Conservatism as the creed of working America

Patrick Garry, RenewAmerica analyst

Despite the abysmal record of President Obama and the struggling economy, polls show that middle and working-class Americans still view the Democratic Party more favorably than they do the Republican Party.

Indeed, the recent election in Ohio, in which the voters overwhelmingly rejected Governor Kasich's effort to reign in the power of public sector unions, demonstrates the negative perception about the Republican Party's ability to represent working America.

This is one of the reasons that, in the face of a truly dismal record, President Obama continues to out-poll Republican opponents among working and middle-class Americans — the long entrenched view that the conservative ideology favors the wealthy and powerful to the disadvantage of the working and middle-class. This view, continually reinforced by the entertainment industry, has been part of the Democratic Party's "brand" ever since the New Deal: the party that looks out for the common person.

The distorted image of conservatism

For the past eighty years, since their overhaul of the American constitutional and political systems during the New Deal, liberals have fairly successfully portrayed conservatives as indifferent and maybe even hostile to the interests of the common person. In my recent book Conservatism Redefined: A Creed for the Poor and Disadvantaged, I explain how this portrayal is not only wrong and inaccurate, but also disingenuous. It is the Left that is increasingly being supported by the wealthy elite, and it is the Left that is increasingly advocating policies that are harmful to working and middle class America — policies that condemn children of poor families to failing schools, destroy jobs that working America needs, promote both private and public debt that hits the working class particularly hard, and foster a big-government entitlement and regulatory culture that suffocates the kind of economic mobility necessary for the American dream.

Yet even though the Left has misrepresented conservative principles and goals, conservatives themselves have inadvertently assisted in this misrepresentation. By not more forcefully advocating their agenda from the standpoint of working-class and poor Americans, conservatives have played into the liberal portrayal of them. Therefore, what conservatives must do, especially during the current budget and tax controversies in which liberals paint conservatives as concerned only with the rich and powerful, is to specifically address how their policies and principles will empower working-class and poor Americans.

How the two ideologies approach opportunity

The focus of the Left is on opposition and penalty — opposing the success of "the wealthy" and penalizing them for that success. But this opposition does not translate into opportunity for struggling Americans. Indeed, since 2008, despite all the liberal government programs, the employment rate of 15- to 64-year-olds has fallen steadily and now, at below 70%, approximates the rate in Europe. The youth unemployment rate (those younger than 25 years-old) hovers near 20%, just barely below that of Europe. Historically, the U.S. labor market has functioned much better than that in Europe — but that hasn't been the case since 2008. The U.S. economy now seems to have a rigid job market, with less chances of economic advancement.

The Obama campaign against American business has not hurt the wealthy or powerful — in fact, Warren Buffett seems to be a very vocal Obama supporter. The rich continue to enthusiastically support Obama; he has already raised a record amount of campaign funds. No, the real victims of the Obama policies are those he claims to represent — the poor and working-class. Their jobs are disappearing; their education is failing; their homes are being foreclosed; and their chances at advancement are being transferred overseas.

Under a liberal governance, the U.S. in its international tax environment rating has declined more than 50 percent since 2008, now placing 69th out of 183 countries, according to a joint study by the World Bank International Finance Corp. and PricewaterhouseCoopers. In its business tax rates, the U.S. ranks 131st. Whereas 123 out of 183 economies have made improvements in their tax policies since 2006, the U.S. has slid backward. And the consequences of this downward slide is not to empower the poor, but to disadvantage them, by pushing American companies to move their jobs overseas.

A strangulating regulatory environment has similarly snuffed out opportunity for the poor and working-class. As Richard Epstein reveals in Design for Liberty: Private Property, Public Administration and the Rule of Law, the number of government bureaucrats needed to issue a permit authorizing a new 2700-square-foot building outnumbers the number of construction workers needed to build it. Thirty years ago, General Motors had 500,000 workers. But largely because of federal labor regulations, GM was prevented from adjusting labor costs so as to combat foreign competition, with the result that GM now has only 60,000 employees.

According to the Small Business Administration, the regulatory burden on the U.S. economy is $1.75 trillion annually, or approximately $10, 585 per individual employee. A Chamber of Commerce survey shows that more than sixty percent of small businesses have no plans to hire additional employees in the next year because of the adverse regulatory environment. The businesses are making profits, but they aren't going to make new jobs because of the increasing regulatory costs.

