For the last five years, liberals have promoted three main economic policies to shorten or ameliorate the Great Recession and speed the recovery from it.
- Deficit-financed spending to compensate for demand gaps in the private sector.
- Easy monetary policy to raise inflation and support demand.
- Mortgage modifications to reduce foreclosures and support consumption.
Most conservatives hate this agenda. As Mike Konczal notes, they bizarrely portray these policies as “corporatist” efforts to enrich the rich. But what’s really weird is conservatives have no alternative to this agenda they loathe.
To be clear, conservatives absolutely do have an economic policy agenda. They favour lower taxes, less regulation, government spending cuts, more domestic energy production, school choice, free trade, and low inflation. They often cite these policies as ones that might alleviate recession and speed recovery. They favour these policies now, they favoured them in 2008, and they favoured them in 2004.
That is, conservatives favour the same set of economic policies when the economy is weak and when it is strong; when unemployment is high and when it is low; when few homeowners are facing foreclosure and when many are. The implication is that conservatives believe there is nothing in particular the government should do about economic cycles.
This is a big problem. Recessions are terrible. They create enormous misery by throwing people out of work and out of their homes. How can a political ideology have nothing to say about how to address recessions?
Perhaps conservatives believe that conservative economic policies will prevent recessions, making it unnecessary to have policies aimed at addressing them. That view would involve a distinctly unconservative degree of hubris.
Perhaps conservatives concede that recessions are terrible and sometimes inevitable, but genuinely believe that nothing productive can be done to address them. If that is so, how can they favour reductions in the social safety net? The argument for cutting welfare programs is that able-bodied people should work and will do so if denied the opportunity to receive benefits without working. But the defining characteristic of an economic down-cycle is that some people who would like to work cannot find work.
As with many economic issues, there is a gap between conservative wonks and conservative policymakers. Many conservative economic policy wonks break with the Republican party by favouring one or more recession-specific economic policies. Economists Luigi Zingales and Glenn Hubbard have called for aggressive programs to modify mortgages. Scott Sumner, David Beckworth, Josh Hendrickson and others have promoted monetary intervention to combat recessions. Michael Strain has promoted a suite of reforms, mostly aimed at the labour market, that would aim to cut unemployment in recessions.
But acceptance of these policies among actual Republican policymakers is near zero. The standard Republican answer for what to do about a bad economy is the same as their answer about what to do about a good economy. As with health care and bank regulation, economic recessions are a policy question to which conservatives have not the wrong answer, but no answer.
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