“You feel the need to justify yourself.” Each time I take the Myers-Briggs personality test; this question bugs me. Before coming to American University (AU), as a conservative living in a red central-Pennsylvania county, I seldom justified my political views. But now, at the largely liberal AU, self-justification is routine for conservatives like me. One particular moment of self-justification came when I identified as a Republican during welcome week. One of my floor-mates’ ensuing response to my Republicanism was: “So you support rapists.” I’m still frantically searching for a connection between the two.
Unsurprisingly, vicious verbal attacks like the aforementioned one forced me to reveal my ideology through piecemeal incidents, often partitioned into single issue statements related to incendiary current events. But now, as an experienced campus conservative, I’m revealing my conservative doctrine unabashedly.
A Note on Conservatism:
So what exactly does conservative mean? Upon hearing the word “conservative,” some students have nauseating visions of Mike Huckabee reciting the Definitive Rules of Your Life through scripture, others picture John Boehnor’s spray tan, or maybe some think of Iraq and 2008. Here’s the issue: none of these things define conservatism.
At a rudimentary level, conservatism is an economic ideology. It describes an individual’s belief in restraining government intervention in the economy. Do self-proclaimed conservatives like Rick Perry or Rick Santorum issue inflammatory authoritarian statements such as – roughly summarized – “I’m running for President because gays can serve in the military and that’s a problem,” or “High Schools must teach alternative theories to evolution?” Absolutely they do. This is simply because conservative or liberal cannot define all facets of political opinion. Now, I’m sure you’ve heard of the terms socially conservative or socially liberal. But for the sake of this article, we’re ignoring which social issues align with which ideology, because often times, there’s no true relationship between economic conservatism and an arbitrarily “conservative” social stance.
On the infamous online political compass test, ideology is partitioned into four quatrains on a coordinate plane; the x axis represents liberalism (left) vs. conservatism (right), and the y axis represents authoritarianism vs. libertarianism. Depending on responses to a series of questions, the political compass defines an individual’s ideology into conservative authoritarian, conservative libertarian, and vice versa for liberals. Our American political parties, the Democrats and Republicans, roughly hold coalitions over the left and right quatrains respectively (although typical Congressional Democrats do fall slightly to the right, populist liberals like Bernie Sanders and Elizabeth Warren fall far more left). Conservatives, whether they are socially authoritarian or libertarian, reside in the Republican Party. This is why you hear Republicans Rand and Ron Paul say “government should abandon marriage licensing” while Republican Rick Santorum says “Homosexuality is akin to bestiality.”
(Political compass grid pictured below)
In this article, I’ll focus primarily on economics since that’s what I overwhelmingly care about and believe has the largest influence on our lives. Indeed there are social issues that impact individuals and their ability to participate in the economy. I won’t go in-depth on these, but here are a few.
Our broken criminal justice system and rampant police brutality prevent certain individuals, typically minorities, from participating in the economy. Fining people for smoking marijuana or jaywalking does nothing but bring the government additional revenue, something conservatives should oppose overwhelmingly, if they believe in small government. And certainly, imprisoning any additional non-violent portion of the population raises government expenditure, to what should be sheer protest from conservatives.
Banning same-sex marriage hamstrings the economy by decreasing activity for wedding planners and bakers.
War is an enormous waste of money, especially when our own intervention causes the violent backlash we face from terrorist groups. It’s a ceaseless cycle. Just imagine living in a town bombarded with United States artillery. From the rubble and shrapnel, a crowd of Jihadists proclaim that the United States causes all of their problems. Just look what we did to their towns! It’s no wonder terrorist groups maintain lasting legitimacy when home becomes rubble. Stay out of war, and maybe we won’t face foreign terrorist threats. But that’s an argument not suited for a single paragraph rant.
Typically, my social stances align with libertarianism, but that’s not why I’m writing this article. I care most about the economy and the conservative principles it should embody.
“The freer the market, the freer the people.”
This is my anthem. I’m a bona fide free-market capitalist, and that makes me conservative. Capitalism is the light of the world: it provides the best quality of life for all individuals. Unfortunately, populist beliefs shroud this truth.
