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Why I Am No Longer a Conservative

The man who plotted Nixon’s path to victory wonders what the right has wrought.

Much ideological water has flowed under the bridge since I began writing The Emerging Republican Majority in the wake of the 1966 midterm elections. In recent years, I have come to believe that “conservatism”—broadly defined as the shared politics, policy, and practice of the Republican-led House of Representatives and the Bush White House—has become an arrogant defender of ideological excess and entrenched interests and privileges (albeit different ones) to match the Liberal establishment of the 1960s.

At some risk of oversimplification, the power structure Washington conservatism now represents can be described as Wall Street, Big Energy, multinational corporations, the Military-Industrial Complex, the Religious Right, the Market Extremist think-tanks, and the Rush Limbaugh Axis. I do realize that skepticism of various portions of this entente can be found in the speeches and writings of conservatives from John Adams through Theodore Roosevelt and Dwight Eisenhower to John McCain. More power to them.

But the practical question is narrower: Can anything plausibly presenting itself as “conservatism” thrive by indicting this grouping or even two-thirds of it? This is important, because history and logic suggest that the grassroots and rhetorical opposition to this combination should come from the center-Left, not from “conservatism.”

Yes, there are caveats. The business wing of the Democratic Party—Senator Joe Lieberman comes to mind—has corporate hem-kissers to match those in high GOP position, and center-Left clarity of criticism and opportunity may suffer.

And yes, there may be a five, seven or nine percent minority of those calling themselves conservatives who dislike the new entente enough to go into open, substantial, and sustained opposition. I am just skeptical of their having a) much grassroots appeal or b) ability to maintain a broad indictment or dialogue under the conservative label. Merely organizing might insure a fringe and peripheral tone—tired Right-wing complaints in a new package.

These skepticisms and qualms having been stated, it seems clear—setting aside the powerful caveat of renewed terrorism and its further ideological fall-out—that by the measurements of the past, the conservative establishment described in the second paragraph is vulnerable—prone to the usual electoral comeuppance meted out to business-financial Republicanism indulging its cyclical tendencies to crony capitalism, Wall Street socialism, and speculative Waterloos.

Over the last two decades, the United States has seen the extraordinary dual advance of finance and extreme levels of wealth concentration and polarization. Indeed, they have fed on each other.

The rise of Wall Street and its outliers—let’s call the process “financialization”—has to do with factors ranging from deregulation to computerization, the shift from bank accounts to mutual funds and rampant government favoritism. Deregulation made all sorts of new services possible and computerization made even more possible (and globally pervasive). Then the Bull Market provided a feeding trough and Paul Volcker, Alan Greenspan, Bob Rubin et al. provided the government favoritism. The upshot is that by the mid-1990s the Finance, Insurance and Real Estate (FIRE) sector of the economy had jumped ahead of manufacturing in the national income and GDP numbers.

This is pernicious. Whereas the broad-based benefits of manufacturing in the 1950s and 1960s helped create a blue-collar middle class, the pre-eminence of finance has stimulated extremes of wealth concentration and polarization tied to a) the stock market and b) the lucrative financial services industry. In New York City, the capital of this trend pattern, the New York State Comptroller released a report in 1998 that showed 55 percent of the city’s income gains since 1992 coming from the securities industry.

National wealth effects can likewise be tied to the stock market and the maldistribution that flows from the fact that some 40 percent of the privately owned stocks are in the hands of the top one percent income group. In 1982, when Forbes magazine published its first survey of the richest 400 Americans, the top 30 families and individuals had wealth that ranged from $500 million upward to $8.6 billion. Seventeen years and a roaring bull market later, the top 30 had fortunes ranging from $7 billion to $85 billion—a tenfold increase in less than two decades (and fivefold even allowing for inflation).

