entrepreneurs.
These types of changes are the arena of entrepreneurial talents and free enterprise innovations, not of legislative discussions, bureaucratic rules, or expert publications.
Legislatures, bureaucrats, and experts are important to society and are good at certain things, but initiative, innovation, taking major risks, and tenacious ingenuity are not their forte.
As significant as these challenges are, we need the best of the best solving them.
If entrepreneurs accomplish the goals listed above, we will naturally see increased political stability, a well-funded government that can protect against Chinese or other international aggression, and a narrowing gap between the rich and poor.
It will also take a widespread entrepreneurial mindset to figure out how to effectively thwart terrorism without turning the government into a secretive surveillance state, and also help the nation evolve into a less litigious and more productive society.
Government cannot wisely do either of these projects, since it is a central party to both.
And big corporations also have a conflict of interest; they would naturally use both projects to increase their own power at the cost of freedom.
Entrepreneurs are more suited to succeed in these projects than any other group, and to then share their views with the citizenry.
The most critical problems we now face are also our greatest opportunities.
We need more entrepreneurs, and we need entrepreneurs who engage more in social leadership.
Our future now, more than at any time since the founding and pioneering eras, depends on producers.
Hamilton’s ideas contributed much to American growth, but it is time for a renewal of the Jeffersonian spirit of independence and initiative—in all of us.
Click Here to Download a Printable Version of this Article
Sources:
- From the article entitled, “Good for Some” in the 2/13/10 issue of The Economist: “In January Google suffered a serious attack on its infrastructure, originating in China. On February 2nd Dennis Blair, the White House director of national intelligence, went to a Senate committee to give an annual threat assessment. He used it to give a warning of a large and far-reaching threat. Sophisticated cyber-criminals are stealing sensitive government information every day, Mr. Blair explained, and state agencies often find shadowy presences on their networks—‘the hallmark of an unknown adversary intending to do far more than merely demonstrate skill or mock a vulnerability.’ An overarching concern is that in a time of crisis network infrastructure might be seriously compromised.”
- See James Fallows, “Cyber Warriors,” The Atlantic, March 2010. See Israel on its Internet Fighting Team in Harper’s Index, Harpers Magazine, November 2009.
- Ken Kurson, “A Hedge Fund for Little Guys,” Esquire, March 2010.
- Governor Tim Pawlenty, quoted by Mark Warren in “The Dark Horse,” Esquire, March 2010.
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Oliver DeMille is the founder of the Center for Social Leadership, and a co-creator of TJEd.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Aristocracy &Economics &Entrepreneurship &Government &Producers &Prosperity
America’s Seven-Party System
September 9th, 2010 // 12:23 pm @ Oliver DeMille
High school civics classes for the past century have taught that America had a two-party system.
And up until the end of the Cold War, this was true. Each party had clear, distinct values and goals, and voters had simply to assess the differences and choose which to support.
Such clarity is long gone today, and there is no evidence that this will change any time soon.
As a result, more people now call themselves “Independents” than either “Democrats” or “Republicans.”
We are led today by the contests and relations of seven competing factions, or parties. These major factions are as follows:
Republicans
1. Nixonians
2. Reaganites
3. Populists
Democrats
4. Leftists
5. Leaders
6. Special Interests
Either/Neither
7. Independents
Neither party knows what to do about this. Both are plagued by deep divisions. When a party wins the White House, these divisions are largely ignored.
During a Party’s time in the White House, the underpinnings of the party weaken as differences are downplayed and disaffection quietly grows.
Fewer people wanted to be identified as Republicans with each passing year under the Bush administration, just as the Democratic coalition weakened during the Clinton years.
This is a trend with no recent exceptions. Being the party in power actually tends to weaken popular support over time.
Governance v. Politics
The emerging and improving technologies of the 1990s and 2000s have reinvented government by forcing leaders to constantly serve two masters: governance and politics.
Governance is a process of details and nuance, but politics is more about symbols than substance.
