Why Republicans Would Be Better at Governing Than Progressive Democrats

Over the past year, I have repeatedly bashed progressive Democrats and Biden’s administration. Since progressive Democrats are now in power, this focus has been quite natural. However, widely available evidence also shows Republicans would champion policies much more desirable to the public. In fact, a Republican government with the GOP controlling both houses of Congress and the Presidency would deliver almost immediate relief to most U.S. social and economic problems. The purpose of this essay is to show why this assertion is fundamentally true.

The Fundamental Division between Republicans and Progressive Democrats

The most fundamental schism between progressive Democrats and neoliberal Republicans is over the nature of social reality. This difference in basic views over how society actually works is the source for all their arguments over policies. It is the cause of our growing and dangerous ideological polarization. For these reasons, we should examine this most rudimentary of differences first.

What progressives (and more globally, the world’s dirigistes) believe is governments have both the competence and the capability to attack their societies’ social and economic problems. From this most basic definition of progressives, it naturally follows progressives want to give governments much more power than Republicans would. If such a growth in power does not allow the government to solve or ameliorate a particular problem, then progressives believe the government’s power must grow even more in quantity or kind until that problem is controlled.

Neoliberal Republicans believe governments lack, most especially, the competence to attack most social and economic problems. Indeed, by attempting to reduce all society’s problems, Republicans believe that governments more often than not make such problems much worse. In the immortal words of President Ronald Reagan in his first inaugural address, “in this present crisis, government is not the solution to our problem; government is the problem.” In addition, because of Hauser’s Law, the more a government tries to eliminate social problems through expensive policies, the more it erodes its capability to do anything.

The empirical evidence validating neoliberal Republicans’ view of social reality can be found in the post How Much Human Freedom Can We Find in the World? A theoretical model explaining this observed data can be found in the essay How is the Weather Like a Country’s Economy?

The Schism Generated Differences in Policies

Given this basic difference in the way Republicans and Democrats view social reality, we can begin to understand why Republican policies will almost always be superior to Democratic policies. Let us see how this works out for some of the most salient of our controversies.

1. Biden’s Open Borders

One of the easiest ways for Republicans to improve the state of the nation is to go back to Trump’s policies of guarding our borders, especially the one with Mexico. Biden, of course, has opened our southern border wide open to encourage illegal immigration by Hispanics. With this change in policy, Biden has multiplied social problems with a vast increase in drug smuggling, an increase in unvaccinated COVID-19 carriers, human trafficking, and the social burden of unemployed immigrants released into the country. These new immigrants compete for increasingly scarce low-level jobs with American citizens.

Although Democrats cloak their actual motivation for opening the borders with expressions of humanitarian concerns, their real purpose is to increase their future political power. Ever since John Judis and Ruy Teixeira wrote The Emerging Democratic Majority in 2002, Democratic politicians have dreamt of gaining a lasting political superiority. This would be due partly to a large immigration of Hispanics across our southern border. Democrats then envisioned those immigrants being absorbed into the body politic to vote predominantly for Democrats. Unlike in the twentieth century, Democrats have wanted substantially open borders.

However, Democrats had better be careful about what they wish for. A recent Wall Street Journal poll shows American Hispanics steadily moving their political support toward Republicans. After giving 60% of their vote to Democratic House candidates in 2020, they are now evenly split between the parties. The Wall Street Journal reports: “Asked which party they would back if the election were today, 37% of Hispanic voters said they would support the Republican congressional candidate and 37% said they would favor the Democrat, with 22% undecided.” Latino voters are almost legendarily more conservative in their values than most Democrats. In addition, a large fraction of them (4 in 10 Latinos voting in 2020) hate socialism. Some 71% of those voting for Trump said they were concerned about Democrats embracing socialism or leftist policies. Thirty percent of Latinos voting for Biden had the same concerns. Adding to Hispanic illegal immigration might well redound more to the future benefit of the GOP.

2. Inflation, Taxation, and Economic Regulations

The reversal of almost all Joe Biden’s economic policies would put the nation on the road to economic health. During Donald Trump’s administration, the U.S. was energy independent from the rest of the world and even exported fossil fuels. Until the COVID-19 virus hit, jobs were growing, wages after inflation were growing fastest at the lowest wage groups, and inflation was under control. After one year of Biden’s administration, all of those desirable conditions have deteriorated. Consider all of my last updates to the leading and coincident economic indicators I am following.

