Wednesday, January 11, 2012

What I'd Like to Hear From Romney About the Free Market

From RedState:
I don’t like seeing pro-free-market Republicans attacking the concept of what Bain does, any more than I liked seeing Romney attack Rick Perry from the left on entitlements. But just because the role of red-in-tooth-and-claw capitalists is a crucial and necessary one does not mean that they are likely to be popular candidates in today’s general election environment. Criminal defense lawyers, for example may be crucially necessary to our system of justice, but if they have represented a lot of unpopular clients, they are not likely to be politically viable. I continue to think that Romney’s business record is an under-explored political vulnerability (one Ted Kennedy used against Romney in 1994, but didn’t even use all the ads he cut) that the Democrats will exploit ruthlessly. And Romney’s existing defenses of that record are fairly weak. We should not be caught unawares by this in the summer and fall when it’s too late to pick another candidate. In many ways, it’s like the swift boat story. You’ll recall that the centerpiece of John Kerry’s electability argument in 2004 was his military record – not any policy proposal on national security, mind you, but the simple fact of his biography as a war hero. Given that Kerry had decades-old enemies from his activties as an anti-war protestor, it was unwise for Democrats to assume that this biographical narrative alone would go unchallenged in the general election. But that’s exactly what they did, and the Swift Boat Veterans’ ads (especially the ads using Kerry’s own Senate testimony from 1970) did terrible damage to Kerry.

Romney’s story is much the same. There’s no serious argument that Romney’s record of supporting free enterprise and job growth in his single term as Massachusetts governor is better than the records of Perry, Gingrich, Santorum and Huntsman; his claim to be a job creation specialist is grounded in his record at Bain, and just like Kerry’s war hero biography, this claim is bound to attract scrutiny. It would be foolishness in the extreme for Republicans to demand that nobody talk about this during the time when we’re choosing a candidate. The harder question, for free-market Republicans, is how to have a serious debate on this point without compromising our integrity and our principles.

At this point, I'd say that Romney is the only viable candidate to shake out from the Republican Bag o' Nuts, and that I'm more closely ideologically aligned with him than any other candidate--Republican or Democratic--that's on the field right now.  And I think his public speaking and persuasiveness has improved by leaps and bounds over the last four years.  You could call me a supporter and I wouldn't protest.

But he's still sooooooo cautious.

Mind you, caution is essential when every word out of your mouth will be carefully graded and selected for how good a cudgel it makes for your enemies.  But the problem is that, per above, Romney's key advantages are not easily condensed to sound bites.  Modern business--both big and small--is incredibly complex, because business systems evolve the same way that biological and social and economic systems evolve, and evolution is all about complexity.  Unfortunately, evolution is also about survival and competiltion for resources, so modern business is incredibly ruthless.

So Romney needs a simple explanation for what it is that he did, and what it is that business in a free market does, and why, ruthless though this may be, this ultimately contributes to human progress better and faster than any planned "humane" alternative.  That's hard to do without acknowledging that the last five years have scored very high on "ruthless" and very, very low on "humane".

Perhaps a way forward is suggested by David Brooks in his recent missive in faint praise of Rick Santorum:
Mr. Santorum understands that we have to fuse economics talk and values talk. But he hasn't appreciated that the biggest challenge to stable families, healthy communities and the other seedbeds of virtue is not coastal elites. It's technological change; it's globalization; it's personal mobility and expanded opportunity; it's an information-age economy built on self-transformation and perpetual rebranding instead of fixed inner character. It is the very forces that give us the dynamism and opportunities in the first place.

Mr. Santorum doesn't yet see that once you start thinking about how to foster an economic system that would nurture our virtues, you wind up with an agenda far more drastic and transformational.

If you believe in the dignity of labor, it makes sense to support an infrastructure program that allows more people to practice the habits of industry.

If you believe in personal responsibility, you have to force Americans to receive only as much government as they are willing to pay for.

If you believe in the centrality of family, you have to have a government that both encourages marriage and also supplies wage subsidies to men to make them marriageable.

If you believe social trust is the precondition for a healthy society, you have to have a simplified tax code that inspires trust instead of degrading it.

If you believe that firm attachments and stable relationships build human capital, you had better offer early education for children in disorganized neighborhoods.

If you want capitalists thinking for the long term and getting the most out of their workers, you have to encourage companies to be more deeply rooted in local communities rather than just free-floating instruments of capital markets.
I generally take a dim view of all forms of social conservatism, because it boils down to the government imposing a set of social solutions instead of letting the social solutions evolve to fit the conditions. But Brooks is on to the most palatable marriage of libertarianism and social conservatism that you're likely to find. True or not (and it's mostly true), the free market going to be perceived as a vast, howling wasteland, littered with the hulks of gutted businesses and the corpses of formerly decent jobs. The only way to survive in that wasteland is to take shelter in your family and your community.

Romney has to make the case that, Darwinian though the free market may be, it is superior to all of the alternatives. This is a hard case to make, because the natural response to this is, "Well, yes, I'm mostly in favor of a free market, but couldn't we cushion the blow if we just did this... and this... and this..." In fact, this has been exactly Obama's set of talking points. He's a great believer in the free market, as long as it can be constrained so that there's no down-side.

It can't be done.

The free market is made up of a large number of agents. Those agents compete for resources, just like any biological system. And, just like any biological system, the agents that can't acquire resources have to die. There's a slightly subtle point here: if the unsuccessful agents didn't die, the resource distribution would have to be fair, and a fair distribution guarantees that the successful agents can't grow. In effect success for some requires death for others.

Fortunately, we're talking about companies and jobs here, not people. When the job dies, the person goes and finds a new one, because the successful agents grow and proliferate. The only alternative--the "fair" alternative--must inevitably result in less growth, and therefore less opportunity for each worker to grow as well.

Obama will further argue that there's a middle ground, where businesses fail, but where the successful businesses are constrained to protect the common weal. This is partially true; you can identify certain pathologies of the free market (monopolies, undercapitalized banking, naked derivatives trading, to name three) outlaw them, and still have a robust system. But growth is closely tied to freedom of action. The more constraints you place on economic agents, the less mobile they become in the free market space, the less likely they are to seize on truly productive opportunities, and the less they'll grow.

Obama believes that there are a nearly unlmited number of constraints that would improve the system, and that the sooner they are discovered and implemented, the more the system is improved overall. He doesn't understand that the harm that the constraints do escalates exponentially in proportion to their number.

This last point is key to Romney's success. He needs to say as loudly as possible that the term "regulated free market" is almost--not quite, but almost--an oxymoron. Crafting this message is incredibly difficult, because it's non-intuitive. But he simply can't be successful without getting this across.

Which leaves us with the short-term social consequences of unfettered capitalism. Per Brooks, this can be made into an opportunity to unite the social conservatives with the libertarians if it's done sensitively and adroitly. The message has to be that families can be trusted to protect themselves as long as jobs are available, and as long as the public space is a level playing field for the best social ideas. The basic compact needs to be that government won't impede job growth, and it will admit that it doesn't know anything useful about social engineering. Then it's up to each family to turn off the TV, monitor their children's internet usage, attend their school board meetings, and talk to their neighbors.

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