“The global economy has failed us!” says Senator Bernie Sanders, the self-proclaimed Democratic Socialist. Sanders scathingly details the plundering of the poor and middle classes by the wealthy, who supposedly horde billions for themselves, causing the sheer suffering of others. What is the Sanders solution? Of course, to use government to redistribute wealth, ensure entitlements to keep even the laziest of humans afloat, and not to mention tax the living hell out of the rich.
Here’s why Sander’s story of plundering is wrong: the economy is not static. The people comprising each socioeconomic class change constantly. Sanders and other socialists site statistics regarding change in wealth distribution between the top 1% of income earners over conglomerated decades. But he and others omit the fact that these top earners aren’t the same people! Apple CEO Tim Cook didn’t greedily abuse his workers in 1976 only to become a billionaire in 2015. This simple fact matters because Sanders defies the fundamental principles of capitalism: whoever best satiates human demand earns the most wealth, and human demand is ever changing and insatiable.
The top 1% of income earners we see today undoubtedly earned their incomes by satiating human demand. Bill Gates’ Microsoft software changed lives for the better, Warren Buffett’s Berkshire Hathaway provided investors with profound profits, and I hate to say it, but Donald Trump’s real-estate mastery provided the United States with lusher-than-ever golf courses (when he didn’t abuse government subsidies). Here’s how the free market works.
Somewhere around the world, a guy named Joe needs something; this is called demand. In order to satiate that demand, Joe must fulfill it independently or trade with someone who can fulfill it. Joe will choose a route based on the value of labor used to produce his need: if it takes too much time, effort, and capital, Joe will buy his need from a provider. Joe’s provider will charge him a price greater than the cost of making the need and equivalent to Joe’s personal value of the need; this is profit. Then, all is good, and Joe’s quality of life improves because he no longer has a need.
Now, let’s say Joe’s need is an outhouse. Outhouses are messy, fetid, and aesthetically ugly. For years, Joe bought his outhouse from Bob, an adroit producer of outhouses. After years of successfully providing Joe quality outhouses, Bob saved his profits, invested them in new technology and methods of production, and in result, discovered the flush toilet system we know today. Now, Bob sells toilets instead, and when Joe buys one, his quality of life improves once again, especially in the sanitation department. This is basic capitalism, and it applies to everything. Whenever someone makes a purchase, their quality of life improves. Whenever profit is reinvested into a better product, the consumer’s quality of life improves again. We see this with the Iphone replacing the Ipod, Uber replacing taxis, and even renewable energy replacing partially replacing fossil fuels. Unfortunately, this isn’t the world as we know it.
Our Decrepit System:
Here’s how the current United States economy functions. Government officials decide that the public needs a particular service; let’s say an electric train like Amtrak. Amtrak willingly produces the product demanded by Congress, but finds sparring business, because elected officials artificially demanded the service. Because people don’t need Amtrak and it cannot make a profit via the free market, Congress pumps $120 million (not an actual figure) into Amtrak’s pockets. Amtrak continues to stay afloat, even though the market could do without. Without subsidies, Amtrak would be forced to increase its price, and consumers would find Amtrak services as unworthy purchases. But in the meantime, instead of reinvesting its arbitrary profits (if there are any) in producing a better product, Amtrak employees pocket the money, and provide the same service. If Congress didn’t artificially lower Amtrak prices by providing subsidies, the free market would provide a better service at a slightly higher cost, but certainly lower than the cost of an unsubsidized Amtrak train-ride. Profits from this free market alternative would be reinvested until we have an even more efficiently cost-effective product. The cycle continues.
It’s truly unfortunate that many people don’t understand — or blatantly refuse to understand – these concepts. Terms like income inequality tarnish the brand of capitalism. But does income inequality matter? Absolutely not.
Truly, income inequality doesn’t matter. What matters is quality of life. As we reviewed, free market capitalism provides a better quality of life for everyone. This, in fact, is true today in the United States. Within the past few decades, technologies improving quality of life for all expanded en masse. Air conditioning, automobiles, refrigerators, microwaves, and even smartphones are nearly ubiquitous among even the poorest of United States households. But according to Bernie Sanders and others ramshackle socialist lunatics, only the rich benefit! Life hasn’t improved for the poor since the 1970s! Bullshit. If the people at the top of the income scale consistently produce products that improve quality of life for the poorest individual, I couldn’t care less what CEO pay is. The person who invents the next greatest technology deserves vastly more compensation than whoever mops the floor of my high school in Pennsylvania.
