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Charles Wheelan, Ph.D. The Naked Economist

More Contradictions from the Party of Less Government

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Very Good (1644 Ratings): 3.597912/5

Posted on Wednesday, September 17, 2008, 12:00AM

All hell is breaking loose on Wall Street, and one of the more subtle things the crisis has exposed is a growing ideological rift in the Republican Party that's starting to border on intellectual incoherence.

Wanting It Both Ways

The traditional small government, "hands off" wing has always argued for minimal regulation and healthy dollops of personal responsibility. This line of thinking suggests that the appropriate response to the Lehman collapse is for investors and executives to exercise more caution in the future. That's how markets work.

Yet there's now a competing populist strand of the party that seeks to protect the "little guy" against greed and incompetence. John McCain was quoted in the New York Times earlier this week as saying that our economy has been put at risk "because of the greed by some based in Wall Street and we have got to fix it."

The problem is that you can't simultaneously embrace markets and personal responsibility and then, when those markets have a car wreck, argue that it's the government's job to protect us against rapacious Wall Street traders.

Fault Lines Exposed

This is just a tiny example of a phenomenon that's been developing through the Bush presidency and into this campaign. Do you remember Sarah Palin's rousing convention speech? Forget the "First Dude," the hockey mom thing, the eyeglasses, and even whether she did or did not support the "Bridge to Nowhere."

Instead, just pay attention to what she said and what it means for the growing contradictions within the GOP. For those who were paying attention, Palin raised two issues that should have exposed the fault lines that will eventually consume her party.

First, do Republicans favor small government, or do they think that government should provide more assistance for families with children who have special needs? Because you can't have it both ways.

A Dual-Sided Speech

In her critique of Barack Obama, Palin told the adoring crowd, "Government is too big ... [Obama] wants to grow it." That's a legitimate point. And it's consistent with Ronald Reagan's famous assertion that the nine most dangerous words in the English language are "I'm from the government and I'm here to help."

The Republicans are supposed to stand for less government -- lower taxes, less regulation, and, as a result, more personal responsibility and self-reliance. That's one of the most important and defensible tenets of the party.

But wait! Was that the same ostensible conservative telling the audience, "To the families of special-needs children all across this country, I have a message: For years, you sought to make America a more welcoming place for your sons and daughters. I pledge to you that if we are elected, you will have a friend and advocate in the White House."

Whose Special Needs?

Why are families who have children with special needs any different from farmers at risk of losing their land, workers who need health insurance, employees hurt on the job, families dealing with parents who have Alzheimer's disease, veterans eating out of trash bins, and so on. If you have those problems, then "a friend and advocate in the White House" is big government.

But if you happen to have a special-needs child, apparently that's different because Palin happens to share your challenge. And if one of her family members happens to get Alzheimer's, then maybe we'll have new programs for that, too.

Palin's speech suggested that, again, the Republicans want it both ways -- and it's no anomaly. This explains how the Republicans can talk about small government and then deliver huge new programs like Medicare prescription drug coverage, the largest expansion of entitlement spending in decades.

Or how the party of personal responsibility is fielding a ticket whose website calls for "aggressive federal action to help keep 200,000 to 400,000 families from losing their homes."

Governing Through Inefficiency

The second point is more subtle but ultimately more damning of the Republicans: How can the government be inefficient and ineffective at most things it does -- and yet perfectly able to decide who should be held indefinitely at Guantanamo Bay without even rudimentary legal protections?

Governor Palin told the convention, "Al-Qaeda terrorists still plot to inflict catastrophic harm on America ... [Obama's] worried that someone won't read them their rights." The Republicans have consistently promised to get tough on terrorists -- no problem there. A terrorist organization with a nuclear weapon is arguably the most dangerous threat we must confront. But Palin was also mocking our basic legal protections, and that's a huge, scary mistake.

Believe it or not, the reason her position makes so little sense is rooted in economics. Researchers have long recognized that any time we test or screen for something -- whether it's detecting prostate cancer or keeping hijackers off airplanes -- there's an unavoidable tradeoff. The more sensitive the screen, the greater the risk that you tell someone they have cancer when they don't, or that you'll stop a guy in the airport security line because he has a big belt buckle and not a hand grenade.

But if you design a less sensitive test to avoid "false positives," then occasionally you won't catch a tumor or the guy trying to board an airplane with a semiautomatic weapon -- a "false negative."

