A Simple Way Of Restoring Republican Economic Credibility

Republicans have a problem: their plans for promoting economic growth aren’t working. George W. Bush followed the standard Reagan-revolution playbook of tax cuts, deregulation and free trade, and the result was the worst national economic performance since the Great Depression — huge budget and trade deficits, anemic job growth and a severe recession. So while it isn’t difficult to drum up opposition to President Obama’s ideas for expanding the role of government, it will be a lot harder to convince voters that Republicans have viable alternatives to those ideas. That old Reagan magic just ain’t workin’.

Here’s one way of restoring Republican credibility: start paying attention to what the rest of the world is doing. Although Republicans long ago abandoned isolationism, they continue to apply their economic policies as if America is isolated from the rest of the world. So they cut taxes and wonder why the economy doesn’t grow, when it is obvious that much of the money ends up being spent on goods from overseas — which is where the growth then occurs. They unilaterally reduce subsidies, and instead of industries being strengthened they collapse in the face of foreign competition. (My favorite example of the latter dynamic was Ronald Reagan’s decision to abolish commercial shipbuilding subsidies without seeking similar action by other nations; U.S. producers were out of the global market by the end of his administration, and have never returned.)

The latest manifestation of this naiveté is attacks against “protectionism,” which invariably are aimed only at Americans. In many cases, the so-called protectionists are trying to enforce free-trade principles flouted by our trading partners. So Boeing is blamed for provoking a trade war because it objects to quasi-socialist subsidies given to Airbus, even though the World Trade Organization has ruled those subsidies are illegal. And tire-makers are attacked for getting a tariff roughly proportional to the 30% pricing advantage their Chinese competitors realize through Beijing’s manipulation of its currency. Isn’t it time Republicans wake up to the fact that we live in a globalized economy, and everybody has to play by the rules for their ideas to work? Maybe if they started to challenge unfair practices in other countries, their policies would produce better results here.