The problems we are currently experiencing with our economy arise immediately from progressives’ prejudice for solving all social and economic problems with government power and regulation. Society and the economy are simply too complex for government to handle. Federal bureaucrats tend to favor single solutions applied to all for a particular problem. Single solutions are easier to manage and enforce. Yet, particular problems, e.g. the breakdown of supply chains, almost always require different solutions for different individuals and different companies. A single federally mandated solution will usually help a few and hurt many. A much better approach, favored generally by neoliberal Republicans, is to structure economic regulations, taxes, and laws to give individuals and companies the power to fashion their own solutions. After all, they are much closer to the source of their woes and understand the nature of their problems much better than a government bureaucrat,

Not only is the nation’s economy incredibly complex, but it is so tightly interwoven that problems in one part of the complicated and entangled system will always generate other problems elsewhere. This fact is the root of free-market capitalism’s superiority over socialism.

An illuminating example of the kinds of problems arising from the interwoven nature of the economy is the phenomenon of inflation. This is a growing problem exacerbated by Biden’s progressive economic policies. Inflation is a serious economic problem all by itself. However, it is also a symptom of many other economic problems. In fact, there are three aggregate economic variables that determine the annual inflation rate: the annual percent change in the amount of money, the annual percent change in the GDP, and the annual percent change in the velocity of money. The velocity of money is defined as the average number of times a dollar changes hands in a year. Let us denote a price index, say the consumer price index or CPI, with the letter P. Then the annual percent change in P is the yearly inflation rate. It is usual to denote the change of variable in a particular interval by placing the Greek letter Δ in front of the variable. Then we can denote the annual change from year i to year i+1 as ΔP = P_i+1 – P_i . In addition, we will denote the velocity of money as V and the GDP in the constant dollars related to the price index as y. Using this notation, we can show the inflation rate is given by

The derivation of this equation can be found in the PDF found here. From this equation, we can see that inflation increases when the quantity of money increases, the velocity of money increases, and when the GDP decreases. Among these aggregate variables, only the quantity of money is directly under the control of the government through the Federal Reserve. A deft summary of this equation is that inflation is what you get when too many dollars chase too few goods.

While only the quantity of money is directly under the control of the federal government, the other two variables — the velocity of money and GDP growth — are indirectly influenced by the federal government’s economic regulations and taxes. For example, the more government taxes companies, the less capital companies will have to invest in new productive capacity. If that available capital is less than needed for replacement of obsolete equipment and needed retraining of the work force, aka replacement investments, then not just GDP growth, but the GDP itself will actually decline. Therefore, the more government taxes from corporations, the more inflation is increased. In fact, a very respectable argument can be made that companies should never be directly taxed. As long as a company’s income is retained within the company, it would be used to maintain the company and to increase its productive capacity. Company-retained capital then acts to maintain and increase the GDP. The point at which a company’s income should be taxed is when it is paid out as dividends. Then, it becomes personal income for the stockholders. Also, when a stockholder sells the company’s stock, the capital gains from that sale become taxable.

The more rich people are taxed, the less capital they will have for productive investments. The more all people are taxed, no matter what their income level, the less they will have to sustain demand for goods and services. Taxes, although a necessary evil, always tend to decrease the ability of the economy to grow. While some government spending, especially for physical infrastructure, might increase GDP growth, the government’s need for productive capital is dwarfed by the needs of the private economy.

Any government action that discourages the economy’s growth, whether through taxes or regulations, reduces potential (perhaps even absolute!) GDP growth. One consequence of these government policies would be a smaller supply of needed goods and services. Another result would be higher inflation. There is a way of demonstrating that increased government expenditures are generally detrimental to economic growth. To show this, plot every nation’s per capita GDP for a given year against an index of economic freedom. Such a scatter plot is shown below for the year 2018 using the Cato/Fraser Economic Freedom Index. This index varies from zero, when there is no private economic freedom and the government has total control of the economy, to 10, when private individuals and companies totally control the economy and the government has no control. This index is discussed in the post How Much Human Freedom Can We Find in the World? and compared with the Heritage Foundation’s Index of Economic Freedom.

