We Are Trapped

Charles Krauthammer offers some hard cautions to the “conservative counter-revolutionaries” determined to continue “their containment of the Obama experiment.” While applauding their efforts to contain Obama, saluting them as “remarkable”, and sympathizing with their goal to rollback government, he argues that it “is simply not achievable until conservatives receive a mandate to govern from the White House.”

“Under our constitutional system, you cannot govern from one house alone. Today’s resurgent conservatism, with its fidelity to constitutionalism, should be particularly attuned to this constraint, imposed as it is by a system of deliberately separated — and mutually limiting — powers.”

Back off, then, is his counsel. And take this to electorate in November 2012.

Sound advice. But Krauthammer like too many American conservatives likes to place this battle as the latest in the long-running struggle between “social-democratic versus limited-government” visions. And that is their mistake and also the drawback to left Democrats who fall into the same line of thinking.

Despite what ideologues on either side of this increasingly stark and distorting confrontation like to make out, it is possible to blend both visions. It is what most American voters would like to see. It comes through loud and clear in opinion polls the past few years. When majorities say that they think government is too big on the one hand but don’t want to see massive entitlement reform on the other, they are trying to communicate their belief in a “third way” to a deaf political class locked in ideological prisons and tribal caucuses.

That is why the pendulum swings back and forth between the parties in elections with such regularity. It is the electorate’s way – or at least independents and non-tribal Republicans and Democrats – of showing dissatisfaction with either competing vision. And they don’t believe they are being contradictory by wanting a blend of social democracy and limited government.

And there is nothing wrong with the blend – either in practical terms or intellectual ones. For most classical liberals – as distinct from liberals – it makes perfect sense. Read John Stuart Mill, for example, or even Adam Smith, who despite being hijacked by libertarians, saw a large role for government. Those conservatives who like to cite FA Hayek should remember, if they ever knew in the first place, that he accepted that there are legitimate grounds for government to supply health care without people having to shriek “Marxism.”

And in practical terms combining social democratic and limited government visions has not proven impossible for, say, the likes of Margaret Thatcher, another classical liberal.

But you won’t hear from the left of the Democratic Party or the right of the GOP anything like this. Mention social democracy and the Glenn Becks and Rush Limbaughs of this world morph it all into “socialism.” Mutter the words “limited government” and MoveOn.org and Rachel Maddow react with equal intellectual-distorting horror.

In practical terms, too, both militant sides are blind to their lack of consistency with their visions.

On the right, we have all of this talk about “limited government” and how we can’t afford things but conservatives continue with massive corporate welfare. Cut Social Security and Medicare – those programs Americans have contributed to and are relying on – we can’t afford those, but let’s not cut tax loopholes for the rich or stem the flow of taxpayers’ money to successful agri-business or other corporations. The GOP likes to see itself as the friend of small business but has turned its back on serious health care reform. Health-care costs cripple small business.

On the left, we have lip service paid to enterprise, small business and the American entrepreneur. But little restraint when it comes to over-regulation. And where is the recognition that corporate tax does need to come down for America to be globally competitive?

We are trapped.

 

Dollar or Pound?

A relative wrote me to ask whether she should change pounds for dollars on the grounds that the dollar has weakened during the debt ceiling showdown and would likely increase in value once a compromise had been struck in Washington DC. This is what I replied:

“I am glad you are so confident that a last-minute deal will avert a technical default. I think a lot could go wrong before then. And if a deal is struck, it will be the two-part Reid-Boehner compromise that in effect will kick the can down the road and will merely delay the reckoning. In other words, this failure of mature government is to be repeated in a few months time.

On the macro-level, I agree with Mohamed el-Erian (PIMCO’s CEO) that long-term damage has already been caused to the U.S. and that international investor confidence has been shaken by what has been taking place in the past few weeks. It is quite likely that the rating agencies will downgrade the U.S., even if the Reid-Boehner compromise is agreed. That will knock the value of the dollar.

Despite the awfully slow economic growth in the UK the last quarter, I still believe that the Coalition is basically on the right track – UK debt reduction is essential and more necessary than debt reduction in the U.S.. For example, the U.S. deficit could disappear with an increase in government revenue, i.e. tax increases. That is off-the-table, alas, at present because of the economic illiterates in the GOP House caucus, who believe incorrectly that any tax increase will restrain economic growth.

In other words, I think the pound is a better bet than the dollar in the medium term. Could you make a small profit by buying dollars now and maybe in a few days time, if a deal is struck, see a dollar value rise and be able to exchange back to pounds beneficially? Maybe you could, but it is a risk and I am not sure that you should be risking your capital.”

And what happens if a deal is not done, even the Reid-Boehner plan? I know there is a temptation to risk but I myself would avoid it.”

 

Press Regulation – The Way for Politicians To Hide Their Graft

Thanks to Andrew Gilligan at the Sunday Telegraph we have meat to the suspicion that some in the UK political class will use the phone-hacking scandal at the now defunct News of the World to push for regulation that would muzzle papers from disclosing their wrong-doing or graft. The Hacked Off campaign that actor Hugh Grant fronts is partly funded by lobbyists at Sovereign Strategy, which was accused of involvement in a “cash-for-access” operation to serving Labour ministers. The company employed also former Labour minister Lord Moonie who was caught in a press sting offering to help clients amend laws for £30,000.