US Politics: Economy Special --- A Conservative Roadmap to Stability and Character

Last Tuesday, in his response to President Obama's State of the Union Address, Rep. Paul Ryan (R-Wisc) set out the basics of his alternative vision for the future of the US. Recognising that there “is no doubt the President came into office facing a severe fiscal and economic situation,” he nonetheless criticised the Administration for disastrous policies that that have only made matters worse: “What was a fiscal challenge is now a fiscal crisis....We cannot deny it; instead we must, as Americans, confront it responsibly.”

Rep. Ryan then changed course and explained that the forthcoming “budget debates are not just about the programs of government; they're also about the purpose of government". And what followed was a brief resume of arguments conservatives have been making for 60 years defending the free market and individual liberty, ending with the proclamation, “Limited government and free enterprise have helped make America the greatest nation on earth.”

It is this theme of American exceptionalism, a product of the nation's adherence to the values enshrined in the constitution, that pervades Rep. Ryan's "Roadmap". The document's driving philosophy is that his policies will restore the “American character rooted in individual initiative, entrepreneurship, and opportunity –-- qualities that make each American's pursuit of personal destiny a net contribution to the Nation's common good.”

This belief that individuals are better judges of that which benefits them the most (or, more precisely, that which best alleviates their most pressing dissatisfaction) which underpins the consumer-choice oriented reforms for health care, Medicare, Medicaid, and retirement planning included in the Roadmap. The economy is made up of so many billions of individual decisions that no group of experts can understand them. If they can't comprehend the scale of decisions taken then they should not interfere with those countless transactions.

The bottom line is that millions of individuals, making billions of choices every day with the purpose of improving the position of the self-interested individual, will arrive at a market where the rational expectations of every consumer is met. One recent validation of this economic theory, though not mentioned by Rep. Ryan, is the popularity of eBay. Transactions there are governed by the demand and supply for each product, the result of millions of individual choices, and works extremely well with no regulation. Both parties involved in the transaction are satisfied with the exchange, otherwise there would be none.

Ryan quotes approvingly Thomas Jefferson's dictum that the sum of good government is a “wise and frugal government, which shall restrain men from injuring one another, which shall leave them otherwise free to regulate their own pursuits of industry and improvement, (and) shall not take from the mouth of labor the bread it has earned".

Ryan maintains that is a path that America can still follow, but warns in a criticism of America's "Expanding Culture of Dependency": “Americans have been lured into viewing government – more than themselves, their families, their communities, their faith – as their main source of support; they have been drawn toward depending on the public sector for growing shares of their material and personal well-being.”

And this is why, Ryan argues repeatedly, America is at a "tipping point". The country can either take a step back by implementing his reforms, or proceed toward an eventual catastrophe by embracing the growing 'culture of dependency' that the present administration is offering. He describes how the public policy of President Obama (the fiscal stimulus, TARP, Cap and Trade, financial market legislation, Housing policy and Healthcare) “all contribute to an extensive and deliberate power grab in which government seizes ever more of the economy”.

Ryan believes this growth of a “larger and more intrusive government", if allowed to happen,will have a catastrophic impact on America's future. Using figures supplied by the Congressional Budget Office, Ryan reports that the fiscal impact of those policies “is a level of spending, deficits, and debt unprecedented outside of wars”; levels that, most alarmingly, cannot even be met by substantial tax increases.

The consequence of those policies is a legacy of debt that will “be felt as those born today are completing college and beginning their careers". Ryanconsistently considers the long-term results of current policies, and notes that in this case, by “2058 the economy enters a free-fall, beyond which the catastrophe cannot be measured: CBO cannot model the impact because debt rises to levels the economy cannot support.”

Ryan then returns to his argument that current policies are leading to the “erosion of American character". He laments the fact that if “the government continues following the 'progressive' ideology now prevailing in Washington, America will increasingly resemble a European welfare-state.” He bolsters this impression by citing a report that shows that between 1950 and 2007, the number of Americans reliant on government benefits rose from 28.7 percent to 58.2 percent. And far from stabilising that number will rise to 67.3 percent by 2018, even without the passing of laws on Cap and Trade and Healthcare.

But, Ryan stresses, the United States can come "back From the brink as long as it realises "the need to act now". He dismisses any notion that the nation's pre-eminence in the world is historically determined to be over, and resolutely emphasises that “America is not the servant of inexorable historical forces.” Instead, Ryan, counters, “Americans make history, by their choices and actions in a free society that rewards personal initiative, promotes individual responsibility, and provides expanding opportunity.” (Ryan's italics)

Throughout his presentation of an alternative set of policies Rep. Ryan stolidly defends the equitable outcome they will generate. He declares on page 1 of the Roadmap, and repeats the general theme frequently, that his ideas do “not attempt to abandon commitments Americans established over the past century, or to dismantle government. It recognises that government has a necessary role in supporting the institutions through which Americans live their lives, and in providing a safety net for those who face financial or other hardships.”

With its optimism that America can change its future, if only it returns to some recently lost dependence on individual virtue, the Roadmap echoes economist Friedrich Hayek's caution that the US (and Great Britain) is on the "Road to Serfdom" (1944) and journalist John T. Flynn's 1949 warning that 'The Road Ahead' for America is a "socialist" one if it does not turn back now.

Quite what that says about the conservative impulse in America is debatable. Perhaps all it tells us is that many Americans are frequently beset by a sense of gathering doom fuelled by, as the historian Richard Hofstadter termed it in the 1950s, "status anxiety", the subconscious feeling that impersonal economic forces are threatening the long-standing security and status of a certain group of citizens. It is an interpretation that has been revived in recent explanations of the Tea Party.

But, and as much as detractors of conservatism may disagree, Ryan's 'Roadmap' illustrates that the defense of the free market in the United States, at least for the true believers, is based more on moral imperatives than on selfish economic interests. Ryan contends that “it is government's responsibility to uphold the principles of free and competitive markets", and he and maintains that following this principle in the future will have the moral consequence of restoring the American character. For, he explains, “consistent with this is the longstanding recognition among Americans that freedom and responsibility are two sides of the same coin.... Only by taking responsibility for oneself, to the greatest extent possible, can one ever be free; and only a free person can make responsible choices... these moral characteristics inhere in individuals, growing from the coupling of freedom and responsibility; and this in turn is the root of the Nation's virtue."

At the same time that Hofstadter's "status anxiety" was trying to define populist conservatism, the first post-1945 conservative journal was appearing. The Freeman introduced itself on 2 October 1950 with "The Faith of The Freeman", stating, “It will be one of the foremost aims of the Freeman to clarify the concept of individual freedom.” And in words to compare with Rep. Ryan's, the editorial continued: “That tradition has always emphasized the moral autonomy of the individual. Real morality cannot exist where there is no real freedom of choice. The individual must be free to act as his own conscience directs, so long as he does not infringe upon the equal rights of others.”

Ryan's Roadmap contains recommendations based on individual free choice that progressives are going to fight tooth and nail to defeat. But the only way a budget will get passed this year, and the deficit problem is at least addressed, is for both sides of the political divide to recognise that the other is acting in good faith. Rep. Ryan is not the tool or lackey of big business, and President Obama is not a socialist. That may not be enough to resolve the budget crisis, but at least it would be a start, as Rep. Ryan argued in his speech last week, towards facing the problem responsibly.