Intellectual Sloth

One of the things that troubles me about this presidential campaign is the Republican abdication of coherent thoughts when making arguments. I don't know where this party is getting its leaders, but it is not getting them from the right pool. Is it too hard to ask, from a nation of 300 million people, for the presidential candidates of both parties to articulate and defend their ideas? McCain's performance has been pitiful at best, and it sometimes makes me wonder whether he is a small government conservative at all. Into this is what the party of Frederick Hayek's and Milton Friedman's ideas have degenerated?Let's look at the last presidential debate. There was a question on health care. That was a reasonable question, considering it is in the thoughts of a good portion of the electorate. How is it possible, given that health care has been an electoral issue for close to a decade, that McCain could not counter Obama's scheme? Is it so hard to defend a market-based health care system?

I tend to support McCain's elimination of the deduction for employers that provide health care coverage. The reasoning is simple: By forcing the patient to find health care coverage tailored to his or her needs, the resulting negotiation will most likely involve higher co-pays. However, over time, this will create incentives for the patients to shop around, resulting in a downward pressure on health care costs. Over time, costs will go down, and more people will be able to afford health care. Let's remember, the problem with today's health care is not that it's bad. The US has the best medical infrastructure in the world. The problem is that the costs are too high. Now, when the patient, who generally is part of the insured population, goes to a doctor, he doesn't care about finding cost-efficient ways of doing things, because the insurance pays. Therefore, the insurance claims are larger, resulting in higher premiums. Anyway, I digress.

There have been questions on the current financial crisis. It boggles my mind that McCain suspended the campaign to address the issue, yet he has not come up with an intelligent way of talking about it. Again, I think Obama has it wrong, but that is no excuse for the Republicans lack of a coherent response. In this case, if you want to be a serious conservative statesman, your first explanation to the public is that we need to tackle the causes of the problem, not the symptoms.

So, what, in my not so humble opinion, are the causes? Regrettably, I think that the politician which is nearest to the truth is Ron Paul. I say regrettably because I think that his gold standard idea is lunacy, putting under the spell of that nonsense a lot of his wonderful ideas.

(1) There was a market distortion: credit was too cheap, cheaper than what its risk adjusted value should have been. That is why we were going from bubble to bubble, as the money was going from one asset class (tech stocks in the 90's) to another asset class (real estate in the 00's).

(2) The distortion was caused by lax monetary policy. The Fed's mandate to develop policy to promote growth and price stability is akin to having a diet to promote weight loss by eating more calories and doing less exercise.

(3) The real estate asset bubble was compounded by Fannie Mae and Freddie Mac mandates to provide liquidity for the mortgage market. This problem was made worse recently by the present Congress when, as the sub prime crisis developed, they actually LOWERED their regulatory capital and expanding their mandate, making them more likely to default.

(4) So, as credit cheapened, it was profitable to come up with more complex structures to provide credit, so this MBS and ABS market flourished and infected the balance sheets of a good deal of the financial institutions.

So, is the solution to cap executive compensation? Is the problem "greed"? Sen. McCain decided that the problem is human nature: greed. I have no clue how you can regulate that.

This is evidence of a serious degeneration of the Republican Party. Conservatism will not flourish if the representatives of its ideas scoff at eloquence or defense of the ideas as elitism. After all, the founding fathers, the conservatives on whose shoulders Republicans stand, were the elite of this country, and created a system of government that restrained the passions of the mob. Populism and Republicanism, on average, should not mix.

Republicans need serious training on debating, economics, and government. Their so-called "Reaganism" sounds more like a religion than a political philosophy. Now, Republicans will have to go back to zero and explain, to a new generation of Americans, why a smaller government is better than a big one, and how market-driven solutions are better than centrally planned ones, in the context of the citizenry's present problems: economics, health care, and social policy.