Whom should the U.S. economy—and U.S. economy policy—revolve around, the entrepreneur or the family? That is really the core economic debate between Rick Santorum and Mitt Romney (and Jon Huntsman, too, for that matter). Not that there isn’t plenty of overlap between the two conservative economic visions, but embracing one or the other does lead down different policy paths. Think of it as traditional conservatism vs. modern, free-market conservatism. Edmund Burke vs. the Austrians, Friedrich Hayek, and Joseph Schumpeter. Tradition and order vs. creative destruction:
The postscript to [Hayek's] “The Constitution of Liberty” was entitled “Why I Am Not a Conservative.” And in it, Hayek aligned himself with the classical liberals of the 19th century, the “party that favours free growth and spontaneous evolution.” A society, for Hayek, was not, as it was for conservatives such as Burke, an organic, living whole in which essentially social beings are bound by ties of custom and tradition, but merely an aggregate of self-interested economic actors. “The only ties which hold together the whole of a Great Society,” he wrote, “are economic.”
Indeed, the ascension of Margaret Thatcher represented a victory of this new type of more libertarian conservatism in Great Britain, while the election of Ronald Reagan signaled its emergence in America.
Which brings us back to what just happened in Iowa and what will happen in New Hampshire. Recall this bit from Santorum’s “victory” speech:
I believe in cutting taxes. I believe in balancing budgets . . . But I also believe we as Republicans have to look at those who are not doing well in our society by just cutting taxes and balancing budgets.
I don’t think Santorum believes tax reform is unimportant. True, throughout his Iowa campaign, Santorum has, in the words of David Brooks, been “picking fights” with supply-siders. Yet Santorum wants to sharply cut tax rates on labor income, capital income, and corporate profits.
Nor does Santorum think cutting the size of government is unimportant. He says he would cut federal spending by $5 trillion within five years and implement Representative Paul Ryan’s entitlement reforms. That’s a pretty Tea Party-friendly agenda.
All necessary but not sufficient for Santorum. He isn’t satisfied with an economy that’s more efficient and competitive if it doesn’t result in stronger families. As it says on his campaign website: “Rick Santorum believes that to have a strong national economy, we must have strong families.” The family is at the center of Santorum’s economic vision. GDP growth is a means, not an end.
So, the former U.S. senator advocates policies that many free-market economists and supply-siders abhor but directly help middle-class families. He would keep a whole host of personal deductions: charitable giving, home mortgage interest, healthcare, retirement savings, children. Even expand them. Santorum would triple the personal deduction for each child and allow—attention underwater homeowners—uncapped deductions for losses incurred in the sale of a principle residence. By contrast, Romney says he generally likes the Bowles-Simpson Commission’s take on tax reform, lower rates, and fewer tax breaks. And Huntsman would get rid of all tax breaks.
Not that Romney doesn’t care about families. But the former venture capitalist’s emphasis is different:
I believe in America. We have always been a land of discovery and pioneers. We flew the first plane across the ocean, we planted the first flag on the moon, we connected the people of the world with the telegraph, the telephone, the television, and the Internet. It is not an accident of history that America is the home of Facebook, eBay, Apple, Microsoft, and Google.
These companies reflect our singular capacity for innovation. Nor is it an accident that the productivity of the American worker is unparalleled. The dynamism of our society is renowned around the world. We should build upon our strengths, not burden them with bureaucracy, excessive regulation, and intrusive government.
There is little doubt, certainly in my mind, that free-market capitalism is the best path to long-term prosperity. But free-market capitalism and the innovation it spawns are also disruptive forces that tear at middle-class family stability. Both need to be acknowledged, especially during a period when globalization and technology are transforming—and will continue to transform—working America.
Romney seems to be kind of a modern-day mercantalist, which is underscored by his emphasis of our current challenges with China and his willingness to enact a semi-protectionist agenda. His understanding of the global competitive environment is what in my mind makes Romney the most qualified candidate for this current election. Unfortunately, what makes him the most qualified candidate also makes him the least able to connect with the “common man.”
Only 1 question – how does free-market capitalism a disruptive force that tears at middle-class family stability?
Sorry, how “is”…
Is this a new concept to you? Have you never read The Communist Manifesto? While the idea of “middle class” might be anachronistic in a mid-19th century context, that’s hardly the salient factor here it seems, and the notion of capitalism being a disruptive force that tears at the institution of family is so prevalent in early socialist writing that it is simply taken as premised. It was obvious to everyone that capitalism had delivered a hammer-blow to family wherever it had displaced traditional societal structures. Socialism didn’t fall out of the sky; it was concocted as a way forward out of the social disintegration and commodification of man visited upon society by industrialization & capitalism.
Think it doesn’t still tend toward familial disintegration? Try having a conversation about music with a 13 year-old. Tradition – and its inherent authority – has been almost wholly overcome by fashion, and wisdom vanquished by marketing.
What in anything Santorum has said favors greater government. Tax breaks are not bureaucrats or regulations. Cutting 5 trillion would shrink government. Romney has spoken only in generalities and has a history of growing government, think Romney care. Romney is big government in the tradition of GHW Bush. He is an anti- Reagan.
I hate to break it to you, Goldstein, but someone whose economic plan has 59 points is hardly dealing in generalities.
Great article, James (as usual). But, I disagree that it’s free-market capitalism that tears at middle-class stability. What tears at middle-class stability is a myriad of many things, from culture to our monetary system, the monopoly of government-run schools, and on and on. We are less and less a family-oriented society, and all of our institutions aim to push us further away. It’s a chicken-and-egg dilemma at this point, but failing to prioritize strengthening the institution of the family is only going to continue to weaken our society. The 19th century had plenty of disruption, from a free-market innovation perspective, but the blend of gold-standard monetary system, no federal income tax, the Homestead Act, etc. ensure the economic FREEDOM to complement the cultural bedrocks of faith and family to the greatest century of growth and prosperity the world has ever seen. It wasn’t until the progressives got their claws in around the turn of the century that we began to decline.
James, after reading your article and the comments that followed, I have only one observation: you’re slumming.
The great thing about Reagan was that he combined free-market/libetarian conservatism with the ability to connect with the middle class. As James seems to indicate, it appears that Romney and Santorum each appear have a strength on one side or the other. It’s fairly easy for Santorum to pick up a few fiscal policy positions that align with free markets. It seems to me more difficult for Romney to learn to connect with “working people.” I heard Santorum’s speech Tuesday night and it just jumped out at me as Reagan-esque (being a grandson of Italian immigrants myself helped this perception). Still I hope for Romney to improve his pitch to working class America, because I think he has the right skills for the challenges we face. But Santorum’s rise really hi-lighted for me where Romney needs improvement.