Thursday, December 23, 2010
Conning Kansas: How America Has Grown Less Conservative
As I survey the current financial mess, I wonder how we have allowed a small group of ideological right-wing extremists hijack the economy. For over thirty years, a radical faction of discredited economic players have tricked the masses – that’s you and I – into voting on the basis of social issues, and in that way ignoring our economic self interest. Of course, Obama has ceded the Holy Grail of neocon extravagance: he’s given more than Bush ever dreamed and we’ll have hell to pay later on (stay tuned for more "hostages" in the near future)…
Check this out: in 1979, the highest-earning one-tenth of 1 percent of all taxpayers – the richest of the rich – took home only 3 percent of the national income. Today they take home 10 percent – that’s more than three times. Over that same span, their average tax rate has dropped from 32 to 23 percent. The minimum wage has lost nearly half its purchasing power. Income inequality during that same period has reached proportions not seen in any other advanced democracy and upward mobility in the U.S. is a thing of the past.
The irony is that during this same time period the Kansas of my title (meant to evoke mainstream America) has grown less conservative, not more. How can I say this, you ask? Well, for one thing, the National Election Survey has been asking voters for years whether they would prefer a larger government with more services or a smaller government with fewer services. In 1982, the first year of the poll, 32 percent favored smaller government, and 24 percent favored larger government (with the remainder flat in the middle or having no opinion). By 2004, it had completely reversed itself, with 43 percent preferring bigger government and just 20 percent wanting a smaller one. Other polls have shown that the public has turned away from the conservative movement’s anti-government stance and favor a more active government and more progressive taxes.
The same holds true for social issues. Since 1977, for example, the proportion of Americans believing gays should be allowed to teach in elementary school has doubled, from 27 to 54 percent. Those favoring gay adoption has risen from 11 to 49 percent (Bowman, 2006). Since 1976, the proportion of Americans who believe women deserve an equal role in business and political life has almost doubled, from 30 to 57 percent. The proportion who believes that a woman’s place is in the home has collapsed from 10 to 2 percent. 
The question remains then, if the public isn’t moving to the right on economic issues and if it isn't even moving right on social issues, then how can we explain the rise of right-wing economics? The only way we can understand it is by noting that right wing economics (once described as “voodoo economics” by none other than Bush the Elder) has been embraced by the economic elites.
Beginning with the 1970s there was a rise of a cult of pseudo-economists known as supply-siders -- a fanatical sect of tax cutters. Simply put, the thrust of their idea is that cutting taxes for the very rich is the best response to any and every economic circumstance. Additionally, they believe that it is perfectly appropriate to turn the most rapacious and greediest elements of the business lobbyists into essentially an arm of the federal government (Chait, 2007).
Despite having been proven wrong repeatedly, they have gained an iron grip on the ideological machinery of the conservative movement. Contrary to myth, the supply-siders were not maverick conservative economists; they were amateurs and cranks, convinced that they were able to reach conclusions that had escaped the analysis of professional economists (much like the climate deniers of today). The supply-siders quickly teamed up with cynical corporate lobbyists, who far from being zany, were smart, cynical businessmen (and some like Jack Abramoff, downright crooks) who knew that this was a chance to rape, pillage, and plunder.
All cults have their founding myths. The supply-side cult got its start, in part, from a little-known economic consultant, Arthur Laffer, an editorial page writer for the wall Street Journal, Jude Wanniski, and, yes, Dick Cheney, then chief of staff to President Ford. Wanniski had no training in economics at all, but was tutored by Laffer, who had been an economics professor t the University of Chicago. Laffer’s first came to Washington to work in the Office of Management and Budget (OMB). He quickly gained infamy when he made a wildly unconventional calculation about the size of the 1971 Gross Domestic Product. President Nixon, astutely observing that Laffer’s number was very optimistic, seized on it because it caused the appearance of an economic boom. When it was discovered that Laffer had used just four variables to arrive at his figure (most economists used hundreds if not thousands of inputs) he became the laughingstock of Washington. In fact, he turned out to be horribly wrong. Laffer left government in disgrace and the scorn of his peers (Blumenthal, 1988).
There’s more to all this and I hope to shed some light because too many of you have swallowed much of the supply-side Kool-Aid. Today’s Wall Street collusions/ meltdowns, the corporate ownership of government, and the continuing rise of "wealthfare" (giveaways to the rich) has its origins in supply-side “theory” and the dismantling of government and continues to wield a strong influence over social and economic policies.
As Warren Buffet has noted: There is a class war and the rich are winning it.
Blumenthal, S. (1988). The rise of the counter-establishment. New York: Harper & Row.
Bowman, K. (2006, Sunday, June 11). Gay pride and prejudice. Washington Post, p. B02.
Chait, J. (2007). The big con: The true story of how Washington got hoodwinked and hijacked by crackpot economics. Boston: Houghton Mifflin Company.