As I stated in The Coming Aristocracy, before the past two decades politics were the domain of elections, which had a compact and intense timeline.
After elections, officials had a period to focus on governing, and then a short time before the subsequent elections they would return to politics during the campaign period.
Now, however, governors, legislators and presidential administrations are required to fight daily, year-round, on both these fronts.
Both major parties struggle in this new structure. Those in power must dedicate precious time and resources to politics instead of leadership.
Worst of all, decisions that used to be determined at least some of the time by actual governance policy are now heavily influenced by political considerations, almost without exception.
Power facilitates governance, but reduces political strength. Every governance policy tends to upset at least a few supporters, who now look elsewhere for “better” leadership.
While Republicans and Democrats accomplish it in slightly different ways, both alienate supporters as they use their power once elected.
The Loyal Opposition
The party out of power has less of a challenge, but even it is expected to present alternate governance plans of nearly everything — plans which have no chance of ever being adopted and are therefore a monumental misuse of official time and energy — instead of focusing on their vital role of loyal opposition which should ensure weighty and quality consideration of national priorities.
The temptation to politicize this process is nearly overwhelming — meaning that the opposition party has basically abandoned any aspiration or intent to participate in the process of governing and become all-politics, all-the-time.
As a result, American leadership from both parties is weakened.
With the advancement of technology in recent years has come the increased facility for individuals to not only access news and information in real time, but to participate in the dialogue by generating commentary, drawing others’ attention to under-reported issues and ideas and influence policy through blogging, online discussions and grassroots campaigns.
An immensely important consequence of this technological progress has been the fractionalizing of the parties.
Republicans: The Party of Nixon vs. The Party of Reagan
Both Nixon and Reagan were Republicans, but symbolically they are nearly polar opposites to all but the most staunch Republican loyalists.
Reaganites value strong national security and schools, fiscal responsibility, and laws which incentivize small businesses and entrepreneurial enterprises.
Nixonians value party loyalty over ideology, government policy that benefits big business and large corporations, international interventionism and winning elections.
A third faction in the Republican community are the populists.
Feeling disenfranchised by the loss of the Party to the Nixonians, the populists want Americans to “wake up,” realize that “everything is going socialist,” and “take back our nation.”
Identified with and defined by talk-show figureheads with shrill voices, the populists are seen as more against than for anything. They believe that government is simply too big, and that anything which shrinks or stalls government is patently good.
A Bad Day To Be A Populist
The populists are doomed to perpetual disappointment, since any time they win an election they watch their candidate “sell out.”
It is hard to imagine a more thankless job than that of the candidate elected by populist vote; once she takes office she is consigned to offend and alienate either her constituents or her colleagues — most likely both.
She is either completely ineffective at achieving the goals of her constituency, or, if she learns to function within the machine, she has no constituency left.
Any candidate who tries to work within the system will lose her appeal to the populists.
If such a candidate stays focused on principle, like the iconic Ron Paul, many populists will admire his purity but will criticize his lack of substantive impact — his accomplishments are seen as almost exclusively symbolic.
Some of the most influential populist pundits (like Rush Limbaugh) have lost “believers” by being outspokenly populist when it supports the party agenda (like during the Clinton Administration and later in rejecting McCain’s presidential candidacy as too moderate/liberal) and then switching to support the Party (backing President Bush even in liberal policies and supporting McCain when he became the Republican nominee).
This is seen by detractors as manipulative, corrupt and Nixonian at worst, and self-serving, hypocritical and opportunist at best.
Vast Right Wing Conspiracy
Populism is considered “crazy” by most intellectuals in the media and elsewhere.
This is probably inevitable and unchangeable given that the same things which appeal popularly (such as alarmism, extremism, labeling, using symbols, images, hyperbole and appeals to sentimentalism) are considered anti-truth to intellectuals.
Indeed, part of training the intellect in the Western tradition is to reject the message of such deliveries without serious consideration, and dismiss the messenger as either unfit or unworthy to have a serious debate on issues.
