Memo To: Website Browsers
From: Jude Wanniski
Security vs. risk: mature enterprise vs. entrepreneurship; budget balance vs. economic growth: the two major political parties have been biased decidedly towards the first of each pair, to the detriment of the second. This missive sent to Polyconomics clients in late April explores the potential for a realignment favoring risk-taking, entrepreneurship and growth.
April 28, 1997
The topic of political realignment is one that has occupied theorists for at least the past 25 years. When I first heard it discussed almost that long ago, it was supposed to happen pretty soon, with shifts leading to a different combination of voters in the two major parties. Somehow the shifts would involve liberals and conservatives of different types and locations arranging themselves by different rank and file. The topic came up a year ago, in a telephone conversation I had with Felix Rohatyn of Lazard Freres, who will be our new Ambassador to France. Rohatyn, a dyed-in-the-wool Democrat who also happens to admire Ross Perot, told me he thought the central political problem in America today is that both major parties represent the bond market but neither represents the stock market. What Rohatyn was saying struck me as being exactly correct. The bond market represents security and the stock market represents risk. If both major parties identify security as their operating paradigm, policies and attitudes that involve risk cannot hope to advance. Perot’s entrance on the political stage in 1992 came from the side of risk, as he did not get to be the most successful entrepreneur of his generation by playing it safe. The two major parties and their friends in the Establishment combined to close him off, though, and on his second attempt in 1996, he clearly had run out of steam, playing it safe with a taxpayer-financed campaign.
In identifying the two parties with security versus risk, we should think not only of bonds over stocks, but also of blue chips on the NYSE over NASDAQ, older people over younger people, big, mature corporations and banks over the new kids on the block, budget balance over economic growth. In foreign affairs, think of the Pentagon over State, isolationist containment over constructive engagement, force over diplomacy. As it is, Democrats and Republicans each have elements of security and risk, but the dominant force in each party is security. The Establishment, which is by its very nature a defender of the status quo, controls both parties. It does so through money and political influence, of which older people and enterprises tend to have more compared with those on the way up. The Establishment likes things the way they are, which is why it is so nervous about political realignment. As things stand, money counts as much as it does because of the federal tax system. When even the smallest favors on Capitol Hill or in Treasury regulations can mean millions or even billions at stake, it makes perfect sense for the Big Guys to buy both parties with whatever it takes.
The government always will have favors to grant to those who seek them, but to stamp out the rampant corruption that mires both parties requires reform of the tax system. If it were drastically simplified, power would flow out of Washington. If unable to threaten individual corporations or entire industries with penalties to them or with subsidies to their competitors, the White House and Congress would find the amount of money available for political campaigns drying up overnight. Without this major source of corruption, Congress could more easily be trusted by the people it represents. Yet it is because this would be such a drastic change to the status quo, the Establishment would fight it out of fear of what would replace it. By controlling both political parties, it can maintain the status quo forever. Only a successful third party presidential candidate or a political realignment of the major parties can produce a willingness to take the risks on behalf of fundamental reform. A third party presidential candidate might provide such a pivot to realignment, but more likely it would be a major party candidate who also would win the nomination of Perot’s Reform Party.
The realignment would be most evident in the voting patterns of black Americans, who were decisive factors in the last major realignment of the parties in the New Deal, an alignment that grew out of the Great Depression. Prior to 1932, black Americans voted Republican as a bloc, identifying with the party of Lincoln. The national Democratic Party relied upon the solid white vote of the Old Confederacy, which maintained strict racial segregation. As the Depression forced desperate young blacks out of the South in search of a livelihood, it also broke their remaining nostalgic ties to the GOP as they swarmed into the Democratic Party. The New Deal offered at least the promise of government jobs and a bit of bread on the table from the Democratic political machines of the big cities. Older blacks remained in the Republican Party, horrified that their children would join the party of poll taxes, lynch mobs, and slavery, but as they died out, the Democratic hold on the black community was complete. By 1960, John Kennedy identified himself with Martin Luther King Jr., at a time when King was still viewed as a dangerous radical by many Americans and an agent of change. Richard Nixon chose instead to identify with Jackie Robinson, a symbol of change. Since 1964, the national Republican Party essentially has written off the black vote at the national level. In last year’s presidential race, the GOP ticket of Bob Dole and Jack Kemp gave lip service to black Americans. Kemp, though, was unable to persuade the campaign to spend a dime of the $67 million it received from the taxpayers on advertising in black media.
