The Meaning of the Wisconsin Recall Election

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The most surprising aspect of the current presidential race – to me at least — is not that Mitt Romney appears to be clawing his way into contention, after an extremely divisive Republican season, but rather that he is not yet far ahead.

President Obama’s two most important legislative “triumphs” – Obamacare and the $800 million stimulus bill – are both unpopular with a large majority of the electorate. Despite promises of the salutary effect of the stimulus, unemployment has remained over 8% for almost the entirety of the Obama presidency. The President has not offered one single proposal aimed at cutting long-term fiscal debt, besides tax increases. Recovery from the recession has been so sluggish as to be unnoticed by most Americans, and things could get significantly worse in the coming months if the eurozone implodes. The only sector producing significant new jobs is the brown energy sector towards which the Obama administration has always cast a jaundiced eye.

Yet despite all this, President Obama retains a narrow lead in most polls, including in the crucial battleground states.

Yuval Levin in the Weekly Standard last month offered an insightful explanation of why “I’m not Obama” has not yet proven sufficient for Romney: Americans suspect that the post-war prosperity is a thing of the past and that old models no longer apply. From 1960-1999, economic growth averaged 3.5% a year. From 2000-2009, it was less than half that, and since 2009, it has been only .6%.

Old economic models appear broken beyond repair. Higher education appears to be the next overpriced bubble waiting to pop. A college education no longer guarantees a job: For the first time ever, half the unemployed have some college education. But while the economic value of that college education may be declining its cost is rising at twice the rate of the cost of living, and many recent graduates are beginning their working lives saddled with enormous debt loads.

Some of the countries most prestigious law firms have gone bankrupt, and it is far from clear whether the old models of major law firm practice make any sense. I choose these two examples merely as metaphors for a rapidly changing world in which formerly safe paths to a level of financial security appear to be drying up.

In the face of great uncertainty about the future, even Americans who are convinced that the President is clueless about how to prepare America for a better future are skeptical that just throwing the bums out is enough. They are waiting to hear whether Romney has any new ideas for a new world.

Romney’s background in equity capital, where success depends on identifying potential added value in underperforming or failing companies, should help him in this regard. But so far he has not made the case for a new vision to deal with a rapidly changing world. A belief in free markets and entrepreneurship as the keys to innovation and adaptation is certainly part of that vision. But it will also require drawing on and explaining the public policy work done by market-oriented think tanks. Romney must emphasize he supports free markets not big business. Support of the latter too often degenerates into crony capitalism, in which the government puts its hands on the scales to aid certain well-connected large firms.

THE FIRST STEP IN THE ROMNEY strategy must be to portray the Obama economic vision as backward-looking and incapable of generating the needed innovation. In that regard, Scott Walker’s victory in the last week’s Wisconsin recall election is a favorable omen. Walker was able to appropriate the reformer label for himself. Romney must do the same: Show himself capable of offering solutions to endemic problems, just as many state governors, who do not have the luxury of being able to print money, have had to do.

The second plum handed Romney last week was President Obama’s press conference, in which the President claimed that the “private economy is doing fine,” butthe public sector needs bolstering at the state and municipal level. To that end, Obama urged greater government spending to protect public sector jobs. In a week in which voters in the second and third largest cities in irremediably blue California voted to cut public employee pensions, Providence, Rhode Island reneged on pension commitments, and public employees in other blue states began to face the fact that their promised pensions will likely never materialize, Obama appeared to call for more federal funding to maintain public sector employment at its present levels and with all its benefits.

Wisconsin voters signaled their approval of Governor Walker’s reforms, which enabled him to clear a $3 billion deficit, without cutting public services or raising taxes. But the message fell on deaf ears in the White House. In addition, the President still does not appear to grasp that without private sector growth there will be no money to pay for, much less expand, public sector employment.

Obama’s economic vision is profoundly retrograde. As Levin puts it, “His express objectives are to protect our existing entitlement system from structural reform, to increase the tax burden on investment and employment, to further empower and liberate regulators – and to bring more of the economy into the public sector.”

Public employee unions, which are one of the principal cash cows of the Democratic Party, effectively marry the party to government and bureaucracy. Their perpetual goal, in the words of Walter Russell Mead, an Obama voter in 2008, is “more government mandates and more government jobs – with more security, higher wages and better benefits all the time. . . . The civil service state is a solution permanently in search of new problems to solve.”

The goal of the public service unions is to prevent all but the most superficial change. They seek, as Mead points out, ever growing subsidies to the postal service, the public school system, higher education, even health care, while opposing any reforms designed to make these sectors more efficient, cheaper, or to provide better services. To the extent that the Democratic Party is thrall to the public service unions, it is the status quo defender of government service providers against the consumers of those services.

The Wisconsin results provide encouraging evidence that the segment of the population most adversely affected by the defense of the status quo – the young – is beginning to wake up to the fact that “hope and change” are not to be found on the Left. A majority of voters under 25 voted for Governor Walker.

The current entitlement system – social security, Medicaid, and Medicare – represents a tremendous generational transfer of wealth from younger (and poorer) workers to the elderly (and richer). The current rates of unemployment among college graduates have helped convince young graduates that happy days will not soon return without serious changes in American economic governance. (In Spain, and other European social welfare states, the levels of unemployment among younger workers are so high that they threaten a social explosion not too far down the line.)