Missing the Tradeoff

The challenge of terrorism is that both false positives and false negatives are unacceptable. We can't let just a few terrorists slip in. But if we design a system so sensitive that it will catch every person who has the potential to do us harm, then we're almost certainly going to snare plenty of people who've done nothing wrong.

Palin's smug line about reading terrorists their rights misses this inevitable tradeoff. The tougher we are on potential terrorists, the more legal protections we need to fix our inevitable mistakes. That's not politics, it's basic logic. Should we send everyone who sets off an airport metal detector straight to prison and leave them there indefinitely?

There's a philosophical inconsistency to the GOP position as well. The Republicans are skeptics about the limits to what government can or should do. Again, this is a reasonable position; without market competition, the government tends to be slow, inefficient, and largely unaccountable.

But how can the party that so vociferously (and effectively) maligns government be willing to entrust so much unchecked power to that very same government when it comes to arresting people and holding them without trial? Would you let the Post Office or the IRS or FEMA send people away indefinitely? If not, why should we entrust any other bureaucracy with that power?

Identity Crisis

Remember, this is the party that has historically opposed gun registration for fear that the government might someday swoop in and take away guns from its citizens. Where's that paranoia and distrust of authority when we need it most?

Yes, the Democrats have heaps of problems of their own. A reasonable person can agree with everything I've written here and still conclude that the Republicans are less dysfunctional than the Democrats.

But that doesn't answer the question that's been festering since the Reagan presidency, and has been highlighted anew by McCain's nod to the Palin wing of the party and by his response to the Wall Street carnage: Who are the Republicans, and what do they stand for?

