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Memo to the Reform wing of Conservatism

Or, where libertarianism, progressivism, and the free market meet.

This campaign season, McCain’s economic rhetoric caused both admiration and distress for me. I admired him, because he was in favor of a less progressive tax system. I was distressed because of his ramped up rhetoric against “big business,” coupled with his support of the $700 Billion bailout bill. Call it cognitive dissonance, if you will.

In the fallout since the campaign ended, much ink has been spilled over the two “camps” in the GOP right now – the Reformers and the Traditionalists. Reformers want to cut out corruption and “stick it to the man,” it seems, where The Man is big business. Their critiques, embodied most recently by Sen. McCain’s rhetoric, rather than being in support of small business, has mostly been critical of big business. As an economic platform, it went nowhere fast.

I propose the following shift in the Reform rhetoric, which sounds much more Libertarian than Progressive. It’s quite a simple platform.

Support competition. (No, really.)

In particular, support it in a way where the government takes a back seat role, rather than an invasive, disruptive role. We don’t do nearly enough of this in our domestic industries. There are several ways to accomplish this goal.

a) First, lower the corporate tax rate and articulate clearly the positive effects such a change will bring. McCain dropped the ball here because he had no effective response to Obama’s claim that he was “giving a tax break to those oil companies.” We’re bleeding jobs because it’s easier for entrepreneurtss to open up shop elsewhere and send exports our way. We should counter it not with Protectionism (and thank heavens few on the right are speaking that way), but with more competitive environments here.

b) Second, stop bailing out industries. Companies like Honda, Toyota, and Nissan should be rewarded for their innovation and success. It sends a horrible message when we say to big business, “If you do well, keep the profits. If you do poorly? Well, we’ll bail you out.” Such a tactic gives them an unfair advantage. I say let GM declare Chapter 11. The Mitt Romney’s of the world will buy individual parts of GM, streamline them, and make them run better.

c) Fight tooth and nail to keep the private ballot sacrosanct on unionization votes. (This one should be fairly obvious. Half of the American auto industry’s problems have to do with their infestation of unions.)

I have one point to add about unions that is mostly tangential, since I don’t much care for unions in a world with an activist media.

Remember the debate over raising the minimum wage last year? As it turns out, 2 million people in the 2000 census earned minimum wage. Half of those were between the ages of 18-24 (e.g. poor starving college students such as myself, looking for an extra buck here and there). So, 1 million people make minimum wage. Why the big stink over it, then? Union wages are based on minimum wage. Increase it, and you increase union wages.

d) End explicit cartelization. Fannie Mae and Freddie Mac are the two big examples of this problem. By placing so many bad mortgages in one place, the risk got concentrated in one place. Coupled with the bad policies described in point b, Fannie and Freddie had an enormous, unfair competitive advantage.

I’ll give another example. Remember when there was just The Phone Company? How fast did phones advance in that time period? We went from the rotary phone to our standard phones (now available in colors other than black!) in a period of decades. Long distance phone calls were mightily expensive. When competition entered the market place, a deluge of phone models came with it, and the cost to communicate dropped considerably.

e) Support all viable sources of energy. Oil. Clean Coal. Wind. Nuclear. Solar. NOT ethanol. Our rhetorical position in accomplishing this goal should be scream loudly whenever our colleagues support subsidies for the any particular industry. Level the playing field, and argue for it in such a way that emphasizes free markets and competition. Here again, McCain couldn’t effectively critique Obama where he had a clear weakness.

In sum:

Those who want to reform business do wrong to wander into the camp that supports greater government action or stifling critiques of big business. Instead, both the Reform minded and Traditional conservatives should embrace a more libertarian position on trade that argues strongly for greater freedom and competition in the market place. When industries are forced to compete, employees and consumers both win. If we want to bolster the middle class, the engine of our economy, the best way to do so is with competition.

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