So what then, is this crony capitalism? Where are the problems in the economy if income inequality is not one? Why is United States economic growth stagnant? What caused the 2008 financial crisis?
The Unfree Market
My friends, let me introduce you to the Federal Reserve. Apart from interest groups lobbying government for subsidies, the Federal Reserve is the root of all evil. Here’s how it works.
Once upon a time, in the year 2002, the United States economy stagnated after the Dot Com bubble. Investment was sluggish, so the Federal Reserve decided to jumpstart the economy by lowering interest rates. When the Federal Reserve lowers interest rates, banks in turn borrow more money to provide more loans to more people. With lower interest rates, people who typically cannot afford to take out a loan now can, since they owe a pittance in return.
Concurrently, the government expanded its efforts for home ownership. HUD and FHA programs encouraged impoverished individuals to open mortgages. This government planning created artificial and compartmented demand. The HUD and FHA programs created a bubble, or extreme demand for housing destined to explode.
Once the artificial demand inflated the housing sector, housing prices skyrocketed. At the point, investors come into play. After banks issues mortgage loans to impoverished individuals, Government Subsidized Enterprises, Fannie Mae and Freddy Mac, purchased mortgages from banks and packaged them into investment securities. Also, since housing prices skyrocketed, wealthy individuals purchased property as a form of investment. This enabled Fannie Mae and Freddie Mac to diversify their investment securities among differently priced properties, guaranteeing investment profit for all!
Or so they thought.
Eventually, the economy produced more $900,000 homes than people who could afford them existed. The Federal Reserve noticed the massive uplift in housing prices, correlating it with strong economic growth, and raised interest rates. All of a sudden, the impoverished individuals could no longer pay their mortgages and many defaulted. The result was a domino effect. People defaulting on loans caused housing prices to go down, causing investors to lose money, who in turn sold their investment securities, completely bankrupting Fannie Mae and Freddie Mac, Goldman Sachs, AIG, and other investment security selling institutions. This is what we refer to as “2008.”
What was our response? The Federal Reserve attempted to keep prices high by printing money and inflating the economy, effectively lowering the value of the dollar in our pockets, prolonging the recession and degrading quality of life for the lower and middle classes. Oh yeah, and don’t forget the additional billions we printed to bail out failed firms. While we suffer, the political class stuffs its pockets with printed money, scoffs at our struggles, and promises to fix them by reinvigorating the same crises. But here we are, still in economic doldrums, awaiting the day where monetary queen Janet Yellen finally discovers the Secret Formula for Economic Success, establishes the perfect interest rate for prosperity, and makes America great again.
As a millennial, the Federal Reserve pisses me off. To think that my dollar, each and every one of the $16,000 I earned during high school for my college savings accrued nearly zero interest and devalued accordingly due to a bunch of politicians with subpar brain function, is sickening. We should all be pissed off. My savings shouldn’t be impacted by Iraq or Goldman Sachs. And there’s almost no one in either party (except for Rand Paul and a handful of Congressmen) willing to deem the Federal Reserve as the demon it is.
Maybe one day, someone in government will think: “Gee, you know, maybe the free market could determine its own interest rates and we could return to the gold standard to prevent arbitrary inflation?” And I’m impatiently waiting for that day to come.
(I intend to write an article regarding the gold standard. But for now, this one is long enough).
So Yes, I’m Conservative
Now that we’ve established that government sucks, I’ll say it again. I’m a conservative. True conservatism idolizes the free market. The free market brings us innovation and improved quality of life, while the government misconstrues the economy with subsidized inefficiency and the atrocious boom-and-bust cycle of artificial bubbles. And no one, I mean no one, will find lasting economic success without returning to free market principles of limited government intervention. Whatever liberals promise, whether it’s free college, more entitlements, or what have you, none of it improves quality of life. It improves complacency of life. Only the free market will bring products that truly revolutionize living standards. So I vote to elect the officials who understand.