Monday, June 13, 2011

Conservatives Agsinst Free Markets

American conservatives have built their rhetoric around unconditional support of the free market. Anything that 'the market' does is good; any change in value not produced by the market is bad. This description should be a shallow caricature of Republican economic theories, but I'm afraid it isn't. Republicans want to insulate the economy from "politics," which is most plausibly defined as "authoritative allocation of value." In a democracy, Republicans want economic actors (anybody seeking to make money) to be insulated from public controls. Of course, since the American system of democratic capitalism provides that those political actors (voters) are also seeking to make money (and are thus economic actors in their own right), the Republican stance is actually that we should insulate the economy from market forces.

Democracy allows economic actors to thrive. Politically-instituted regulation mitigates the harms of firms' externalized costs, e.g. pollution from coal-fire power plants (or, for that matter, toxic run-off from coal mines). Firms that account for true costs of production by refusing to externalize such costs (say, by installing carbon scrubbers in their plants) can prevent their creative-accounting competitors from cornering the market through immoral competitive practices. The recourse to the body politic--either through legislation or the courts--is a feature of democratic capitalism.

It's more than a little intellectually inconsistent for Republicans to complain about the price effects of having a fair market:
Consumers could see their electricity bills jump an estimated 40 to 60 percent in the next few years.

The reason: Pending environmental regulations will make coal-fired generating plants, which produce about half the nation's electricity, more expensive to operate. Many are expected to be shuttered.
The horrors! An energy production method which is noxious to the capitalist system is under attack by the capitalist system. The price increase, according to basic micro-economic theory, incentivizes innovation and allows for new technologies to be developed.

This innovation is anethema to the modern conservative movement, however, which emphasizes an appraoch more out of a totalitarian regime than a free capitalist society: "Drill Here, Drill Now." The phrase beseeches government to massively intervene in the energy market, as Republicans typically criticize as "picking winners and losers." Even though Republicans are currently blocking efforts to repeal welfare subsidies for oil companies, they are asking for a new government giveaway to Exxon, BP, and Shell. It's a good time to remember that when Republicans talk about economics, they're taking things more on faith than on an actual examination of economic principles. That, and they want to richly reward the Koch Brothers and the oil and gas industry that fights so hard to put Republicans into office.

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