Even the non-working poor get penalized by the regulatory state. For instance, after 26 years of providing meals to the poor, the Morristown Community Soup Kitchen was suddenly classified by health regulators as a "retail" food establishment under New Jersey law, thus rendering the soup kitchen liable for complying with a wide array of health regulations. Those regulations are estimated to cost the kitchen, run by volunteers, at least $150,000 a year, even though there has never been a case of food poisoning in the 26 years the kitchen has been operating.

The issue most important to economic advancement

Liberals claim to act on behalf of working Americans, but they consistently oppose secret ballot elections for union representation. Democrats also oppose "right to work" laws, which give workers the right not to be forced to join a union, even though the states that have passed these laws have witnessed the greatest job growth. Moreover, when Indiana's Mitch Daniels stopped automatically deducting public sector union dues in 2005, many workers then voluntarily chose not to pay those dues.

Even though job opportunities for the unskilled and uneducated are declining, the Left still ignores the kind of education actually being received by the children of poor and working-class Americans, continuing to stand by the teachers' unions that have presided over declining educational standards. The Left concentrates its focus on mandated equality, even though, for instance, a plumber who has mastered the new water-flow sensor technology and pipe-fitting innovations can make more than $100,000 a year, whereas plumbers who know only the basics can make less than $20,000.

What really hurts poor and minority workers is not that corporate executives make high salaries, but that their job skills have not kept pace with the skill levels of workers abroad. And yet, the Left puts its education emphasis on politically-correct curriculums and teacher salaries, and then blames minority unemployment on racism. Even though public education spending is now in excess of $10,000 per pupil per year, making it the second highest spender in the industrialized world, reading and math scores have been flat since 1970, and high school graduation rates have actually declined, with ethnic and racial minorities having particularly low graduation rates.

Big government works against the poor

There are many reasons why conservatives argue for limited government. It is not just because the principle of limited government is enshrined in the Constitution, or because unlimited government results in unlimited budget deficits, or because government is only really competent at a few functions (and certainly not at investing in corporations or creating jobs or producing economic growth). But another reason is because big, unlimited government hurts just the people that the promoters of big government say they want to help.

Rather than helping the average person, big government ends up helping big business and big labor. This cozy partnership between the three big's — big government, big business and big labor — has been especially evident during the Obama presidency. Consider, for instance, the case of Jeffrey Immelt, the CEO of General Electric who serves as chair of Obama's Council on Jobs and Competitiveness and whose company paid no corporate income taxes in 2009 and 2010, all the while shipping thousands of jobs overseas.

According to the Washington Post, President Obama has raised more campaign money from financiers and bankers than all of the Republican presidential candidates combined. Perhaps the reason for this is that, even though Obama has given verbal embrace of the Occupy Wall Street protest, Wall Street firms earned more in the first two and a half years of the Obama administration than during the entire eight years of the Bush presidency. But smaller banks, who don't have the manpower or resources to comply with all the regulations enacted by a Democratic Congress, have not fared nearly as well.

Under Obama, increasingly powerful federal agencies have served their special interests to choke off job creation. The National Labor Relations Board, for instance, has aggressively sought to stop Boeing from building a new factory in South Carolina, which would create thousands of new jobs, just because a union didn't want Boeing expanding in a location other than Washington. And after enacting one of the most far-reaching pieces of legislation in history (the healthcare reform bill), the Obama administration has been busy selectively giving hundreds of waivers to powerfully placed interests — but there are no special waivers being given to the average working person.

Big government and the debt culture

A powerful and expanding government has also promulgated a policy of increasing the indebtedness of the American public — an indebtedness that hits the poor and working class especially hard. It was federal rules that pushed mortgage lenders to issue housing loans that the poor and working class could not afford, leading them eventually to not only lose their homes but their credit rating as well. This federal encouragement of massively increased housing debt eventually led to the housing bubble, and then to the financial crisis that produced the worst recession since the Great Depression. And like all recessions, this one imposed the most pain on those furthest down on the income ladder.

Government rules that sought to increase homeownership by the poor eliminated many longstanding underwriting standards, such as the requirement that borrowers document their income and assets. Under the new loans, which could be approved over the Internet, even the down payment requirement was relaxed and sometimes abandoned. But this only meant that people who could not afford a home bought it, only to later lose it, along with any money they had put into the house.

Federal college-loan guarantees have fostered an incredible indebtedness among young people, thereby creating the conditions for a tuition bubble, since federal loan guarantees in turn prop up astronomical increases in tuition and fees. No wonder higher education is so supportive of big government — because no matter how much college administrators increase tuition, the feds are there to provide the money. But there are no standards placed on these loans to unsuspecting 18 year-olds. Even when they are D students, taking out tens of thousands of dollars each year to pursue a degree in a field of little practical value, there is no one urging a rethinking of that use of loan money. It's like a bank giving a loan on a house, but never once taking into account whether the loan is economically viable.

