Politics & Policy

How to Save Capitalism from Libertarians

(Heike Brauer/Dreamstime)
A GOP candidate who focuses on protecting wages and jobs could take the 2016 nomination.

I have a prediction to make. Something new is going to emerge in the 2016 election — a genuine conservative populism.

The Democrats have made it clear — with President Obama signaling he will impose his unilateral immigration non-reform asap along with climate-change restrictions, and congressional Democrats quickly reelecting the same old leaders — that the next two years will consist of picking fights like crazy around hardcore liberal issues peripheral to voters’ core concern: the middle class’s sense that its own standard of living is declining and its children’s prospects are even worse.

In the short term, Republicans would be wise to frame their policy responses to Obamacrats’ provocations primarily on the negative effect that these changes will have on voters’ paychecks: not just on their “jobs” but on the way these moves will accelerate hard-working voters’ declining standard of living. Unregulated amnesty will invite an influx of low-wage workers to compete with and reduce existing workers’ paychecks, for example, including those of immigrants. Climate-change regulations will frustrate economic growth, reduce your paycheck, and keep you from enjoying a wage increase from lower energy costs. Obamacare is eating up the paychecks of the young.

Talking like this will be hard for many Republicans, because the party is dominated by two overlapping elites: principled libertarians and pragmatic business owners.

But what’s at stake in developing a truly populist conservative alternative is nothing less than the survival of free-market capitalism in the United States. We have one shot to prevent the Europeanization of America after eight years of Obama. We had better get this right.

Why do I predict a new conservative economic populism will emerge? In part, the answer is that the current crowd of 2016 potential candidates is so crowded. Simply repeating the standard conservative economic platitudes will not make a candidate stand out. Every candidate is going to claim to be pro-life, for lower taxes, and against regulation. Just 50 percent of voters in 2014 said they preferred the Republicans on the economy, according to exit polls.

Conventional conservatives are going to sound a lot alike, and I predict most will say little that sounds new or gripping to the average voter. Our ideologies are disconnected from ordinary voters’ lives. But this in itself is a clear opportunity, one that some candidate is likely to figure out and seize, to demonstrate that the conservative Republican base is not really libertarian. At the core of our concern is the value of hard work, innovation, and economic growth that reaches down to the average American family.

What might this new conservative populism look like? Its distinguishing characteristic will be seriousness about creating the economic conditions that raise the standard of living of the middle class, and a willingness to violate pure libertarian symbolic policies to get there.

Call it a coalition of the hardworking (janitors, waitresses, dentists, small-business owners and entrepreneurs) against the emerging coalition of cronies who prefer to work Washington relationships and siphon off bundles of cash. There is now a Wall Street–Washington complex in which “too big to fail” bankers shake hands with the government, borrowing money at artificially low 0 percent interest rates and lending them back to the government at 2 percent, making billions in unearned bonuses. Many businessmen understand that working exemptions from the Obama regulations is the key to their big paycheck, even as it hurts ours.

What would these populist policies look like? An extremely brilliant friend of mine suggested some yet-to-be-considered possibilities. First, breaking up the “too big to fail” banks. There is no reason, other than politics, that Citibank and Goldman Sachs were saved from their own idiocies. Campaign donations flow to the Democrats in gratitude for their new deal for Wall Street banks that are non-investors in the economy, since they are investing in Washington instead.

His most striking suggestion? End the corporate income tax while raising income-tax rates on the 1 percent. That would reward hard-working entrepreneurs and their workers who create companies that add real value to the economy, along with ordinary families, while taxing the income that goes to luxury consumption goods, from Manhattan flats to luxury yachts.

Ending the corporate income tax might be too much, but reducing it to the level of Canada (15 percent) while raising taxes on the incomes of very top earners would create explosive economic growth, rewarding hard work, not consumption, while demonstrating to voters that we care about their interests.

I would add at least two more ideas. First, raise the minimum wage by 15 percent, to $8.70 an hour. At this point it is clear that, unlike the $15-per-hour minimum wage that some socialist Democrats agitate for, a 15 percent wage hike for minimum-wage workers would not hurt economic or job growth, and it would demonstrate to all hard-working voters, not just minimum-wage workers, that we are not captives to some strange ideology. The majority of Republicans support raising the minimum wage, according to a recent Pew poll.

Second, protect family incomes. The coalition of the hard-working includes moms who work part-time, or not at all, or who get family members to help care for their kids while they work. Increase the child-care tax credit by 15 percent and make it available to all mothers with children under the age of six.

I would add to this economic list strong support for a ban on abortions after the fifth month of pregnancy, and protection for religious dissenters on gay marriage, especially in terms of employment discrimination.

There is a huge opportunity for a conservative populist to take on the hardening libertarian orthodoxies (including opposition to tax support for families) in a way that will genuinely focus conservative economic policies on growth-producing measures that benefit all the members of the coalition of the hardworking.

The Obamacrats will be pursuing their pet “values” issues against the wishes of the American people. The coalition of the cronies will continue to rake in big taxpayer bucks and donate to Democrats.

Meanwhile, in 2016, the GOP libertarian vote, among voters and donors, will be split among multiple conventional conservatives who are not facing the fact that vague platitudes are not cutting it with voters.

The top-tier conservative candidate who grasps this dynamic and this opportunity will not only win in 2016; he or she will save capitalism from its well-meaning but inept defenders.

— Maggie Gallagher is a senior fellow at the American Principles Project. She blogs at MaggieGallagher.com.

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