Now that the conversion of the old Confederacy to a two-party system is complete -- the GOP having taken root alongside the Democratic Party -- realignment finally can be realized. The reason I became interested in the Nation of Islam’s Minister Louis Farrakhan -- at the time of his Million Man March in October 1995 -- is that he appeared to be a genuine agent of change in the context of political realignment. More than any other black leader, Farrakhan represents a reaction to the security of the New Deal coalition. His conflict with the Jewish Lobby is political, not religious or social, which is why Min. Farrakhan can insist he is not anti-Semitic or bigoted or a purveyor of hate, and I can agree with him on that. In the New Deal coalition, the Jewish community has supplied money and political skill, which it has in abundance, while the black community has supplied votes, which it has in abundance.
This longstanding coalition no longer makes sense to the black community, however. In fact, in the past 30 years, the black community has been ravaged by the “generosity” of the welfare state -- which has been all the old coalition has had to offer in exchange for black votes. At our Boca Raton conference, Min. Farrakhan stood and applauded when Rep. John Kasich said, “It is a sin for the government to do for people what they can do for themselves.” In his presentation, Min. Farrakhan asked: What is left for the black husband and father to do in his family when the government provides free food, clothing, and shelter? It is Rev. Jesse Jackson who identifies with welfare, security and all the various government affirmative actions. To Min. Farrakhan, it makes more sense for at least younger blacks to be throwing their support behind the growth wing of the GOP, for example, supporting elimination of the capital gains tax, which has become the defining economic issue between the parties. Without these younger blacks who would benefit most from entrepreneurial capitalism, the GOP’s growth wing loses one battle after another to the corporate statists. It was fascinating to observe Rep. Jesse Jackson, Jr., a Chicago Democrat, in an MSNBC interview with Tim Russert two weeks ago, speak glowingly of Min. Farrakhan “knocking on the door of the Republican Party.”
Then there is foreign policy. Just as the major corporate players have “bought” the two major parties to ensure security over risk, and the Cuban emigre community has “bought” both major parties on its issue of opposition to Castro, the Jewish community has used its clout to persuade both major parties to back unconditional support for Israel. Each has a perfect right to do so. In a realignment of the parties, which would produce a GOP party of risk, though, U.S. foreign policy would likely be more open to reconciliation with Cuba as well as reconciliation with the rogue nations of the Middle East. Min. Farrakhan argues, as I have since the end of the Cold War, that the U.S. should receive petitions for reconciliation from all nations. The Jewish political community, which is divided on almost all other issues, is united on Israel’s security, unwilling to chance a political realignment that might threaten it. When Jack Kemp last September had a good word to say about the Million Man March, Jewish political leaders came down on him like a ton of bricks, no matter that his support for Israel’s security is beyond question. For the same reason, General Colin Powell is anathema to all the foreign-policy hawks, not only those in the Jewish and Cuban communities. Kemp and Powell and Farrakhan are natural allies, willing to take chances on economic growth and on foreign policy initiatives in a new world order.