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1093 Comments

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ronnyd - Friday, October 24, 2008, 9:47PM ET Report Abuse
- Overall: 5/5
Where has the republican party disappeared to? Conservative has become a synonym for crackpot.
Brent - Friday, October 24, 2008, 10:03AM ET Report Abuse
- Overall: 1/5
This article is incredibly poorly conceived. Clearly this guy pursued something which is not based on reality or logic for his PHD.
Yahoo! Finance User - Wednesday, October 22, 2008, 2:09PM ET Report Abuse
- Overall: 1/5
This Guy's a PHD? You can't have more support to families and a smaller govt.? Isn't the reps mantra "Better Management of what we got"? News flash to the old schoolers (like this guy) ... In this case you can have both.
attilia - Wednesday, October 22, 2008, 11:15AM ET Report Abuse
- Overall: 5/5
I hate to admit it but you are right. We cannot spend and tax our way to prosperity. What really hurts is its all govt. induced to begin with, now we are truating the same clowns with 1.5 trillion to pull us out of something that just needs to clean itself out! I am still voting McCain, but the republican party is leaving me behind. Great article.
Yahoo! Finance User - Wednesday, October 22, 2008, 10:56AM ET Report Abuse
- Overall: 1/5
Very unbalanced view!
Yahoo! Finance User - Wednesday, October 22, 2008, 10:47AM ET Report Abuse
- Overall: 1/5
Wheelan shows he's another Palin hater.
leesab - Tuesday, October 21, 2008, 4:02PM ET Report Abuse
- Overall: 1/5
What an idiot. having a "friend and advocate in the white house does'nt mean gov't intervention. It means supporting non profit causes and raising awareness. As I continue to read through the article, its apparent that this guy is absolutely "scared" of what a conservative female brings to the ticket.
Eugene S - Tuesday, October 21, 2008, 4:01PM ET Report Abuse
- Overall: 4/5
President Bush has failed at everything that he tried to accomphlish except run the USA into deep debt with no way to pay it off. I hope he goes to Kennebuck not Texas for retirement!
William C - Tuesday, October 21, 2008, 3:50PM ET Report Abuse
- Overall: 4/5
I've been wondering about this myself. As a conservative Republican, I find the party's populist shift to the left on matters of personal responsibility and economics very troubling.
Paul - Monday, October 20, 2008, 10:16AM ET Report Abuse
- Overall: 1/5
Another economist that is in the pocket of the "Messiah" come on no ONE in the government is to blame nor is it to anyones credit that we have this mess. Why cant we just be Americans and pull together to get this resolved.
Yahoo! Finance User - Sunday, October 19, 2008, 9:34AM ET Report Abuse
- Overall: 1/5
I would expect a more compelling article from someone who cites their doctor of philosphy after their name
Yahoo! Finance User - Saturday, October 18, 2008, 5:02PM ET Report Abuse
- Overall: 1/5
Trying to draw a parallel between someone inadvertently setting off a metal detector and someone captured on a battlefield fighting with a terrorist army is ludicrous. But thanks for all the useful finanacial advice in this piece, Mr. PhD.
Yahoo! Finance User - Friday, October 17, 2008, 3:38PM ET Report Abuse
- Overall: 1/5
What world do you live in? I'll go with a few innocent people being temporarily detained as opposed to a nuke being set off in a US city any day! Also, Gov. Palin didn't say she was creating a new government program for handicapped children. She said she was some one who understood the issues these parents faced. Based on her actual record, I don't think a new bureaucracy is in the making.
Yahoo! Finance User - Wednesday, October 15, 2008, 10:34PM ET Report Abuse
- Overall: 5/5
This is a dead-on analysis. The Republicans have been telling us for years that the government should get out of the regulations business. You can't have your cake and eat it too!!
Yahoo! Finance User - Wednesday, October 15, 2008, 7:28PM ET Report Abuse
- Overall: 1/5
Just like a lefty to hate the best woman that brings out the truth! Can't believe your name isn't on the Pres. candidate list.Your poor wife better be perfect--I pity her!
Q - Wednesday, October 15, 2008, 9:33AM ET Report Abuse
- Overall: 5/5
jstthefactsmaam - Great post.
Yahoo! Finance User - Tuesday, October 14, 2008, 2:37PM ET Report Abuse
- Overall: 1/5
This is a political post, there is no financial advice and should not be on the financial page.
SondraK - Monday, October 13, 2008, 9:19PM ET Report Abuse
- Overall: 5/5
An intelligent analysis - how refreshing!
Bill 1 - Monday, October 13, 2008, 4:39PM ET Report Abuse
- Overall: 1/5
The Acorn didn't fall far from the tree.
Andrew - Friday, October 10, 2008, 10:28AM ET Report Abuse
- Overall: 5/5
Personally, I think this article nicely encapsulates one Republican dilemma. It's disappointing that some commentators here are limited to "Anything the Democrats do will be worse", and don't express a view on what the Republicans need to do to make their product more appealing. Either you believe in Big Government, or you don't. the Democrats are clear on where they stand, the Republicans come over as confused and conflicted. Confronted with an incumbent President with little credibility and a ticket whose strength is a pair of "mavericks", whatever that means, the electorate want to vote for someone whose ticket has a direction, even if it's not the direction with which they would most closely identify. Sailing in circles is not good enough, and embracing policies and actions with which Lenin and Marx would be comfortable doesn't sit well with mainstream Americans. with all respect to the economists at the helm, the correct response to the market downturn is not to flood existing companies with cash. When the government "pumps billions into the market", where does it go? It's not underpinning the stock market, and clearly capital flows are no more fluid now than one month ago - just look up LIBOR and the TED spread, and understand what they mean. The failed companies must die, and the strong underlying small and mid size banks that are fiscally sound and well run will rise to take their place. Regulation is a GOOD thing , when handled appropriately. For example, a company that 's "too big to fail" is too big - you fix that by regulation. A person who can't stump up a significant downpayment can't get a loan that is ultimately an asset of a government regulated institution - that's sensible regulation. By the way, the last time I checked out the list of socialist countries, depending on the barometer you wish to use , the Swedes were doing pretty well all round, and the Cubans life expectancy was as good or longer than US, so quit with the "show me a socialist country..." nonsense. You and I might not choose to live there, but quit trying to make these things so black and white. Thanks for the article, nice reasoned discussion. If you don't agree with it, say so and why not (a great American attribute), but "you suck" isn't helpful. thanks
