Battle4Liberty

Larry asked a great question in response to my last post…so are the republicans supply side economists or Austrian economists?

If you are referring to Republican (or Democrat) politicians, most are attorneys, not economists, and there are different views within each party. The following is my oversimplified interpretation of national politics.

Let’s start with the Democrats. In general, most are part Keynesian and part central planner. Keynesians recognize some value in free markets but think they will ultimately self-destruct if not constantly reigned in by government. Central planners could be socialists, fascists, or some combination of the two; they believe that markets just don’t work or are overtly unfair. I don’t think most Democrats want to completely destroy markets; they just want to “control” them for the better. Obamacare is a great example because it touted “managed competition” in healthcare markets. Of course, competition is–by definition–free and cannot be managed.

It’s not easy to get a good read on Republicans as a group. Most campaign like Austrians in the primaries, promising to cut regulations and scrap the current tax code in favor of a flat or fair tax. They campaign like supply-siders in the general elections, promising a softer version of tax cuts and general regulation relief while promoting certain types of central planning, such as healthcare and education. They usually end up governing like soft Keynesians, favoring a combination of pro-market policies and populist, anti-market intervention.

When you mix the Democrats and Republicans in Washington, you get a blend of hard and soft Keynesian economics, a far cry from either the supply side or the Austrian views. This general mistrust of free enterprise explains why Washington’s best effort at reform typically regresses to talk about cutting the growth of spending or running existing programs more efficiently, and even watered down proposals like these usually don’t go anywhere.

Now back to the specific question…There are some exceptions to the rule, but most Republicans are neither supply sider nor Austrians. They’re middle-of-the-roaders who really favor a mixed economy. They want the growth of free enterprise and the security of big government, and don’t understand why the two cannot peacefully coexist. But trying to do both simply breeds cronyism. Supply-side policies are a move in the right direction, but a more potent Austrian approach attacks cronyism at the core.