The Deep South, Conservative Economic Policy Across All States, Wisconsin Most of All.

I’ve been trying to get a mental, political economy map of where the Republican Party and conservative movement are these days.  Several things that were present but hazy in the past have become much clearer since Governor Walker’s overreach in Wisconsin.  These include:

Jobs: Conservatives don’t really have a job plan.   There’s the cut the budget during a fragile recovery plan, which Goldman is predicting will take a serious slice out of growth. But even more generally, their view of why we have high unemployment is strange.

Last year we reached out and talked about the economy with 30 conservative economists (part 1, part 2) and I got the sense that they had a Ayn Rand Groundhog Day version of the recovery: every month, the productive leaders of the economy peek their head out from their hole checking the field for the shadow of the unproductive parasite class and politicians looking to leech off them; the proper role for government is to clear the field of parasites and leave tax and cash goodies to help bring them out of their hole and into the economy.

Public Sector: I associate Wisconsin Republicans with Tommy Thompson. I had several moderate conservative friends (RINOs, I suppose) from Madison who campaigned for Thompson, and he struck me as a good Republican. He wanted to reform welfare, but in doing so spend just as much if not a little-bit more, in order to do it right. He didn’t want to “reform” welfare as code for slashing it.

Walker wants to attack public unions. He told someone he believed to be David Koch that as Reagan brought down the Soviets by being tough with the air traffic controller unions, this is their moment to be tough and show the enemies of conservatism who is in charge. He even pulls out a picture of Reagan to show his staff to remind them what the stakes are.  Walker and the conservative movement’s approach approach is all about portraying teachers and public workers as, in Rush Limbaugh’s phrase, “parasites” when compared to Tommy Thompson.

I haven’t found anyone making the case that the public sector workers in Wisconsin are overpaid. Andrew Biggs of AEI, who watches public sector compensation closely replicates data and research done by EPI concludes: “At the end of the day, I just don’t think we can make any final conclusions on state/local pay [in Wisconsin] because so much of the data, particularly on the benefits end, is still too loosey-goosey. There’s just more work to be done.” Mind you, that’s the strongest attack by a conservative wonk using the data I can find: it’s too tough to tell one way or the other. Given that the teacher’s unions are willing to take a hit on benefits, their position is actually to the right than AEI’s.

Relations With the Corporate Sector: As many have noted, Walker is worried about a budget crisis, but also slashing corporate taxes. Ryan McNeely (whose new blog is a must-add for policy fans) noted something similar about Christie’s budget: “What the budget represents in a blunt shift to perennial conservative priorities like school choice and tax cuts rather than a fundamental shift in the overall size of the budget.” This isn’t about shrinking the budget or a government you can drown in a bathtub, this is about shifting the priorities of the budget away from public work and towards gifts for corporations.

I’ve noticed all these in isolation but haven’t been able to put them together into a whole. Ed Kilgore just wrote a great piece for the New Republic that puts it into a narrative: This is about taking the smokestack-chasing model of growth of the 3rd world and combining it with the Moonlight and Magnolias Deep South model of development:

Walker also has an economic vision for his state—one which is common currency in the Republican Party today, but hitherto alien in a historically progressive, unionist Midwestern state like Wisconsin. It is based on a theory of economic growth that is not only anti-statist but aggressively pro-corporate: relentlessly focused on breaking the backs of unions; slashing worker compensation and benefits; and subsidizing businesses in order to attract capital from elsewhere and avoid its flight to even more benighted locales. Students of economic development will recognize it as the “smokestack-chasing” model of growth adopted by desperate developing countries around the world, which have attempted to use their low costs and poor living conditions as leverage in the global economy. And students of American economic history will recognize it as the “Moonlight and Magnolias” model of development, which is native to the Deep South.

Just take a look at the broader policy context of the steps Walker is taking in Wisconsin. While simultaneously battling unions and calling for budget cuts, he’s made the state’s revenue quandary much worse by seeking to cut corporate taxes and boost “economic development incentives” (another term for tax subsidies and other public concessions) to businesses considering operations in Wisconsin….Even before the arrival of Haley, this was the default model of economic growth in Southern states for decades—as the capital-starved, low-wage region concluded that the way it could compete economically with other states was to emphasize its comparative advantages: low costs, a large pool of relatively poor workers, “right to work” laws that discouraged unionization, and a small appetite for environmental or any other sort of regulation. So, like an eager Third-World country, the South sought to attract capital by touting and accentuating these attributes, rather than trying to build Silicon Valleys or seek broad-based improvements in the quality of life….

Why is this model of economic growth so appealing to the Tea Party? For one, it tends to jibe very well with the Ayn Randian belief in producerism: the idea that “job creators”—business owners—are the only source of economic growth in society, and that everyone else—the workers, government employees, and the poor—are just “useless eaters” shackling those who exercise individual initiative. While many Democrats are baffled by Scott Walker’s attack on the unions—shouldn’t he be focused on jobs rather than eliminating workers’ protections? they ask—the fact is that today’s conservatives believe this is the right and only way to create jobs. The same delusion is present at the federal level, where House Republicans insist that deregulation and spending cuts are the only ways to create jobs….

So what is at stake in Wisconsin, and across the country, is not just the pay and benefits of public employees, or their collective bargaining rights, or the specific programs facing the budgetary knife. We are contesting whether Americans who are not “job creators,” by virtue of wealth, should be considered anything more than cannon fodder in an endless war between states—and countries—over who can attract the most capital by slashing the most regulations. In this sense, standing up to Scott Walker is a truly worthy fight.

I encourage you to read the whole thing. It’s a really stark vision of the role of the state in the economy, and really brings home the idea of a third world America. What’s your take?