The red curve in this plot is the best fit of an exponential curve to the data. We can only conclude that a country’s economic health deteriorates with increased government control over the economy.

Herein lies the superiority of Republican economic policies over those of the Democrats. Republicans tend to favor a minimal government with minimal expenditures and minimal taxes. One of the first fruits of the Trump administration and the Republican-controlled Senate and House in 2017 was the Tax Cut and Jobs Act. This act along with Trump’s partial deregulation of the economy led to great improvements in the economy’s performance in 2018. These improvements were somewhat muted by the prospect of trade wars, particularly with China. Nevertheless, Republican economic policies prior to the COVID-19 catastrophe demonstrated their superiority over progressive Democratic policies.

3. The Green New Deal

One of the ways Democrats have greatly harmed the economy is with their policies to reduce human emissions of carbon dioxide. I have written recently about how atmospheric carbon dioxide is not an existential threat, so I will not repeat that discussion here. Nevertheless, to the very limited extent that Biden has been able to put in effect his climate plan, he has drastically reduced the ability of private companies to produce fossil fuels. Biden has done this with changes in regulations on fossil fuel production and with pressure on financial leaders not to invest in fossil fuel projects. This pressure on banks and investors to stop financing is not just on domestic projects, but on foreign ones as well.

By executive order, Biden has canceled the Keystone XL pipeline project. As soon as he came into office, he also issued a moratorium on the exploration for fossil fuels on federal lands and waters. However, in June of 2021, a federal judge in Lousiana issued an injunction against Biden’s moratorium. Biden’s administration is currently appealing that decision. In addition, the law authorizing onshore drilling, the Mineral Leasing Act, allows the Interior Department to exercise considerable discretion in withholding permission to drill. Biden’s administration can endlessly tie up drilling projects. For example, this can be accomplished by requiring oil companies to complete additional analyses on the environmental effects of drilling at a particular place.

As a result, gas prices are expected to rise to a nationwide price of $3.40 in 2022. In California, the price is expected to inflate to $6 a gallon in San Francisco, and to around $5.50 in Los Angeles and Sacramento. Current gas prices for each state can be found on a AAA web page found here. These price increases drain the ability of individuals to demand other goods and services, reducing potential GDP. In addition, by increasing the cost of transporting goods, they contribute to the well-known disruption of supply chains.

In contradistinction to progressive Democrats, Republicans can be expected to follow policies more friendly to the economy. The party is very divided over the issue of anthropogenic global warming, but they are more favorably disposed to policies adapting to changes caused by global warming. These are the policies championed by Bjørn Lomborg. In agreement with Lomborg, most Republicans do not want to restrict fossil fuels in a draconian way. By allowing individuals and companies to adapt to a gently warming Earth, they believe the government’s destructive effects on the economy’s health will be minimized.

4. Social Stability

The Democratic Party, with their “defund the police” policies and their demonization of opponents as racists and fascists, are profoundly destabilizing society. In fact, ever since the police shooting of Michael Brown in Ferguson, Missouri in 2015, progressive Democrats have expended increasing efforts to blame law enforcement for social inequality. As a result, because police feared being charged with a crime for doing their duty, they became much less proactive in fighting crime. This became known as “the Ferguson Effect.”

Increasing progressive attacks on police and law enforcement resulted in a reversal of the crime reduction experienced in the two decades prior to 2015. Then, the Ferguson Effect exploded with the 2020 murder of George Floyd in Minneapolis. With the destruction of law and order in Democratic Party-ruled cities and states, U.S. citizens are beginning to see civilization dissolve in front of their eyes. The collapse of law and order in blue cities has been overseen by George Soros-funded, leftist district attorneys. Republican officeholders at the local level, especially mayors and city district attorneys, are the antidote to the progressive shredding of social stability.

We have a critical choice in the coming 2022 general elections. We can either choose with the Republicans a non-authoritarian society based on the ideals of the Age of Enlightenment, or we can choose the increasingly autocratic rule of progressive Democrats. Do we want to control our own individual lives apart from the government?

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