Tuesday, October 1, 2013

Shutdown: Looking Past the Tactics

Government "shutdowns" are said to be bad for Republicans.  And that's probably true in the short-term sense.  Our liberal friends in the mainstream media tend to report the news in liberal terms.  Thus a government shutdown means that women and minorities will be unable to get the benefits they need, and therefore Republicans are taking bread from the mouths of babies.

But long term it doesn't seem that big of a deal.  Sean Trende shows that the government shutdowns of 1995-96 didn't seem to annihilate the Republicans when it came to the 1996 elections.  True they did manage to lose some House seats, but mainly in Clinton-leaning districts.

So let's focus on the donut, and not upon the hole.  That's what supply-siders Arthur Laffer and Stephen Moore do.  They note that the big Democratic spending occurred in 2007-10, when Congress was Democratic.  Since 2011, with Republicans running the House, spending has come down, rather more than we might think.  Although Republicans seemed to lose the August 2011 debt-ceiling crisis and the December-January fiscal cliff crisis, in fact they won, because they got substantial cuts in spending.  That's good for the economy, as Laffer and Moore point out.
The federal government’s main activity now is to redistribute resources, mostly from producers to non-producers. When the money the government takes from workers and producers is used to pay people and companies not to work—food stamps, unemployment benefits, bailouts, Solyndras, Obamacare health subsidies—it’s a double-whammy.
It's not good for the economy when government takes stuff from some people and gives it to others.  Why not?  Because when you give money to people, whether 19th century Russian heirs or 21st century "disability" recipients, they don't need to get out and get a job.  Where "job" is defined as doing something useful to other people for which they are prepared to pay money.

But look at the list above: "food stamps, unemployment benefits, bailouts, Solyndras, Obamacare health subsidies."  Add in too-big-to-fail banks and grants for studying global warming, and you'd define the current over-under Democratic coalition.  And the Obama years have been very good for them.

But the ordinary middle class has not done well.  If you want to start a business, the regulatory hail-storm has beaten you back.  If you want to retire, the Crash of 2008 made you sell at the bottom and now you can't even get a decent interest rate on your savings account.  If you are a middle-class college graduate you are buried in student debt.

In the 2000s the Democrats did a fine job encouraging "social liberal economically conservative" voters away from the Republican party.  That was easy when the economy seemed to be OK and you could always get money from the mortgage ATM.

But now, after nearly eight years of the over-under Democrats hosing money at their base, the "social liberal" question seems to be less important.  The fact is that if you are an unorganized individual, not a green energy capitalist, not a union member, not a welfare-state dependent, you are tearing your hair out right now.  You are wondering: can I ever retire?  Will I ever be able to start a business?  Will my children be able to afford a decent education?  Will they find decent careers?  Will the government come after my savings, like they have in Cyprus and Poland?

The fact of politics is that you may not like the other people in your party coalition, but you put up with them because the alternative is worse.  Libertarians may not like fundamentalist Christians, but when it comes to smaller government, what difference does it make?

And so I suspect that all the sound and fury of the government shutdown will signify nothing.  The fact of the matter is that if you are a member of the People of the Responsible Self these Obama years are the times that try men's souls.

Come 2014 and 2016 the People of the Responsible Self won't be worrying too much about the niceties.  We will just want Obama and Pelosi and Reid gone.

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