On the Soapbox

As it becomes more and more certain that 2006 will be to the Republicans what 1994 was to the Democrats, I can't help but wonder if a 2006 victory would actually be good for the Democrats.

For starters, Americans tend to be allergic to one-party rule. Therefore, if Democrats are in control of the Hill when 2008 rolls around, the public would be less likely to vote a Democrat into the White House. Of course, there have been exceptions to this one-party aversion over the past few elections (keep in mind that, by the popular vote, Americans supported split-party rule in 2000), but September 11 and a weak Democratic candidate in 2004 may have had an effect. If the Democrats win the Hill in 2006 and if the Republicans nominate an electable candidate (vs. an unelectable one), then chances are, a Republican will be elected to the White House in 2008.

Another problem is that, come 2008, Democrats can no long scapegoat the Republicans for the nation's woes if they control the Hill. I am confident that the two topics that Americans care about the most--the economy and Iraq--will remain bleak for the next two years.

In the case of the economy, there is very little effect that government has on the market. It is a pet peeve of mine whenever a politician talks about "job creation" because jobs are created and destroyed by the market, not by some politician in Washington. The economy has been growing for the past several years, and it will most likely continue to grow from now until 2008. Despite this growth, most of the people on the street have a pessimistic view of the economy. This is because the world economy is currently in a long and painful process of correcting of the gross labor-capital imbalances brought about by centuries of Western imperialism (this, by the way, is just another way of describing globalization; I like to use this when I'm talking to left-liberals because they tend to balk at the "g" word). While globalization is good for our national economy, it is imbalanced in that those who derive income from labor are worse off and those who derive income from capital, who tend to be fewer in number and richer, are better off (of course, added together, the net gain is positive; trade is not a zero-sum game). However, this imbalance is not the fault of any Republican or Democratic policy. Just as investors should have a diversified portfolio, people, ideally, should have diversified income streams (vs. relying just on labor wages) so that they can cash in on economic prosperity regardless of whether labor or capital is gaining. Of course, this does not happen in reality partly because those who rely on labor for income are generally not well-educated enough to know the importance of putting money aside for investing and partly because our overly consumerist culture means that there is actually a negative savings rate, so that instead of saving and investing money, most people are racking up debt and indulging in consumption. Ultimately, the problem of the income disparity is due largely in part to poor economic decisions by individuals (CEOs reaping lots of money may make the headlines, but those causes of income disparity represent only the tip of the iceberg), and there is nothing that any party can do about it except step up government's Robin Hood role, but that would only serve as a bandage and not as a lasting solution (a lasting solution would be to make microeconomics a required part of high school curricula).¹

In the case of Iraq, an immediate withdrawal will be disastrous. As I have argued before, once the mistakes of the invasion and the mismanagement of early reconstruction were made (to be sure, these are serious errors for which the Republicans must be made accountable), there is no turning back and we must finish what we started lest we want to exacerbate those mistakes. The Democrats seem to have trouble understanding this, and even if they did opt to try to clean up the mess, it would still be exceedingly difficult to reach a mediocre resolution, especially by 2008.

So come 2008, Americans will be disappointed as income disparity continues and as Iraq remains in turmoil, despite having the Democrats in Congress. The Republicans, humbled by the 2006 defeat, will have two years to shake down the party and to rediscover the discipline and principles that they have lost. And with the Democrats in charge of Congress, Americans will likely vote in a White House to counterbalance them. Since he (or she) who controls the White House controls the upcoming Supreme Court vacancies of Stevens and Ginsburg, I would much rather that a Democrat win the White House in 2008--even if that means secretly hoping for a Republican victory in 2006.

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¹ I should clarify that I am not necessarily opposed to government playing the role of Robin Hood. Any good economist knows that money is an imperfect proxy for utility and that, as a result, defining taxation in terms of money is rather silly. This is because while utility, by definition, experiences no diminishing returns, money does. Therefore, a flat tax on utility necessitates a progressive tax on money and a flat tax on money is necessarily a regressive tax on utility.