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Washington Republicans Shouldn’t Fall For Keynesianism Lite

At some point, we’re just having a debate about the size of the bottles we should have unemployed people bury and dig up.

Within the corridors of Washington’s think tanks and the halls of Capitol Hill, there have always been terms and phrases used which are absent from the conversations most Americans have about the challenges they face day to day. This is not all bad – there’s no reason for your average middle class American to care about the alphabet soup of programs and agencies which take up so much of the time of those in Washington. But it can become bad when parties and politicians embrace sweeping expansions of the role of government in reaction to problems out of step with the concerns of most voters, but that receive high marks from the donor class.

Such is the case with the current talk among Washington Republicans about upward mobility, itself a response to the blasé gestures of the White House towards problems of income inequality (preceded by, of course, immigration, gun control, and a host of other issues not on the public priority list). Aspects of the mobility problem are real, but the actual cares and concerns of most Americans are more simple and tangible. What does your average middle class voter care about today? The costs of things they view as the necessary elements of a middle class life: health care, energy, food, and a college education for their kids. But putting forward an agenda that tackles these problems isn’t particularly satisfying for those inside the Beltway, so they feel the need to stretch a bit and say things like “we have to be willing to try things that will make some conservatives uncomfortable” in dour moral tones.

The most recent example of such talk is this Jobs Agenda, put forward by Michael Strain of AEI and receiving much nodding agreement from several serious people. The agenda is not all bad, but where it is good, it is simply citing the low-hanging fruit of things like reforming government training programs and rolling back operational licensing challenges. Where it is more aggressive, it rapidly turns into warmed over Keynesianism, betting on government driven taxpayer-funded stimulus and incentivizing the hiring of one American over the other.

Strain favors a major transportation agenda and accelerated infrastructure spending, of the sort President Obama is set to call for today. But he never explains his solution to the problem of Davis-Bacon, which prevents this from being an efficient way to boost economic growth. Strain also favors creating a new entitlement or restructuring current ones to pay people to relocate to find work – despite the fact that experiences with these types of programs in the 1970s were generally lousy. He favors a series of steps, via wage subsidies and more, to incentivize the hiring of the long-term unemployed – while quietly conceding that this will warp the labor market and drive businesses to hire people they wouldn’t have and not hire others they would have purely on the basis of how long they’ve been out of work. He never explains why his policy approach wouldn’t incent businesses with large numbers of low skill workers from firing en masse and hiring the long-term unemployed at lower pay, making up the difference with the taxpayer subsidies.

It’s no surprise that Strain has also been one of the most prominent proponents of extension of unemployment benefits, embracing essentially the same view of the North Carolina experiment as Paul Krugman. He cites the problems of shifts to disability as the result of benefits running out. But such a small portion apply for disability after exhausting UI – just six percent according to GAO – that the benefits of driving more people to pick a job and stick with it, and others to be honest about not actually being in the labor force, likely outweigh that problem.

Other than a lower minimum wage – which also happens to be the most politically unfeasible aspect of Strain’s agenda – there’s nothing conservative or particularly innovative here. In a sense, Strain’s proposal reads as a more complicated version of what his AEI colleague Kevin Hassett has proposed: that the government should just hire a bunch of unemployed people. And at that point, we’re just having a debate about the size of the bottles we should have unemployed people bury and dig up.

More problematic for agendas like Strain’s are the noticeable absence of any limiting principle. Is there anything that should be off limits in terms of government’s intervention in the labor market if it supposedly “worked”? Or is everything on the table, regardless of how it enlarges the federal government, empowers bureaucracy, increases regulatory burdens or fundamentally transforms the relationship between employer/employee and the state? His agenda would not survive initial contact with the average Tea Partier, but even absent that: compared to the disconnected and unpopular agenda the White House is putting forward, what does it offer except less of the same?

Helen Rittelmeyer, writing in the latest American Spectator, offers a critique of modern Burkeans, urging them to “be skeptical of anyone who claims to speak for a population that they show no sign of having stopped to listen to”:

This is good counsel for us all, particularly at a time when the distance between the concerns of most middle class Americans and the Washington class has grown so great.

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