Quantcast

News analysis: Paul Ryan's Hayekian roots lead to 'Ryanism' approach; Dems, GOP differ on philosophies

Published: Tuesday, June 30 2015 2:27 p.m. MDT

In this Monday, June 18, 2012, file photo, Rep. Paul Ryan, R-Wis., looks on during a campaign event with Republican presidential candidate, former Massachusetts Gov. Mitt Romney at Monterey Mills in Janesville, Wis. (Associated Press) In this Monday, June 18, 2012, file photo, Rep. Paul Ryan, R-Wis., looks on during a campaign event with Republican presidential candidate, former Massachusetts Gov. Mitt Romney at Monterey Mills in Janesville, Wis. (Associated Press)

With the addition of Wisconsin Rep. Paul Ryan to the Mitt Romney GOP presidential ticket, pundits predicted that the "incredibly boring" and "strikingly petty" race would finally become about something bigger.

"Once Mr. Ryan entered the race, everything changed: the issues, the substance of the candidates' speeches, perceptions of Mr. Romney and President Obama, the role of a running mate," Fred Barnes wrote at The Wall Street Journal. "The economy remains a central issue, as do Mr. Obama's overall record and Mr. Romney's past one. But now the looming fiscal crisis, Medicare and the size and role of government are front and center of the campaign. The presidential contest has been elevated into a clash of big ideas and fundamental difference."

Republican vice-presidential candidate, Rep. Paul Ryan, R-Wis. gestures during a rally at a hardware store in Roanoke, Va., Wednesday, Aug. 22, 2012.
 (Associated Press) Republican vice-presidential candidate, Rep. Paul Ryan, R-Wis. gestures during a rally at a hardware store in Roanoke, Va., Wednesday, Aug. 22, 2012. (Associated Press)

David Davenport of Forbes wrote that the big question being debated now is, "Do Americans want the Romney-Ryan less government formula of tax cuts for economic growth, along with spending and entitlement cuts and debt reduction? Or do they prefer the Obama-Biden approach of letting tax cuts expire, and promoting more government spending and infrastructure programs to spur economic growth?"

The debate over the role of government in the economy is one of differing philosophies developed by twentieth century economists John Maynard Keynes and Friedrich Hayek. Keynes believed unemployment could be affected by aggregate demand, and that if the private sector wasn't buying things, the government ought to step in to buy things and employ people.

In contrast, Hayek believed that the price system, or free markets, could coordinate people's actions into the spontaneous order of the market system. Fiddling with the market could have unforeseen consequences, such as increases in the money supply that could make credit artificially cheap and lead to busts.

President Barack Obama is most commonly referred to as a Keynesian, based on his $831 billion stimulus bill, $447 billion jobs bill, budget proposals and investments in clean energy companies.

Romney, on the other hand, reportedly falls more on the Hayekian side as his economic plan calls for a flatter, easier tax system and a small, simpler government.

Ryan is a student of thinkers like Ludwig von Mises, Ayn Rand, Milton Friedman and Hayek, holds a degree in economics and political science, is known as a political wonk and is a proponent of smaller government. However, a New York Times article by Adam Davidson suggested that while many of Ryan's proposals, including his Roadmap for America's Future, have Hayekian roots, other parts of his budget plan would not fall under that label.

Peter Boettke, an economist at George Mason University, said that for Ryan to be truly Hayekian, he would need to apply the "generality norm," where any government program that helps one group must be available to all. If applied, Boettke told The New York Times, that principle would eliminate all corporate and agricultural subsidies and government housing programs, and it would get rid of Medicare and Medicaid or expand them to cover all citizens. Likewise, private companies should be allowed to compete with the government by offering an alternative Postal Service, road system and perhaps even a private fire department.

"Though he talks like Nobel Prize-winning economist Milton Friedman, some of Ryan's most high-profile votes seem closer to Keynes than to Adam Smith," Matt Lewis wrote at The Daily Caller.

Ryan came under fire recently for requesting stimulus funds for Wisconsin business after fighting against the 2009 stimulus bill. During his career in Congress, Ryan also voted for the $700 billion bank bailout, loans to help the auto industry and the expansion of Medicare.

His explanation for the $700 billion TARP vote was that he felt the country was on the cusp of a deflationary spiral, which could have created a Depression and led to a big government agenda and a "complete evisceration of the free market system we have." Therefore, a vote for TARP was a vote to prevent that. Likewise, with the auto bailout, he said Josh Bolten from the George W. Bush administration said the auto companies would either get a bailout or TARP, and Ryan said he voted for the bailout in order to keep it from expanding.

The proper name for Ryan's beliefs, then, could be "Ryanism," Arthur C. Brooks wrote at the American Enterprise Institute.