The phenomenon of financialization helped to stimulate the greed of upper echelon corporate America, which in turn led to the incredible array of scandals that have focused negative attention on the Bush administration and its corporate connections. By way of illustration, consider the following greedometer: In 1980, the ten U.S. executives with the highest compensation according to Business Week had an average compensation of $3.45 million. By 1988, the average had jumped to $22 million, and by 2001, to $155 million. By comparison, during this same period median family income barely stayed ahead of inflation.

This two-decade period of boom and bubble had seemingly inevitable corollaries—they also accompanied the late 19th century Gilded Age and the Roaring Twenties—of financial, political, and ideological corruption. The financial corruption unleashed has now become a staple of the news.

The political corruption, alas, has been almost as rampant, quintupling the cost of seeking open House and Senate seats, turning lobbyists into pocket party bosses and big contributors into a new nobility. Small wonder that the top one percent have got tax, deregulatory, and bail-out breaks from Congress. Didn’t they pay for them, voters may believe, by providing half of the campaign contributions?

As for the ideological corruption, over the last two decades the fashionability of greed has created another re-enactment of the Gilded Age: the resurgent popularity of survival of the fittest, laissez-faire, worship of markets, and all the rest of the moral accouterments. This is a familiar failure of conservatism.

A third feature of the present age is that much of the propaganda pumped out by the think-tanks and other intellectual advertising-agency types who talk about “free enterprise” is so much malarkey, as the people who write their checks know full well. “Corporate welfare” is a periodic lament of conservative libertarians who are otherwise “useful idiots,” in terms of political propaganda, to their funders. Tax breaks are the staple of Washington tax consultants, lawyers, and lobbyists. “Military socialism” — in its pure form, plus the new homeland security entrepreneurialism — is one of the fastest-growing jewels in the crown of unfree-market economics.

But even the joys of Pentagon contracts negotiated by marketing vice presidents who used to be Air Force generals pale next to the achievements of the newest form of unfree enterprise: bail-outs, the collectivization of private risk, and the emergence of a financial sector better protected by government rescues, preferences, and guarantees than manufacturing ever was by tariff protection. Milton Friedman has made the point that finance has flourished because it is protected by the Federal Reserve and is not allowed to fail.

Suffice it to say that without these ideological perversions and mutations, bank, stock market, and hedge fund failures would have occurred on a level—let us call it the free-market in action—that would have made the stock market bubble impossible. The Dow-Jones Industrial Average probably could not have got above 5,000 and the Nasdaq probably could not have got above roughly where it is now, a more or less 75 percent decline later. The conservative establishment, however, including both Bush generations and Alan Greenspan, was at the heart of the bailouts.

Three hundred years ago, European mercantilism aimed at building wealth by accumulating as much gold as possible, with every conceivable assistance by the state. Possibly the recent bailout- spangled policy of trying to maximize the market capitalization of the stock indices and the banking and investment sector could appropriately be described as financial mercantilism. Ironically, back in the early 1980s, center-Left strategists like Robert Reich, recently Clinton’s labor secretary, endorsed the idea of a so-called Industrial Policy, by which government aid, strategy, and benign regulation would be used to promote the embattled manufacturing sector. It was dismissed by critics contemptuous of “lemon socialism.”

What to make, then, of lemon financialism—”Wall Street socialism”? One would think this would be a battle cry of every American conservative who had ever read Friedman, Schumpeter, or Hayek. Instead, the conservative sstablishment gave it a wink, if not a salute.

A fourth point—evident from the historical example of the once-leading economic powers Holland and Britain: the United States takes on grave risks in reorienting its economy towards finance and away from the old pattern of making things, building things, growing things, and hauling things. Some of this evolution represents a genuine new stage of the world economy, but just as much is an unhealthy U.S. evolution.

Historically, again using the example of those two preceding world economic leaders, the peril comes from taking on too much debt—the financial types will always find a justification in some new economic paradigm—and then recklessly undertaking a war (or wars) when a new peril emerges.