Romney’s task going forward is to stick the label of reactionary on President Obama, and then to enunciate his own market-based solutions for reenergizing the American economy and freeing its animal spirits.

This article was first printed in Yated Ne’eman.

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5 Responses

  1. Phil says:

    Here’s my question: Why are some frum Jews so fixated on the “Tikkun Olam” Judaism of their woefully ignorant conservative/reform/unaffiliated brethren, which is often so at odds with the morals and needs of the frum community? Those two words don’t even appear in any classic Jewish source; Aleinu isn’t discussing socialism!

    Balance is certainly nice but no respected Torah leader ever supported or currently supports socialism; R. Kook, ZT”L certainly didn’t.

  2. L. Oberstein says:

    Why is English language frum journalism so one sided? Is there no room for those who are not conservative Republicans in Mishpacha, Ami, etc. Every week there are columnists and occasional contributers who have a very slanted and one sided take on every controversial issue in political life. Neither political party is pure and consistent to Torah values. If one can make the case that socialism is from the Torah, as many did in the Kibbutz Hadati, why do we have to go to the other extreme and side always without exception with one side of the spectrum. It is an issue that bears cheshbon hanefesh.

  3. lacosta says:

    rabbi rosenblum did not address the haredi stake in the Democratic welfare apparatus. many en masse voters [ ie hassidic followers] vote their Rebbes’ daas tora , which in a number of cases has preference for the open hand that Democrats offer, even at the price of a halachically proscribed moral agenda….

  4. L. Oberstein says:

    Interesting that Yated Neeman readers are Fox News followers if they watched TV. There is a real disconnect when so much of their readership relies on the Welfare state for their sustenance but who oppose the very programs they benefit from. I know what I would call it but you wouldn’t print that.
    Obama may or may not be re-elected. This election is about him, not Romney, as it always is for the second term. It depends on the economy and who knows what will be in November.
    What really bothers me is the breakdown of compromise in Washington. Menchlichkeit, meeting half way, putting the national interest above short term political gain, these and other values are out the window. Senators used to live most of the time in the DC area and socialize with one another, now they live in their home states and don’t have these relationships with members of the other party. That is bad for compromise. Instead of seeing one another as good people who love their country, they are ideologues with an agenda. I do not doubt for a moment that were Nancy Pelosi and Read able to, they would ignore the Republicans. It is just that now it is the other way around.
    There are no easy answers and we need bi-partisanship in Washington. If we continue to persecute undocumented aliens, we will just harm our owm economy. Who works in this country any more except the Hispanics. Try to get a maid or a gardener from another group. Why does Microsoft have to open a plant in Canada for all the graduates of US universities who can’t get a green card. The US is losing its edge and we are fighting one another instead of working together. That is the real issue.
    Unfortuantely, the political system we have now,especially when plutocrats can spend unlmited money to advance their pet candidates, doesn’t leave room for compromise. All of us are the losers.

  5. shaya says:

    Medicaid does not transfer from the young to the old; rather, it transfers from taxpayers to the poor, who are disproportionately young (many of them are children and young mothers).

    Which kind of economic and social welfare model works the best is an empirical question. There’s a lot of evidence the the neo-liberal (economic conservative) model that has taken hold over the last few decades has been bad for the economy and society, transferring wealth from the majority to the 1% (see the books Winner Take All Politics, and the Price of Inequality). Some European countries with high taxes and social expenditures, such as the Nordic countries, have done quite well on economic and social indicators over the same time period. They leave the economy only lightly regulated in some areas (such as hiring and firing), producing high rates of employment, yet provide generous social benefits for everyone.

    Regardless, we need to ask not just what is most effective in creating jobs or whatnot — the question is also what is compatible with Torah. From Avot 2:2 we see that a simple life with part-time work and part-time Torah study is ideal. This is most feasible not in a free market economy, where employers can force workers to work long hours, but rather in a somewhat more regulated economy, such as Netherlands. There, a law guarantees anyone who wants to work part-time a right to do so, with full benefits. Consequently, a large proportion of the people work part-time, leaving free time to do other things (hopefully Torah and mitzvos for the few Jews there).

    A more free-market economy, as you advocate, may or may not increase the rate of economic growth, but it would certainly increase working hours, increase the wealth of a tiny elite while increasing the cost of life for the rest of us, and continue the many absurd contradictions of modern mass industrialized life, from the unprecedented, massive and extreme violations of tzaar baalei chayim in factory farming to the fact that we spend billions on advertising luxury goods while millions of Americans lack basic human needs such as food and shelter. Are the millions of foreclosures going on now even compatible with halacha at all?

    We need to return to a simpler, less unequal, society, focused not on increasing wealth and technology as fast as possible, but on providing people’s basic needs, achieving injustice for the wronged and oppressed, and providing time for everyone to spend as much time on Torah and mitzvos as posible. If Kerala (a state in India) can achieve nearly 100% literacy and a life expectancy over 70 years with an annual GDP/person of only a few hundred dollars a year, surely we can abolish homelessness and dire poverty, and provide sufficient income with most people only working part-time jobs.