Amid the search for a way forward for Republicans heading into the 2014 midterm elections, the drumbeat for "libertarian populism" has been getting steadily louder. That idea, defended by writers like the Washington Examiner's Tim Carney and The Transom's Ben Domenech, asks the GOP to meld two strains within its ranks that have, until now, generally been seen as discrete.
Libertarianism is characterized by its support for only minimal government intrusion into the free market. Populism, meanwhile, is known for its support of anything that benefits "regular Americans" instead of powerful elites. At first blush, the two can seem uneasy bedfellows – after all, some may wonder, doesn't capitalism just serve to make richer the already rich?
The philosophy's advocates don't see it that way. Instead, they call for eliminating governmental programs primarily because those programs give a leg up to large, entrenched interests like super PACs, labor unions, banks and corporations. Libertarian populism is defined less by what it's for and more by what it seeks to do away with – the reality that our current system unfairly privileges big institutions at everyone else's expense. Setting aside that any policy prescription liberal economist Paul Krugman doesn't like is probably worth pursuing, there are good reasons to think Carney and Domenech might be on to something.
There can be no doubt crony capitalism is a problem in America. When the biggest, richest, most powerful institutions can collude with government to rig the game in their favor, the competition that makes free markets the greatest force for freedom in the world begins to break down. Aspiring entrepreneurs are dissuaded from trying to start new businesses, because they doubt they'll be able to compete with existing ones – not on the merits, but in the big firms' ability to buy influence with policymakers. And when producers are able to gain an unfair advantage through subsidies, bailouts, federal loan guarantees or beneficial regulations, consumers are forced to pay more for lesser products.
A great example of this is our needlessly convoluted "swiss cheese" federal tax code. Large entities have the resources to hire an army of lawyers and accountants to ensure they're taking advantage of every possible loophole. Most individual taxpayers, well, don't have that option. As a result, middle-income households end up paying nearly as much, and sometimes more, in taxes than the wealthiest Americans. And because big institutions can put their dollars to work lobbying the government for better treatment, the nature of the tax credits, write-offs and deductions carved into the code will skew more and more in their favor over time.
The libertarian populist answer to this problem is to flatten and simplify the tax code – not because doing so reduces the burden on the rich, but because it makes it harder for them to avoid what they owe. Fewer loopholes means less reason to spend huge amounts of money seeking out those loopholes. This does in a day what decades of carve-outs meant to benefit the middle class have failed to accomplish: It levels the playing field. And that is the crux of the libertarian populist formula: get government out so entrenched institutions can't keep using it to game the system.
At both ends of the political spectrum, Americans are hungry for an antidote to cronyism. Frustration with that aspect of the status quo is what powered both the tea party and the Occupy movements. In between, people may not quite be sure what's wrong with the current system, but they know something isn't right.
Therein lies the opportunity for Republicans. As the Examiner's Carney put it, "It's time for free-market populism and a Republican Party that fights against all forms of political privilege – a party that champions all who want to work and take risks in order to improve their lives and raise a family."
There is ample evidence that this could be a winning strategy. As workers have struggled to bounce back from the recession, banks and corporations have been raking in the profits, and that hasn't gone unnoticed. A report by the College Republican National Committee earlier this summer found the conservative narrative that young people most agreed with was, "We need leaders who aren't afraid to fight existing interests like big companies and big unions in order to reform outdated and unsustainable programs." Americans, especially young Americans, have become deeply suspicious of large institutions. More worrisome for Republicans, they have come to associate the GOP with the very institutions they mistrust.
The College Republicans asked a focus group of aspiring entrepreneurs why they voted for President Obama even though they see Republicans as the party that favors business. "The Republican Party would make it really easy to start a business and have a successful business if you already have that capital in your bank account … but we're all sitting on our own various debts and our student loans, and the Republican Party isn't helping us with any of that," one respondent explained.
Both parties are looking to communicate that they're on the side of regular Americans. Liberals can convey that idea by supporting wealth redistribution measures and ignoring the long-term negative consequences to the economy. But conservatives have to find a different way of proving to people they're not just looking out for the rich and powerful. More and more it seems their only hope is by making the GOP's raison d'être to get the crony out of capitalism.
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