These are the waning days of neo-conservatism in the United States. It is now an ideology without an intellectual foundation; an implementation record of ineptitude, waste, corruption, and defeat; and a membership of ne’re-do-wells without a soul.

 

The neo-con ideology has roots dating to the 1960s. It endorses political individualism, is critical of the so-called welfare state, advocates free markets and an "assertive" promotion of American democracy and national interests in international affairs including by military means. Its economic foundation is based on a simple curve that shows a relationship between taxes and revenues but predicts nothing;[i]  it has a 40-year real history of economic policies that have resulted in slower economic growth, $20 trillion in lost GDP and $8 trillion in lost tax revenues; on accelerated budget and trade deficits; on tax policies that encouraged the outflows of capital to foreign countries and to offshore tax havens. It has engaged in unfinanced wars of choice; caused a greatly depreciated dollar and rapidly rising energy prices; while giving huge tax cuts that have made the rich richer and the poor poorer. Most recently it has relied on economic austerity as the means to simultaneously reduce the debt while encouraging economic growth.   It touted a recent economic study in justification of its debt reduction pursuits.  Last month, however, a 28-year old graduate student in economics exposed a spreadsheet error that showed this study to be flawed, thus signaling the end to this political ideology as a viable element to any society. 

 

Kenneth Rogoff is an economist of some renown.   He is an economics professor at Harvard and a grandmaster at the mental game of chess. Along with another Harvard professor, Carmen Reinhardt, this duo set the economic world abuzz with their report that when a country’s debt-to-GDP ratio reaches 0.90 bad things start to happen, namely that future GDP growth falls significantly.   In their paper “Growth in a Time of Debt” they conclude:

 

 “Our main finding is that across both advanced countries and emerging markets, high debt/GDP levels (90 percent and above) are associated with notably lower growth outcomes.” p.22.

 

In critiquing this paper, Thomas Herndon, the graduate student at Amherst College in Massachusetts, noted that he could not replicate the two professors’ findings. In cooperation with his own professors, he obtained copies of the spreadsheets from Professor Reinhardt who invited him to publish whatever he found.   What he found was a simple summing error that stood the economic community on its head. The two learned professors at Harvard had summed a column of numbers while omitting data from 5 relevant countries. When Herndon corrected this error, the main conclusion from the earlier study disappeared.   Herndon saw that this mystical ratio of 0.90 was not different than others, and GDP growth was not affected by it.

 

Well. Was this sloppy work?   Yes.   Those of us who use spreadsheets on a regular basis make this kind of mistake on a regular basis. And that is precisely why we need to have an independent person to double check our work before we present our findings to the scientific community and to the world.  

 

In this case, the researchers did not question the numbers.   They should have. The numbers were inconsistent with a host of supporting economic facts.    For starters, why would the 0.90 ratio be important given that:

 

a.        the interest payments on our debt were just 6 percent of our total budget. This rate is far lower than most U.S. households.

b.      interest rates are at historical lows, and funds are available for private borrowing.   This means government borrowing does not have a “crowding out” effect leading to higher interest rates.

c.       borrowing from foreign sources has the beneficial effect or repatriating trading dollars at bargain low rates.

d.      all economic theories and experiences tell us that we must spend more, not less, to stimulate an economy that has not recovered from a severe recession. This approach has worked in 11 or the last 11 recessions. 

 

Moreover, the conservative wing of Congress was quick to cite the Rogoff/Reinhardt study as justification for taking austere measures to reduce the federal budget, and to do so by cutting Social Security, Medicare, Medicaid, aid for the elderly and the disabled, Food Stamps, unemployment, and aid for children.  None of these programs contributed significantly to the run up in the public debt, or to any of the other results noted in the opening to this essay.  

 

The real culprits to all the issues raised in paragraph two from 1980 onward are these: 1) rising defense spending, 2) rising trade deficits, and 3) lowering of top income tax brackets. All of these factors were put into place under Republican administrations beginning with Ronald Reagan and ending with George W. Bush.   Then, the same political party that got us into war based on flawed intelligence, that expended $2 trillion in national wealth on those wars, brought about a financial market collapse with deregulation, a housing market collapse with aggressive lending without risk, then sought to restore a wrecked  economy based on the false conclusions from a flawed study.

 

How unspeakably brazen and contemptuous are these actions and results? They are the norm among the new faction of ultra right-wing conservatives who now occupy seats in Congress.   Following the 2010 elections, they managed to win majorities in about 15 states where they set about gerrymandering voting districts that have put their seats into the conservative fold for years to come. 

 

Americans are not stupid. They can be tricked for a short while, but not forever. In poll after poll, and in election after election, the public is showing its disdain for the conservative agenda.   This agenda is demonstrably on the wrong side of history, the wrong side of economic facts, and the wrong side of common sense.

 

As a further example of their incoherency, the new right-wingers are now taking up valuable time in Congress by discussing issues such as hypothetical drone strikes directed by the White House against American patrons in North Carolina cafés. I kid you not!

 

Is this desperation, lunacy, or the last throes of a bankrupt ideology?  I choose all three.

 

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