Wise intellectuals look past the delivery and consider the actual message. This being said, even when weighed on its own merit the populist message is unpopular with intellectuals.
Populism is based on the assumption that the gut feelings of the masses (The Wisdom of the Crowds) are a better source of wisdom than the considered charts, graphs and analysis by teams of experts.
This hits very close to home for those who make their living in academia, the media or government. So our system seems naturally to pit the will of the people against the wisdom of the few.
Crazy Like a Fox
It is interesting to compare and contrast this modern debate between the wisdom of the populists and that of experts and officials with the American founding view.
The brilliance of the founders was their tendency to correctly characterize the tendencies of a group in society and employ that nature to its best use in the grand design in order to perpetuate freedom and prosperity.
In fact, the American framers did empower the masses to make certain vital decisions through elections. Madison rightly called every election a peaceful revolution.
And, the founders did empower small groups of experts: the framers had senators, judges, ambassadors, the president and his ministers appointed by teams of experts.
Only the House of Representatives and various state and local officials were elected by the masses, and the House alone was given power over the money and how it was spent.
In short: The founders thought that the masses would best determine two things:
1. Who should make the nation’s money decisions, and
2. Who should appoint our other leaders.
Riddle: When Is A Democracy Not A Democracy?
The founders believed that most of the nation’s governance should come from teams of experts, as long as the masses got to decide who would appoint those experts and how much money they could spend.
Such a system naturally empowers and employs both populism and expertise.
If It’s Not Broken, Don’t Fix It
Compare today’s model: Senators are now elected by the populace and the electoral college has been weakened so that the popular vote has much more impact on electing a president than it once did (and than the founders intended), thus increasing the power of the popular vote.
Yet many of the same intellectuals who support ending the electoral college altogether ironically consider populists “crazy” and “extremist.” The incongruity is so extreme that is no wonder many conclude that there must be some dark, conspiratorial agenda driving this trend.
Talking Heads
The reason for this seeming paradox is simple: Where the founding era actually believed in the wisdom of the populace to elect, modern intellectuals seem to believe that few of these “crazies” actually believe what they say they believe.
Many intellectuals think that populists, conservatives and most of the masses are simply following the views provided by talking heads.
For them, populist “wing nuts” have been duped by the sophistries of Rush Limbaugh, Bill O’Reilly, Glenn Beck, Sean Hannity, Ann Coulter, or some other “self-serving anti-intellectual.”
But at its core, the alarmist and wild antics of populist pundits are not the real reason many intellectuals question the sanity of conservative populists.
The deeper reason is that few intellectuals believe that sane people don’t want more government.
They understand Nixonian Republicans and their desire for more power, government support of Big Business and less regulation of corporations. They may not agree with these goals, but they understand them.
They also understand poor and middle class citizens wanting more government help.
And they even understand the Reaganesque vision of fiscal responsibility along with strong schools, security and increased incentives for small business.
Does No Mean Yes?
What intellectuals struggle to understand is lower and middle class voters who don’t want government programs.
For example, few of the populist “crazies” who oppose President Obama’s health care would be taxed to pay for it, and most would see their family’s health care benefits increased by Democratic plans.
So why would they — how could they — oppose it?
Rich right-wing leaders who would bear the costs for health care must have convinced them.
This is a logical conclusion. Rich people opposing higher taxes makes sense. Lower and middle class people supporting increased government aide makes sense.
Rich talk show hosts telling people Obama’s plan is bad makes sense. The people being duped by this makes sense.
What doesn’t make sense, what few intellectuals are willing to accept, is that large numbers of non-intellectuals are looking past alarmist talk show host antics, closely studying the issues and deciding to choose the principles of limited government over direct, personal, monetary benefit.
Intellectuals could respect such a choice; lots of citizens refusing government benefits to help the nation’s economy and freedom would be an amazing, selfless act of patriotism.
But they don’t believe this is happening.
Instead, they are concerned that the “wing nuts” are following extremist pundits and unknowingly refusing personal benefit. That’s “crazy”!
