Tea Party has morphed culture wars into economic combat
By Nicholas Wapshott
The opinions expressed are his own.
As Margot Channing put it inÂ All About Eve, âFasten your seat belts.Â Itâs going to be a bumpy night.â The battle over Obamaâs jobs bill marks the opening of theÂ Keynes Hayek election, which, if the poisonous duel between the two giants of economics is anything to go by, will be a down and dirty clash of opposites. Obama will champion intervening in the economy to get Americans back to work, while his rival will demand a shrunken government and the speedy repayment of the national debt.
The first shots in this snarky contest have already been fired. Take Obamaâs dismissal, in his speech to both houses of Congress, of the Hayekian notion that government is too costly and largely unnecessary: âThis larger notion –Â that the only thing we can do to restore prosperity is just dismantle government, refund everybodyâs money, and let everyone write their own rules, and tell everyone theyâre on their own — thatâs not who we are. Thatâs not the story of America.â Obama finds himself defending the whole of the Democratsâ progressive record, from Rooseveltâs New Deal to Johnsonâs Big Society.
Most aggressive in his assault upon Keynesianism is Rick Perry, who declared in the Reagan Library last week that Obama âhas proven for once and for all that government spending will not create one job.Â Keynesian policy and Keynesian theory is now done. Weâll never have to have that experiment on America again.â Gingrich, too, thinks âthe American people create jobs, not government.â Most Hayekian is Ron Paul, who said his first act in the White House would be to âbring a course in Austrian economics to teach the people the business cycle and why the Fed creates inflation and depressions and all our unemployment problems.â
The GOP, once the home of Chicago School economics, has drifted away from what in retrospect looks like the sweet reason of Milton Friedman. Fed chairman Ben Bernanke, a devout Friedman acolyte, is still reeling from being accused by Perry of being âtreacherousâ and âtreasonous,â and finds himself now on the hit list of most Republican champions, who take it in turns to boast they would fire him because, in Newt Gingrichâs words, âhis policies have deepened the depression, lengthened the problems, increased the cost of gasoline, and been a disaster.â Even the once moderate Romney says, âIâd be looking for somebody new.â
To become the nominee, the wannabes have first to please the Tea Party that has taken over from the Christian Right as the main drivers of Republican sentiment. Devotion to economic conservatism and a tilt toward libertarianism has replaced social conservatism as the loyalty test by which contenders are judged. Perry launched his campaign with the boast that he wanted to âmake Washington, D.C., as inconsequential in your life as I can.â Paul went one further, declaring, âWe donât need the government running our livesâ and even saying that â9/11 came about because there was too much government.â
Not even the most ambitious Republican candidate is expecting to reach a government-free nirvana in a single term, but from their utterances we are now getting a good glimpse of what, if the tide has really turned against Keynes, a small-government America might look like. First, there would be no universal health care, the touchstone pledge of all who want to reverse eighty years of government big spending. Second, the federal government would devolve as many powers as possible to the states, which would slash the costs of mandated programs then further minimize influence on peopleâs lives wherever they could. Third, Social Security would be privatized and pension provision left to individuals. Fourth, welfare would be cut and good works for the poor and the needy left to charities and churches. Fifth, government departments such as Homeland Security and agencies like the TSA would be disbanded. Sixth, America would cede its role as the worldâs policeman and withdraw smartly from Afghanistan and Iraq.
Can a candidate be elected on such a program? First, Perry or Paul or Michelle Bachmann would have to overcome the qualms of the less radical portion of the GOP. As Rick Santorum put it, âAre we going to stand in the Reagan tradition, or are we going to go the isolationist view that some in this party are advocating?â The flexible Mitt Romney, who, in his eagerness to appear all things to all men said, âIf the Tea Party is for keeping government small and spending down âŚ then,Â hey, Iâm for the Tea Party,â also said, âWe have always had, at the heart of our party, a recognition that we want to care for those in need, andÂ our seniors have the need of Social Security.â
It may be a case of ideological purity versus electability. John Huntsman, the most conventional of the contenders, warns, âWe canât run from mainstream conservative philosophy.Â Weâve got to win voters.â Tea Party members, however, are in no mood for compromise, a fact that points toward Perry,Â thought most electable by Republicans, as the likely standard bearer. But, as always, it will be the votersâ verdict on the incumbent as much as the detail of the challengerâs policies that will settle the matter. With Obamaâs jobs initiativeÂ falling flat and Democratic support for him flagging, the polls are currently favoring a win for Hayek over Keynes.
Nicholas Wapshottâs âKeynes Hayek: The Clash That Defined Modern Economicsâ is published by W. W. Norton in October. Read anÂ extract here.