Debt hurts the poor most, because they are the most vulnerable to it. They have little savings to finance that debt if anything happens to their job or their economic status. And when the poor can't pay off their debt, they lose their homes, any savings, their chance for an education, and their ability to get any future loans. But big government has increasingly encouraged high levels of consumer debt. Lately, because of beliefs about how to stimulate the economy, the government has pursued a policy of cheap money and low interest rates. And with a near-zero interest rate environment, the prices of real goods increase at a higher rate than what average people earn on their savings — hence, the rational thing to do is save less and consume more. But a nation does not become wealthy on consumption, only on production. And when a nation is living off consumption, it cannot afford to pay the kind of wages that enable the poor to move into the middle class.

The entitlement state's impact on the poor and working class

The entitlement state can actually work against the poor and working class. The federal payroll taxes used to support Social Security and Medicare are not only regressive, but have increased over the past thirty years, even though income taxes, which nearly half the population do not pay, have declined. Furthermore, the distribution of government transfer payments to lower income households has also declined. In 1979, households in the lowest income quartile received 54 percent of all transfer payments; whereas in 2007, those households received just 36 percent. With the lowest income households losing out to the more affluent elderly, the federal entitlement state has actually increased income inequality.

The welfare reform act of 1996, for instance, demonstrated that government entitlements can actually hurt the poor. Indeed, by giving them incentive to move off of government dependency, the reform act induced welfare recipients to get jobs that left them better off both economically and psychologically.

Then again, the actual state of income inequality isn't at all what the Left makes it out to be. Of course income inequality exists, but what the Left ignores is how social mobility influences the composition of that inequality. For instance, a Tax Journal study of individual income tax returns found that 58 percent of those in the lowest income quartile in 1996 had moved up to a higher income level by 2005.

Big government and its entitlement culture transforms society into a combative, adversarial place. People turn against each other in a continual competition for government favor. This kind of conflict can be seen in the streets of Greece and Italy. Fairness is no longer measured by what people earn as a result of their hard work and talent, but what government doles out to favored groups. But the more government tries to enforce a mandated version of equality, the more that people who work hard and save feel cheated.

This was one of the motivating impulses behind the Tea Party — the opposition to government rewarding people for bad behavior: like bailing out homeowners who couldn't pay for wildly inflated houses they had bought on the irrational belief that property prices would continually rise; like bailing out the banks that had engaged in reckless investing, effectively punishing those banks that had acted responsibly. But this bail-out of consequences for harmful behavior had been going on for decades, with liberal welfare policies passing along the costs of out-of-wedlock childbearing to taxpayers, and with liberal criminal law policies at least partially shielding perpetrators from the consequences of their criminal activities.

The more unlimited the power of government grows, the more opportunities it has to reward its hand-picked special interests and beneficiaries. (Indeed, the most unfair society is one in which government picks the winners and losers.) The federal government props up Fannie Mae and Freddie Mac at tremendous cost to the individual taxpayer. It doles out hundreds of millions of dollars to bankrupt but politically connected companies like Solyndra. It takes money from struggling taxpayers and passes it on to wealthy, well-entrenched agribusinesses. Indeed, one of the sources of inequality is corporate welfare or crony capitalism that enriches the powerful.

Big government means that some people get big favors, for which the rest of the population has to pay. The irony to the Occupy Wall Street protest is that even though the Democratic Party has aligned with it, supporting its call for bigger government to combat those Wall Street connivers, Wall Street is one of the Democratic Party's biggest donors. After all, Wall Street wants bigger government too. It makes a lot of money off all the bonds that have to be floated to cover the increasing public debt. It makes a lot of money using its political connections to get billion-dollar government loans and tax breaks for its corporate clients.

Public sector unions as a proxy for the poor

According to the Left, the recent campaign by Republican governors in Wisconsin and Ohio to reign in the power of public sector unions reflects a broader war against the working class in general. But the privileged status of public sector unions doesn't help the poor and working American. For immigrants especially, the entry point into the American economy is not through the much-pursued public sector job, but through employment in the private sector, which must pay for all those benefits enjoyed by public sector unions.

The high labor costs extracted by public sector unions also threatens the stability of state and local governments, including those governmental programs meant to help the poor. Moreover, in the area of education, public sector teachers unions adversely affect the quality of education, which the poor and working person desperately needs so as to improve their position in life, by protecting under-performing teachers from being fired. Perhaps this explains why, even though state and local government spending on K-12 education has increased, the quality and efficiency of public education has declined.