This view is reinforced by the non-intellectual and often wild-eyed way some populists act and talk about the issues.
In this same vein, intellectuals also naturally support the end of the electoral college because it would naturally give them, especially the media, even more political influence.
The most frustrating thing for intellectuals is this: The possibility that these “crazies” aren’t really crazy at all — that they actually see the biased focus and struggle for power by the intellectual media and don’t want to be duped by it.
Such a segment of society naturally diminishes the potential influence of the media, and is treated by many as a threat.
By the way, many conservative populists claim to be Reaganites. In fairness, they do align with a major Reagan tenet — an anti-incumbent, anti-Washington, anti-insider, anti-government attitude. These were central Candidate Reagan themes.
However, once in office, President Reagan governed with big spending for security, schools and the other Reaganite objectives listed earlier.
This is a typical Republican pattern. For example, compare the second Bush Administration’s election attacks on Clinton’s spending with the reality of Bush’s huge budget increases — far above Clintonian levels.
Democrats: Leftists, Leaders and Special Interests
Having covered the Republican Party, the discussion of the Democratic Party will be more simple.
The three major factions are similar: those seeking power, those wanting to promote liberal ideas, and the extreme fringe. Let’s start with the fringe.
Where Republican “fringies” call for the reduction of government, Democratic extremists want government to fund, fix, regulate and get deeply involved in certain special interests.
And while conservative populists are generally united in wanting government to be reduced across the board, Democratic special interests are many and in constant competition with each other for precious government funds and attention.
While Republican extremists see the government, Democrats and “socialists” as the enemy, Democratic radicals see corporations, big business, Republicans and the House of Representatives (regardless of who is in power) as enemies.
Republican “crazies” distrust a Democratic White House, the FBI, Hollywood, the Federal Reserve, Europe, the media and the Supreme Court.
Democratic “crazies” hate Republican presidents, the CIA, Wall Street, Rush Limbaugh, hick towns, gun manufacturers, Fox News and evangelical activists.
Republican extremists like talk show hosts and Democratic extremists like trial lawyers.
How’s that for stereotyping?
A Rainbow Fringe
The Republican populist group is one faction — the anti-government faction. Radical Democrats are a conglomerate of many groups — from “-isms” like feminism and environmentalism to ethnic empowerment groups and dozens of other special interests, large and small, seeking the increased support and advocacy of government.
One thing Democrat extremists generally agree on is that the rich and especially the super-rich must be convinced to solve most of the world’s problems.
Ralph Nader, for example, argues that this must be done using the power of the super-rich to do what government hasn’t been able to accomplish: drastically reduce the power of big corporations.
Because Democrats are currently in power, the extreme factions have a lot less influence within the party than they did during the Bush years — or than Republican extremists do under Obama.
The call for a “big tent” is a temporary utilitarian tactic to gain power when a party is in the minority. When a party is in power, its two big factions run the show.
Call the two largest factions the “Governance” faction and the “Politicize” faction.
For Democrats, the Politicize faction is interested in maintaining national security while trying to reroute resources from defense to other priorities; increasing the popularity of the U.S. in the eyes of the world and especially Europe; promoting a general sense of increasing social justice, racial and gender equality, improved environmental and energy policy; and improving the economy.
A major weakness of this faction is its tendency toward elitism and self-righteous arrogance.
Is That Asking Too Much?
The Governance faction has to do something nobody else — the other Democrat factions, the Republican factions, the Independents — is required to accomplish. It has to bring to pass the following:
- Keep America safe from foreign and terrorist attacks
- Pass a health care bill that convinces Independents of real reform within the bounds of fiscal responsibility
- Bring the unemployment rate down — preferably below 7% within the next year
- Keep the economy from tanking
Capturing The Middle Ground
If the Democratic Governance faction accomplishes these four, it will achieve both its short-term governance and its political goals. If it fails in any of them, it will lose much of its Independent support.
The Obama Administration will maintain its base of Democrat support basically no matter what. And the Republican base will remain in opposition regardless.