Obviously, the United States had to spend more money on security after 9/11. The notion, however, of starting a war in Iraq—throwing psychological and physical explosives into the psychological and physical munitions dump that is the Middle East—is exactly what the war lessons of Holland (1689–1713) and Britain (1914–1918 and 1939–1945) would warn against. The U.S. is already the world’s leading debtor, with a current account deficit in the five percent range, and the unexpected consequences of a poorly managed war in the Middle East could push it up to six or seven percent, the level at which postwar Britain became a financial basket case in 1948.

All of which brings me back to the Bush administration, a regime that mixes greed, inept economic management, business corruption, crony capitalism, triumphalist Pentagon saber-rattling, and Axis of Evil foreign policy theology on a scale that already boggles foreign commentators.

Under normal circumstances, this would be a recipe for political disaster. The Bush-Cheney ties to financial chicanery, the tax-gutting subservience to top one percent wallets, the epidemic of corporate transgression, a war policy recklessness that makes Barry Goldwater look like Mahatma Gandhi, the collapse in stock indices as post-bubble economic weakness widens, the threat to Social Security and pensions, and the administration’s cultural alliance with the Religious Right are all proven U.S. electoral vulnerabilities.

Five or ten years ago, this Enron-Armageddon fusion would have been unimaginable. If the psychologies of 9/11 do not reverberate with voters this fall, the old rules could apply again. August surveys, at least, suggest that the economy and the Bush administration have defined the Republican Party into a tight corner this November.

But if the terrorist threat does produce a wartime rallying to the party in power, the question of dealing with Bush administration becomes more challenging. The administration represents a coalition of so many types of conservatives—business, financial, and cultural—that it is hard to imagine a serious defection or dissent on the part of Americans who call themselves conservatives. Whatever theoretical conservatism, or portions of it, may think, operational conservatism seems to have redefined itself around just what Bush represents—the economics of privilege, the foreign policy of war, and the culture of guns and Sun Belt fundamentalism.

Should George W. Bush become a second Hoover (or even a second George H. W. Bush), things could change. But right now, I would guess that not even ten percent of self-identified conservatives would rally around an opposition to his administration’s multiple high profile characteristics.

Thus it is hard to see much opposition coming from “conservatism.” Indeed, many of the administration’s worst attributes pivot on its blend of conservatisms carried to excess (or incompetence). Further terrorist crises would only escalate that appeal by making the military-industrial complex aspect of Bush’s regime less indictable.

In a piecemeal sort of way, some kind of conservative thought process might be rallied around a mix of Barry Goldwater’s indictment of the Religious Right, Milton Friedman’s criticism of financial bailouts, John McCain’s disdain of Washington corruption, Dwight Eisenhower’s warning about the military-industrial complex and Ross Perot’s impugning of the multinational corporations. But with the administration including so much of the conservative power structure, the odds are that any attempt at institutionalizing a conservative dissent would wind up mobilizing nothing but a small fringe, even a kooky fringe.

American politics has a long tradition of mobilizing anti-establishment constituencies against an entrenched national power structure combining arrogance with an outdated and failing viewpoint. Thirty-four to thirty-six years ago, that described Washington liberalism. Today, it better describes entrenched Washington conservatism.

Outsider conservatism is much more of a practical oxymoron than it was five or even three years ago. For some whose identification with “conservatism” goes back to the very different context of 1966–74, today’s Washington milieu is fatal.

Remnants may wish to keep an old flame alive, and there are certainly old theoretical flames that remain worthy of being fanned. In realistic terms, however, the greater need to block the Greed-and-Armageddon politics operating out of Potomac City becomes controlling.

Does it make tactical sense in 2002 to support Democratic retention of at least the Senate? Is the best bet in 2004 to support either a Republican primary bid or an independent presidential bid by John McCain?

Agreeing in both instances. I clearly am no longer an operational conservative—and perhaps no longer any other kind, either.  
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Kevin Phillips’s new national bestseller, Wealth and Democracy: A Political History of the American Rich, was published in May.

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