Douthat: Imagining a Romney recovery
By Ross Douthat
June 4, 2012 at 11 p.m.
Earlier this year, well before the latest round of job numbers made the current recovery look even more sickly, the Obama campaign released a chart putting the bravest possible face on its economic record.
The chart shows private-sector job losses and gains by month from 2008 through the present, with the figures for George W. Bush's presidency in red and President Barack Obama's in blue. The red numbers descend toward the nadir of January 2009; the blue numbers climb, albeit in fits and starts, reaching positive territory in early 2010 and staying there ever since. The message is clear: Bush brought us to our knees; Obama brought us back.
After 40 months of 8 percent unemployment, the second half of that message rings awfully hollow. But the first half probably has some resonance with voters. Indeed, the memory of the Bush presidency represents one of the few things the president still has going for him as he seeks an economic rationale for his re-election.
As grim as the Obama era has been, Americans still have a distinctly negative reading on what the last period of Republican economic stewardship delivered: rising health care costs, wage stagnation, a real estate bubble and then of course the financial crash itself.
Against this backdrop, it may not be quite enough for Mitt Romney to explain how the incumbent has failed. He needs to explain why, so soon after the Bush era, the country should trust his party to put things right again.
As it happens, two new books by right-of-center thinkers attempt to make such a case, albeit in different ways. The first is "Unintended Consequences: Why Everything You've Been Told About the Economy Is Wrong," by Edward Conard, a former managing director at (ahem) Bain Capital, who was profiled in The New York Times Magazine a month ago. The second is "A Capitalism for the People: Recapturing the Lost Genius of American Prosperity," by the University of Chicago business professor Luigi Zingales.
As its subtitle suggests, Conard's book is an attack on much of the received wisdom about the crash of 2008. He argues that America's pre-crisis economic gains were real rather than illusory. ("The U.S. economy was on fire before the financial crisis," he writes.) He defends the growth of the financial sector and the bubble-era behavior of the major banks. And he argues that the crisis itself was less a comprehensive meltdown than a simple panic that tells us very little about the underlying soundness of the economic order.
Indeed, against the current antibailout mood, Conard suggests that we actually need stronger government guarantees for too-big-to-fail institutions, to encourage the kind of risk-taking that reaps long-term rewards. In a similar spirit, he defends the extraordinary wealth accrued by America's richest 1 percent, arguing that such huge rewards are necessary to induce talented people to become entrepreneurs and investors rather than just white-collar time-servers.
Zingales, on the other hand, looks at the same picture and sees less that's worth defending. Even before the financial crisis hit, he argues, for average Americans the benefits of the economic order were "neither as great nor as widespread as they once were." This trend was not just a necessary side effect of suitably rewarding risk-taking at the top. It also reflected the pervasiveness of crony capitalism across a wide range of industries (the financial sector very much included), which has tilted the economic system in favor of the already connected.
To Zingales, the Wall Street bailout was the natural outgrowth of trends that threaten to send the United States down the same path as his native Italy - toward corruption, stagnation and worse. Given this context, he concludes, what's needed from conservatives are fewer uncritical defenses of big business and the rich, and more of a "free-market populism" that would attack corruption and cartels in the private and public sector alike.
What would these competing narratives imply for the Romney campaign - or a Romney presidency? If Conard is right that the Bush-era economy was basically on a sound footing, then simply rolling back Obama-era interventions and forestalling tax increases on the investor class would probably restore our economic health. That points to a relatively conventional Republican policy vision, focused primarily on keeping marginal tax rates as low as possible.
Zingales' narrative, on the other hand, suggests that more radical reforms are needed to restore American competitiveness. A Republican administration influenced by his book would place a heavier emphasis on issues that the right is often uncomfortable tackling - not only health care and education, but also some form of financial-sector reform.
Given his own background, it's a safe bet that Mitt Romney identifies more with Conard's perspective on the world. But that makes it all the more important that he consider Zingales' equally provocative account as well.
<em>- Ross Douthat writes for The New York Times.</em>