Saturday, September 3, 2011

The Tea Party prosperity gospel

Here's how I see recent political events. The "Tea Party" Republicans, reinforced by the media support of Fox News, are kind of like "health-and-wealth" prosperity gospel Christians, who proclaim that if you just have enough faith, God will reward you with material well-being. You can hear it in the Republican debates when candidates confidently proclaim that they can "create" more jobs by keeping taxes low and reducing spending. One would think that this gospel would fall apart if economic growth stagnated under austerity measures; but as with the actual prosperity gospel, this message is backed by a religious fervor that doesn't die easily. That's why conservative politicians are being encouraged to "stand their ground" and not compromise on spending cuts and tax breaks. (Of course, cutting any part of the half trillion dollars per year we spend on foreign wars is out of the question.)

It is not surprising that some people would react against this by advocating a more scientific approach. The Keynesian economists come along with a way we can steer our way out of this economic meltdown, equipped with mathematical formulas and everything. They insist we have to "do something" in order to get out of this mess. Free markets left on their own will always result in this kind of disaster. Faith is worthless. We have to take control ourselves. More spending. More deficit. More incentives. We can't wait for private investment to start up again. After all, in the long run, we're all dead.

In such circumstances the honest advocates of free market institutions must come across as austere old clerics who insist that nothing good comes without suffering. The true defense of free trade has unfortunately very little to do with its short term success; there is absolutely no reason to believe that a free market must cause growth whenever we want it to. There is, on the other hand, enormous evidence from a broad historical perspective that the institutions vital to a free market cause, in the long run, the greatest prosperity. If we live only for the short run, we are bound to turn either to blind faith or to scientific rationalism: our short term fears can only be alleviated, it seems, either by the prosperity gospel or by atheism. (I am being metaphorical here, of course; but I sometimes wonder how much this has to do with actual theology.)

The only way to convince the public that we must not succumb to our short term fears is by demonstrating that the costs of alleviating our short term pain is just too high. An alcoholic may beg you for more liquor to alleviate his hangover, yet even though he is truly in pain, you will not give it to him. You know the booze will ultimately kill him.

If we're going to get out of this stagnation, we're going to have to feel some pain. There is no way government can decrease spending without causing a temporary contraction. Our markets and financial institutions have simply been depending for too long on government backing for cutting loose to have zero effect. We have to be willing to accept these temporary negative effects in favor of long term gains. We cannot live only for the short term.

One final remark. There is no reason why the poor should have to suffer most during this crisis. If we really want the rich to pay their fair share, maybe we should start by liquidating their failed assets (e.g. General Motors) and giving some of that money to the poor. This, after all, would increase consumption, and isn't that what Keynesians want, anyway?

No comments:

Post a Comment

I love to hear feedback!