The public sector union has become an entrenched interest within government, dedicated to a permanent lobbying for bigger government and higher taxes. Public sector unions are displacing political machines as the activist arm of the Democratic Party; they have become a new kind of Tammany Hall. Public sector unions don't just negotiate with the employer, as they do in the private sector; they influence not only who their employer is going to be, but what public policy and taxation levels will be — and this policy is geared to the interests of public sector unions, not to the interests of the poor and private-sector working class.

Conservatism as a creed for the working person

Conservatism is a creed very much in tune with the values and interests of the common person. It is not an elitist ideology, demonstrated by the fact that the cultural elite overwhelmingly flock to liberalism and shun conservatism. But liberals have succeeded in casting conservatism as the ideological tool of the rich and powerful. What conservatives need to do in response, and especially to combat the kind of attacks that will undoubtedly be made during the 2012 presidential election, is to articulate their beliefs and policies from the perspective of the poor and working class.

Rather than expressing an opposition to big government simply in ideological or budgetary terms, conservatives should frame their opposition in terms of the effect of big government on the poor and working class. Big government tends to cement into place the status quo in society, benefitting those who already have achieved a certain power or comfort in life. It is not a path to opportunity or advancement.

Immigrants do not come to America so as to settle for a life of dependency on government entitlements. They come for the promise of a better life, a life of freedom and opportunity and growth, a life of empowerment rather than entitlement — the kind of life conservatism strives to provide.

Increasing taxes on the wealthy won't help the poor. What the poor need are jobs, good jobs, and to get those jobs they need education, good education. Moreover, tax increases have been proven to have a restraining effect on economic growth — and this restraint affects first and foremost the poor, because they are the first to be laid off during economic downturns. So the only beneficiaries of higher taxes are the public sector unions and the selected objects of governmental corporate welfare. Maintaining the current level of entitlements while raising tax rates on high earners is a recipe for Europe-style stagnation — and as the European example shows, the people hurt most by such stagnation are not the wealthy, but the poor and working class.

A better approach to address both economic inequality and the public debt crisis is to limit future increases in transfer payments to wealthy households and to cap deductions for home mortgage interest and state and local taxes that are very lucrative for high-income individuals, yet virtually worthless for low-income individuals who don't pay any income taxes.

Advancing the conservative message

Conservatism should aggressively proclaim its identity as a creed for the common person. It should push education reforms that allow the children of poor families to attend the same kind of schools attended by the rich. It should push to measure education by what children learn, rather than by what teachers' unions earn. Whenever a big government spending or entitlement issue arises, conservatives should give the poor a choice: whether they want higher government retirement benefits, or whether they want better educational opportunities for their children and greater economic opportunities for themselves in the private sector.

The biggest single tool needed by the poor and working class to advance economically is job training and up-to-date job skills. Conservatives should get behind this issue and push it as strongly as it should push K-12 education. But instead of running job training exclusively through the government, in the inefficient and wasteful way it is currently being run, conservatives should bring together government and business organizations that know very well what kind of skills are needed in today's employment climate — organizations like the Chamber of Commerce that can manage or oversee the curriculum of these job-training centers. Such a partnership would not only save the government money, but would ensure that the kind of education taking place is the kind that will reward the worker with a better and more secure job.

Conservatism stands for the freedom and opportunity of the individual. And this pertains to the individual in all his or her roles. Moreover, conservatives believe in an equality of this freedom and opportunity, whether the individual is a worker or an investor or a business owner. There isn't favoritism among roles, as there seems to be under contemporary liberalism.

Consistent with this belief in the equality of freedom and opportunity, conservatives should also seek to empower the shareholders of a corporation, as well as the workers of that corporation. The current corporate structure, which allows for cozy and unaccountable relationships between a corporation's board of directors and its top management (and which results in astronomical salaries and fees for both directors and officers), is a travesty on the rights of the owners of the corporation — the individual shareholders. It is a disgrace that corporate CEOs pull down multi-million dollar salaries while leading their companies into bankruptcy and its shareholders into financial ruin.

In the coming election, Democrats will not be able to run on their record, so they will rely on attacking conservatives. The primary focus of this attack will be a portrayal of conservatism as a tool of the rich and powerful. This is not an attack that conservatives should shy away from. In fact, it is an attack that should strengthen conservatism, by motivating conservatives to rethink how to deliver their message and who their true constituent really is.

© Patrick Garry