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Republicans: The Anti-Free-Market People?

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Their rhetoric to the contrary, are Republicans actually the anti-free-market people?  In his article, Newt Gingrich isn’t pro-market, he’s pro-business, Dave Roberts essentially argues that they are, at least on energy.

A recent report from the International Energy Agency revealed a stunning fact: Worldwide, fossil-fuel energy corporations receive $550 billion a year in subsidies. Another report found that between 2002 and 2008, American taxpayers alone lavished $72.5 billion on fossil-fuel subsidies, and that’s not counting implicit subsidies like military deployments to defend energy supplies, health costs from respiratory and circulatory ailments caused by fuel combustion, ecological damage like in the Gulf of Mexico, and damage from climate change. This massive interference in global energy markets by heavy-handed government bureaucrats ought to offend proponents of free-market capitalism or small-government conservatism. It’s tantamount to corporate socialism.

Yet Gingrich and his acolyte defend these subsidies. Why? Says Gingrich, “a low-cost energy regime is essential to our country.” That is one doozy of a non-sequitur. Surely a conservative ought to know that money government spends on energy subsidies is taken from elsewhere in the economy. The externalized health and ecological costs of fossil fuels are paid by the public, with money taken from elsewhere in the economy. Fossil-fuel subsidies don’t reduce costs, they shift costs. The burden is moved from energy companies to the public. The result is what we have today: energy that looks cheap because most of its costs are hidden from view.

Obviously, none of this is even remotely a “free market”, in the sense of “a market without economic intervention and regulation by government except to enforce ownership (“property rights”) and contracts.” In fact, as Dave Roberts correctly points out, there’s a major difference between favoring a “free” market and being “pro business.”  

Thus, Newt Gingrich and his cohorts are certainly pro-(big)-business, in the sense of transferring massive amounts of money from we, the people, to them, the (large) corporations. What Newt Gingrich et al. most certainly are not is pro-free-market.  The latter is a philosophical position I can respect, even if I don’t completely agree with it (mainly because of what I believe to be common and widespread examples of “market failure”). The former is simply an object for scorn and mockery, especially when it is peddled by blatant hypocrites like Newt Gingrich.

Unfortunately, Republican politicians have been getting away with this two-faced disingenousness (aka, “lying”) for years, and not just on energy. Thus, Republicans have also favored massive subsidies for Big Agriculture, first and foremost with their wildly wasteful, corn-based ethanol mandates and handouts to mega-agribusiness. We see this in just about every sector of the economy.  For instance, as we all know, Republicans favor massive corporate welfare when it comes to what Dwight Eisenhower referred to as the “military-industrial complex.”  Apparently, from a Republican point of view, that’s “good” corporate welfare, as are subsidies to Exxon Mobil and Archer Daniels Midland. Logic? Don’t ask, because there isn’t any, certainly not if you believe in free-market economics.

Here in Virginia, we have yet another example of Republican hypocrisy, as Bob McDonnell claims to be pro-free-market while doling out subsidies and favors to his preferred industries (wine, film, tourism, oil, etc.). But don’t take my word on this one, let me refer you to libertarian-leaning Republican Norm Leahy, who writes that “Virginia’s political class has stars in its eyes rather than sense in its head when it comes to handing out your cash to Hollywood.”  It’s not just movies, of course. McDonnell also wants to spend our tax money to promote specifically promote Virginia wine and tourism.  Now, those industries may be absolutely the most wonderful industries ever, but how does Bob McDonnell square his supposed conservative, “free-market” principles with doling out money – aka, “corporate welfare” – to them?  Of course, he can’t.

In fact, having the government provide subsidies and tax credits is about as anti-free-market as you can get. Just to be absolutely clear, I’m a progressive who believes strongly in government intervention to correct clear market failures (e.g., “tragedy of the commons”) and “externalities” (e.g., pollution). I’m also  a firm believer in government action to promote the “common good”/”general welfare.” I believe I’m being logically, internally consistent. In contrast, I present to you hypocrites like Newt Gingrich and Bob McDonnell, who, while claiming to be conservative, libertarian and/or Republican supporters of the “free market,” in actuality are its worst enemy.

UPDATE: Conservative pundit Timothy Carney agrees, writing in disgust how “self-described free-market conservatives often rally for energy subsidies and claim it’s not a deviation from their principles.”

  • Cato the Elder

    mostly end in tears, whether they be in the form of home mortgage tax deductions or corporate welfare doled out to favored industries.  

    You might be interested in the following: http://gregor.us/oil/hollow-me… It should disabuse anyone of the notion that one can arrest the advance of the energy curve by throwing subsidies at it.

    I do agree with your premise, however. Somewhere along the way the Republican Party got very confused about the difference between being pro-free market with pro-big business. This has resulted in state capitalism, essentially, where rewards are private and the risks are socialized. Unfortunately, I don’t see anything on the horizon that would make us change our current mode of thinking short of a crash and possibly more severe contraction than the Great Depression (which is a very real possibility BTW).    

  • libra

    my bony Polack er… foot! This is how “free” the market is; its freedom comes from all our contributions:

    http://www.nytimes.com/2010/07

  • TomPaine

    We do not know how either would work in practice since neither has ever been really tried.