The economic irrationality of new conservatives

The economic irrationality of new conservatives

ESSA Writers
April 3, 2014

The current wave of new conservatives, that have become the prominent voice of the right-wing in America, carry with them a great ideological passion. These conservatives have been vocal supporters of many policies that are often congruent with the neo-liberal viewpoint. Such policies include a laissez-faire economic approach and small government; both of which are aligned with the economic rationalist approach. They have also ardently maintained their pro-family, pro-community rhetoric in a time when they say these values are being tossed aside by an increasingly liberalised America.

However, a strict adherence to economic rationalist principles is not compatible with family strength and social welfare in either theory or practice. This new batch of economic rationalists would be wise to support an economic ideology that is the antithesis of their current one if they want to do more than just pay lip service to the masses.

Economic rationalism is a doctrine that improves efficiency rather than equality. The main principle of economic rationalism is that the government should step aside to let the free market work its magic. Lower tax and deregulation are seen as two key pillars of this approach. Of course, lower tax, in a progressive tax system, serves the rich largely at the expense of the poor and deregulation, especially in the labour market, often grants employers unwarranted powers to fire their employees. Above all, economic rationalist policies are generally anti-worker and pro-business, and the lack of moral concern in favour of the ruthless pursuit of profit is perhaps the most important factor to acknowledge. This should radically alter the mind of any new conservative who is supporting policies that comply with this economic doctrine, as the welfare of the communities that they are apparently speaking for, is not the doctrines main concern.

It’s not just in theory that economic rationalism is mutually exclusive from social welfare, but also in practice. Prior to the 1970’s, the middle class in America was in the best shape it had been in for decades. Incomes were rising at a rapid rate and unemployment was at record low levels. This was primarily due to an economic system that was highly regulated and highly equitable. However, a fundamental shift occurred as a new wave of neo-liberals began to sweep into power in the major world governments – lead by Ronald Reagan in the US. What followed was an era of massive deregulation, privatisation and tax cuts implemented under the guise of widespread prosperity. The results were wage stagnation for the American middle class and a string of financial crises, which culminated in the Great Recession. Economic rationalist ideas have had their impact, and the results are there for all of us to see and for working families to resent.

Given all this, the new conservatives should be finding themselves in an intellectual and moral conundrum, as one of their principle moral concerns is so sharply incompatible with their economic motivations. However, the fact that so many neo-liberals are unwilling to even begin to doubt the validity of their economic arguments, despite the weight of evidence against them, suggests that they are by no means concerned with the plight of American communities. It seems clear that their primary political motivation is to instil an economic laissez-faire system whereby those who can exploit it are the only beneficiaries and that the pro-family rhetoric is adopted only to quell outrage and gather support. The only way this tide can turn is if the new conservatives shift their ideological line, because throughout history and up to the present moment, there has been no reconciling economic rationalism with middle-class welfare.