The Weekly Standard has become the voice of the kind of status quo conservatism that led Friedreich von Hayek in The Road to Serfdom to tell his readers 50 years ago why he would not be a conservative. The Standard is as fanatical about national security as Alan Greenspan is about inflation, advocating pre-emptive strikes against friends who look like they might become enemies. Its editor, William Kristol, is in the forefront of those arguing that because we know China is going to be an enemy in the future, we might as well begin a Cold War with it now. After 50 years, the Cold War became the status quo, and Kristol and his allies feel naked and useless without it. Kristol’s colleague, John Podhoretz, is the son of Norman Podhoretz, former editor of Commentary, the official publication of the American Jewish Committee. The alliance of the Jewish lobby and the Christian Coalition covers both Israel and China. The Vatican has no active political interest in Israel, where the struggle is between Palestinian Arabs and Jews. The American Jewish Committee has no active political interest in China, where the primary questions of religious freedom involve Catholics and the Vatican. It’s an easy coalition to arrange because there are no conflicts of interest. When the Holy See and Beijing find their way to diplomatic exchange -- which is only a matter of time -- the anti-China coalition here would weaken. Back inside China, the Vatican would be a positive force for direct dialog in the advancement of human rights.
The refusal of the Jewish political lobby to deal with Min. Farrakhan should soften at the point it is clear he can succeed in helping bring about political realignment. There will be more to be gained by working with him instead of fighting him. This, too, is just a matter of time, as the same positive forces that are bringing the Catholic Church and China together are now bringing the Vatican close to positive relations with Cuba and Libya. For several months now, I’ve argued with my Jewish friends that they eventually will see Min. Farrakhan as a positive force in the Middle East. His recent breakthrough in Philadelphia was scarcely mentioned in the national press -- although The New York Times had a very respectful account of it. It was the first time he had been asked by a white politician, Mayor Edward Rendell, a Jew and a Democrat, to help solve a problem of racial division. The Philadelphia Inquirer reported the following Sunday that Rendell’s mail has been running at 50-to-1 in favor of his invitation to Min. Farrakhan, after the minister’s 85-minute speech the previous Friday. Jewish Philadelphians are divided on whether he did a good thing or not. In the few minutes he devoted to economic growth, by the way, Min. Farrakhan urged a cut in the capital gains tax and a presidential executive order putting the dollar back on a gold standard! He did this in the context that it is easier for people to get along with each other when there is plenty of economic opportunity to go around.
As in 1932, a political realignment would not occur overnight. The process may begin in the off-year elections of 1998, with the trend that was established last year continuing. As a result of the MMM, 1.7 million more black men voted last year than in 1992. As black men see something they can believe is possible in the political realm, after decades of disappointment, their voter participation should continue to climb. The GOP opening can occur not because the GOP offers the black community things in exchange for votes, but because of an offer of a share in the political power of party governance. It is most unlikely that Min. Farrakhan would formally identify himself with the GOP. Once he knocks down the wall that separates black voters from the GOP, his influence as a spiritual force of reconciliation would quickly dissolve unless he balances his influence with the Democratic Party. It’s hardly a secret that all the black political leaders are rooting for this kind of a scenario. Black political influence can only mature when both parties simultaneously are competing for it. The Jewish vote, which is now almost as solidly Democratic as is the black vote, would also divide, the younger population drifting into the GOP’s party of risk.
Realignment does not simply mean that a lot of people who now vote Democratic will vote Republican. It means also that people who now vote Republican will shift into the Democratic Party, on the margin less interested in risk and more in security. The objective would be two major parties that would provide full-fledged national agendas, each prepared to represent all the people, neither writing off a class nor a community. One would simply tilt more toward security, the other more toward risk. The model is a happy family, in which father tends toward risk-taking and mother tends toward security. Each is able to at least appreciate the viewpoint of the other and take it into account in the process of designing family policy. Civility and harmony would replace jealous tantrums and gridlock. As it is, with both parties tending toward security, we get plenty of security and an aversion to risk. The electorate has no choice but to divide responsibility between the executive and legislative branches. After realignment, I would expect both political parties to strengthen as parties, one winning a unified government through a cycle of eight or twelve years, the other then designing a platform that corrects in the other direction and winning long enough to carry through.
This is supposed to be the way it works.