Bio Diesel - Thursday, October 9, 2008, 8:37AM ET Report Abuse
- Overall: 1/5
I am glad to confirm that a education and applied practical common sense don't go hand in hand. Hey Charlie, you find ONE example were socialism has worked. That means they had great social programs that don't have waiting lists and has a booming economy. For the record America isn't perfect, but I wait 15 mins at the doctor and I can buy anything I need in 15 mins because we have store after store for blocks. Yes, we need to fix our Governement. The answer is stem cell research and cloning Ron Paul.
d c - Tuesday, October 7, 2008, 10:24PM ET Report Abuse
- Overall: 5/5
You conservative zealots who can't admit to yourself that you are anything but god-blessed, infallible conservative gifts to humanity need to read Ben Stein's column. I'm usually annoyed by Ben's smugness and arrogant complacency, but in this column he actually got down on his e-knees confessed some of the more obvious mistakes and sins his politics made as direct causes of today's economic disaster. It's so exceedingly rare to read a conservative media pundit admit and take ownership of the failures of their pet beliefs and actions. Wheeler is right about today's twisted up Republicans. Another example, the standard Republican hypocrisy of saying they are the party of personal responsibility, but Republicans never take responsibility, never are at fault, never do anything wrong. Anything that bad happens on their watch, it's always the other guy's fault. Anything good that happens on the other side's watch, it's actually the Republican's credit. For these people, their politics is a cult religion, where reality and logic can not intrude on a twisted, unassailable, world view of what is 'right'.
Mr D - Tuesday, October 7, 2008, 4:46PM ET Report Abuse
- Overall: 1/5
Fannie Mae and Freddie Mac were used as a Democrat campaign fund, payoff to Democrat political support groups and personal piggybank for Clinton era hacks. And the fix is more Democrats? The Republican Part is not perfect but it is far far better than the alternative!
Yahoo! Finance User - Tuesday, October 7, 2008, 4:35PM ET Report Abuse
- Overall: 1/5
How many times do they have to run this turd??
Kirk - Tuesday, October 7, 2008, 9:15AM ET Report Abuse
- Overall: 1/5
Thanks, "Dr." Charles. Once again you prove that common sense and education are not inextricably linked.
Yahoo! Finance User - Monday, October 6, 2008, 11:51AM ET Report Abuse
- Overall: 4/5
Those who are Republican now admit that this admin. and a list of others are not true Conserv. / Republican. Also, former Dems. who became financially succesful switched to Repub. for personal / selfish reasons. They loose sight of the issues you're talking about and they have very short memories and less tolerant. Same w/ the success of peoples of Wall st.; they learn the theories of economics from business colleges' but their intellectual, financial, and social successes blinded their thinking...unable or denying to face eco. troubles ahead. Optimistic a/b things that are "false positive", also, believing that voting Republican prolongs their wealth. Sadly, the Joneses try and mimic these type of individuals and so on - the saga continues.
steven - Sunday, October 5, 2008, 10:38PM ET Report Abuse
- Overall: 1/5
total nonsense to his attempt at logic
Peter & Lyn - Sunday, October 5, 2008, 8:37AM ET Report Abuse
- Overall: 1/5
In this society you realistically must have it "both ways," leaving each party open to endless criticism because they aren't purist.
b - Saturday, October 4, 2008, 2:37AM ET Report Abuse
- Overall: 5/5
Great. I agree completely. I vote red, but am disturbed with my parties recent actions. Not enough to vote blue, I don't think I could live with myself, but it does bother me. Why have we as republicans changed.... a unpopular war was all it took to get us questioning our own ideals..... our values should be: 1. big govt is bad and equal big taxes 2. guns are good 3. baby killers can go to hell, and they will 4. oh yea, God is real, and let us know, that the baby killers will go to a warm zone ,(not the tropics) 5. socialism is not the answer Welfare, Medicare, social security, are all entitlement programs... also known as modern socialism advice to the americans out there Lose your sense of entitlement, because these programs and our position as a world leader are running out of time, a society based on debt will eventually have to pay up, and our time is coming, social ism will not save you then, prepare for the times ahead, because only a fool sees them as good times for the American people, whether you vote blue or red
Bob - Thursday, October 2, 2008, 6:41AM ET Report Abuse
- Overall: 5/5
The Republican Party is Imploding or should I say Exploding? It will fragment into 3 parties probably in the next 4 years. The Democrats are totally lost on what to do. They will split into two. The U.S. will be a third world country in less than 20 years. Please read world history. Our country will default on our loans from China. China will see apportunities in taking over america as a colony. My friends this is a no brainer. Please read History it is doomed to happen again. I am not a Dem or Rep. I am a Free Thinker and a Humanitarian. I have not allowed Religion or Gov't or our education system (society) to posion my brain. Instead of teaching our kids how to pray or pledge alliance to the flag...how about teaching them how to balance a check book......ahem.

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