But without the support of Independents, the White House will see reduced influence in Congress and the 2010 elections.
And when Democrats create scandals like Clinton’s handling of his affairs or the Obama Administration’s “war on Fox News,” Independents see them as Nixonian, responding by distancing themselves both philosophically and in the voting booth.
Independents are powerfully swayed by “The Leadership Thing,” and Obama clearly has it (as did both Reagan and Clinton — but not Bush, Dole, Bush, Gore, Kerry or McCain). It is doubtful that Candidate Obama will lose in 2012.
But “The Leadership Thing” runs in candidates only — not parties.
Obama won because so many independents supported him. Independents are a separate faction that truly belong to neither party.
Indeed, President Obama united most Democrats to support health care reform — partly by taking on Republicans. If a reform bill takes effect, he will likely win the support of Independents by taking on his own party on a few issues and playing back to the middle.
This is power politics.
The 7th Faction: Independents and Independence
Who are these people that vacillate between the parties? Are they wishy-washy, never-satisfied uber-idealist pessimists? Are they the weakest among us?
Why don’t they just pick a party and show some loyalty, some commitment, like Steelers fans or staunch religionists?
Actually, independents are the most consistent voters in America. True, they fluctuate between parties and seldom cast a straight party ballot, but they vote for the same things in nearly all elections.
In contrast, party loyalists stick with their party even when it adopts policies they patently disagree with. Some might argue that this is a more “wishy-washy” way to approach citizenship and voting.
Independents watch the issues, candidates and government officials very closely, since they don’t rely on party platforms to define their values or on affiliations to bestow their trust.
What They Want
Independents want strong national security, open and effective diplomacy, good schools, policies that benefit small businesses and families, social/racial/gender equality, and just and efficient law enforcement.
They see a positive role for government in all these, and dislike the right-wing claim that any government involvement in them is socialistic.
For example: Taxing the middle class to bail out the upper-middle class (bankers, auto-makers, etc.) is not socialism; it’s aristocracy.
Independents are unconvinced by Republican arguments that government should give special benefits to large corporations, or Democratic desires to involve government in many arenas beyond the basics.
Independents care about the environment, privacy, parental rights, reducing racial and religious bigotry, and improving government policy on immigration and other issues.
A Tough Sell
On two big issues, health care and taxation, Independents side with neither Democrats nor Republicans.
They want good health care laws that favor neither Wall Street corporations (a la Republican plans) nor Washington regulators (e.g. Democratic proposals). They want health care regulations that are truly designed to benefit small businesses and families in order to spur increased prosperity.
Independents want government to be strong and effective in serving society in ways best suited to the state, but they expect it to do so wisely and with consistent fiscal responsibility.
They tend to see Republicans as over-spenders on international interventions that fail to improve America’s security, and Democrats as wasteful on domestic programs that fail to deliver desired outcomes.
They want government to spend money on programs that work and truly improve the nation and the world. They are often seen as moderates because they reject both the right-wing argument against constructive and effective government action and leftist faith in more government programs regardless of results.
They want to cut programs that don’t work, support the ones that do, and adopt additional initiatives that show promise.
American Independents & American Independence
The future of America, and American Independence, will be determined by Independents.
Interestingly, Independents come from all six of the factions mentioned in this article. The one thing they all have in common is that they don’t see themselves as part of a specific party, but rather as independent citizens and voters.
The technologies of the past twenty years have made things more difficult for politicians, but they have made it easier for citizens to stand up for freedom.
What we do with this increase in our potential power remains to be seen.
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Oliver DeMille is the founder of the Center for Social Leadership, and a co-creator of TJEd.
He is the author of A Thomas Jefferson Education: Teaching a Generation of Leaders for the 21st Century, and The Coming Aristocracy: Education & the Future of Freedom.
Oliver is dedicated to promoting freedom through leadership education. He and his wife Rachel are raising their eight children in Cedar City, Utah.
Category : Aristocracy &Featured &Government &Independents &Liberty &Politics &Prosperity
