Monday, November 17, 2008

Kristol on what went wrong

After the election, Fareed Zakaria made the claim that Americans had finally learned their lesson on foreign policy:
The electorate has seemed to sense that there is a new world out there and that the nostrums presented by McCain in his campaign are irrelevant to it. As with economics, these feelings developed after watching the ideas in action. Bush embraced a series of radical policy stances -- many of them long espoused by neoconservatives -- especially during his first term.

But the vigorous unilateralism openly advocated by the administration is recognized by most Americans to have weakened the country's influence abroad. Its excessive reliance on military force has yielded few results worth the costs.

I thought this was mostly wishful thinking. There was simply no evidence that the population at large has learned those lessons. It seemed relatively bizarre to reach this conclusion after the relatively modest win of a Democratic challenger after 8 years of a disastrous Republican administration during the worse financial crisis since the Great Depression, especially when one considers how close to consensus Obama was on foreign policy.

Looks like I'm not the only one who thought that. Here is what Bill Kristol wrote today in the NY Times:

Republicans and conservatives today face a similar challenge to that of 1976. A hawkish foreign policy, social conservatism and middle-American populism aren’t the problems. Those elements, as embodied on the Republican ticket by John McCain and Sarah Palin, produced a respectable 46 percent of the national vote — in the midst of an economic meltdown, with the Bush administration flailing and House Republicans rebelling and the Republican ticket lacking any coherent economic message.

I don’t pretend to know just what has to be done. But I suspect that free-marketers need to be less doctrinaire and less simple-mindedly utility-maximizing, and that they should depend less on abstract econometric models. I think they’ll have to take much more seriously the task of thinking through what are the right rules of the road for both the private and public sectors. They’ll have to figure out what institutional barriers and what monetary, fiscal and legal guardrails are needed for the accountability, transparency and responsibility that allow free markets to work.

And I don’t see why conservatives ought to defend a system that permits securitizing mortgages (or car loans) in a way that seems to make the lenders almost unaccountable for the risk while spreading it, toxically, everywhere else. I don’t see why a commitment to free markets requires permitting banks or bank-like institutions to leverage their assets at 30 to 1. There’s nothing conservative about letting free markets degenerate into something close to Karl Marx’s vision of an atomizing, irresponsible and self-devouring capitalism.
This is pretty incredible coming from one of the most influential conservative around. Among social conservatism, populism, hawkish foreign policy and supply-sided economic theory he chose to drop the last one from the conservative ideology. Unlike what Zakaria said, Kristol argues that the foreign policy was not the problem; and from a purely electoral point of view, I agree with Kristol. I think that by moving toward the Democrats on this issue will be much more beneficial for the Republicans than changing fairly popular hawkish foreign policy views.

How Republicans respond to this will be worth watching.

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