GOP Should Grow the Party, Grow the Economy, Shrink the State

Republicans have been getting a lot of advice lately. Democrats have urged them to join the state expansionist party, to agree that markets have failed, to concede that we need more government, and that, yes, "We can work together!" That advice is now consensus among  trendy intellectuals who have long disdained economic liberty and limited government anyway.

They’re joined by Washington business lobbyists who define success in terms of limited failure. Their appeasement formula — if you’re not at the table, you’ll be on the menu — has generally resulted in freedom and business flexibility being served for dinner.

Republicans will never recover by going that route. If Americans really want socialism, why settle for the weak version?

Republicans must accomplish two tasks. First, develop a message that reaches all Americans — liberals and libertarians as well as conservatives. Second, promote policies that empower individuals, businesses, and private organizations to solve problems. That means reviewing current policies that block such empowerment: excessive regulations, taxes, distorting subsidies, anti-competitive licensing laws, and so on. Grass doesn’t need to be taught to grow; all one needs to do is move the rocks off the seeds.

The world does face real problems: poverty, pollution, disease. These can best be alleviated by making it possible for more of the peoples of the world to create wealth and knowledge. Republicans must communicate the fact that the world’s problems are caused by a lack of not only economic freedom, but also the institutional arrangements that allow individuals to exercise that freedom responsibly.

For too long, Republicans have focused only on "red meat" rhetoric, which is useful in motivating the troops but is also likely to motivate opponents. That can get you only so far. Americans have no love for paternalistic policies, but voters will never care what you know until they know you care.

Republicans need to augment their economic arguments with arguments emphasizing citizens’ freedom to choose. They need to find evocative ways to convey the ability of free enterprise to improve human well-being. (Wal-Mart provides a good example, having done more than FEMA to aid those affected by Hurricane Katrina.)

Americans recognize that wealth and knowledge are prerequisites to solving problems, from poverty and pollution to education and infrastructure. They’re looking for solutions and are already rejecting the Democratic "bipartisan" rhetoric that doing something must mean expanding an impersonal bureaucratic state. They recognize that the current health care and global warming initiatives will result in a world that is sicker, darker, and poorer.

Many of the nation’s health care problems stem from a push by government and big business to preserve distorting exemptions in the tax code: provisions that shift the purchase of health insurance coverage onto employers and away from consumers themselves. Eliminating the exemptions would be difficult, but as a second-best alternative, Republicans could seek to extend them to all Americans, make them independent of employment, and put patients in control of their own health care costs by expanding vehicles such as health savings accounts.

Whatever risks there may be in global warming, the "bipartisan" approach of Lindsey Graham (R?-S.C.) and John Kerry (D-Mass.) can only worsen the GOP’s plight. Suppressing economic growth through cap-and-tax energy-rationing programs will only impoverish Americans. Raising energy prices will not help the world’s poor; wealth creation made possible by affordable energy policies will. Note how Holland, which has faced rising sea levels for centuries, has held back the sea while becoming one of the world’s wealthiest nations. The best insurance against disaster is to create the generalized wealth and knowledge that will allow America and the world to address now whatever risks might materialize a century from now — or later.

Republicans should work to reform policies that have encouraged people to locate in earthquake zones in California, flood plains along the Gulf, and fire-prone areas throughout the West. They should join with environmentalists and others to encourage reforms that would allow private insurers to price risks, thus encouraging development outside of hazardous areas.

Rather than pick technology winners via tax subsidies, Republicans could make a principled case for eliminating all capital taxes or (even better) the corporate income tax itself. Few reforms would do more to accelerate the diffusion of affordable, energy-efficient technologies and all the benefits they would bring.

Republicans must reject the "do something by expanding government" approach. Americans want solutions, not more bureaucracy. They have always had doubts about "big" institutions. Republicans should be critical of subsidized Big Business. However, they should also realize that the biggest institutions are not economic, but political. Republicans should make it clear that "doing something" about the problems we face often means government doing less.