"'Ryanism' celebrates private entrepreneurship, demands lower taxation and is willing to take on the hard issues of structural reform to programs, including out of control entitlement spending," Brooks said. "It seeks to protect the social safety net by limiting it to the truly indigent and not to allow it to become a source of middle class entitlement (as it has over the last few decades). It does not 'end Medicare,' but rather makes changes to the system for those under age 55 so the program is solvent and does not rob our children. It is unashamed of America's powerful position in the world and recognizes that military spending is — when pursued prudently and not wastefully — a public good and not just another government boondoggle."

In other words, Brooks said, the Ryan approach is "conservative and, very likely, workable."

On the other side of the aisle, Obama cannot be considered a true Keynesian either, economist Veronique de Rugy wrote, since the president's desire to let the Bush tax cuts expire for households making more than $250,000 per year goes against the philosophy. Although Keynesian economics would recommend against raising taxes in a recession, Europe has done so as part of its austerity measures, and Obama would prefer to do likewise, she said.

"Tax increases (private-sector austerity), especially in times of economic contractions, are never a good idea or a good way to promote growth. That's true even in a Keynesian model," de Rugy wrote. "Yet, we aren't hearing anti-austerity advocates complain loudly that Europeans are raising taxes. Where are the headlines saying, 'Europe needs to stop raising taxes?' Instead, we read that spending, and the lack of it, is to blame for austerity. Maybe that's because acknowledging that austerity through spending cuts and tax increases has produced terrible results in Europe makes it hard to continue calling for tax increases — even if only on the rich — in the U.S.'s weak economy."

The two campaigns — Romney/Ryan and Obama/Biden — may not be faithful adherents to the Keynesian and Hayekian philosophies, but both campaigns have worked to differentiate their versions of government, the role it should play in the lives of U.S. citizens and what the debate should be about this election season.

During a speech in Roanoke, Va., in July, Obama laid out his philosophy, saying, "Look, if you've been successful, you didn't get there on your own. You didn't get there on your own. I'm always struck by people who think, well, it must be because I was just so smart. There are a lot of smart people out there. It must be because I worked harder than everybody else. Let me tell you something — there are a whole bunch of hardworking people out there."

"If you were successful, somebody along the line gave you some help," Obama continued. "There was a great teacher somewhere in your life. Somebody helped to create this unbelievable Americans system that we have that allowed you to thrive. Somebody invested in roads and bridges. If you've got a business — you didn't build that. Somebody else made that happen. The Internet didn't get invented on its own. Government research created the Internet so that all the companies could make money off the Internet."

Romney pushed back, saying "The idea to say that Steve Jobs didn't build Apple, that Henry Ford didn't build Ford Motor, that Papa John didn't build Papa John Pizza, that Ray Kroc didn't build McDonald's, that Bill Gates didn't build Microsoft, you go on down the list, that Joe and his colleagues didn't build this enterprise, to say something like that is not just foolishness, it is insulting to ever entrepreneur, every innovator in America and it's wrong."

What the president said demonstrates the philosophical difference between the campaigns, Romney said.

"I find it extraordinary that a philosophy of that nature would be spoken by a president of the United States," Romney said. "It goes to something that I would have spoken about from the beginning of the campaign: that this election is, to a great degree, about the soul of America. Do we believe in an America that is great because of government or do we believe in an America that is great because of free people allowed to pursue their dreams and build our future?"

After the fact, both candidates tempered their positions,with Obama saying, "Of course Americans build their own businesses," and Romney saying that without schoolteachers, firefighters and people who build roads, you couldn't have businesses. However, the two sides have continued to hammer themes rooted in Hayek and Keynes.

"The reason (the election) is so hotly contested is because the choice that we face this November couldn't be bigger," Obama said at an Aug. 18 campaign event in Rochester, N.H. "It's not just a choice between two candidates or two political parties. This is a choice between two fundamentally different visions for our country; two fundamentally different ideas abut the direction that we should be going in."

In his speech, Obama touted the end of the war in Iraq and the drawdown in Afghanistan, saying the U.S. should take about half the money it's no longer spending on war and "put it to use putting people back to work rebuilding roads and runways and ports, and wireless networks and broadband lines into rural communities, and creating a Veterans Jobs Corps that can help returning heroes get back to work as cops and firefights in communities that need them. That's the America we want to build. That's the choice in this election."

"People ask me why I think the president's policies have been such a disappointment. I just don't think President Obama understand what it is that drives our economy," Romney argued. "America runs on freedom — free men and women, pursuing their dreams, working hard to build a better future for their families. That is what propels our economy. When an American succeeds, when she wins a promotion, when he creates a business, it is that individual, that American that has earned it, that has built it. Government does not build our businesses, the American people do. The American people also build the government."

"We are at proverbial fork in the road in America," Ryan said during a bus tour introducing him as the vice presidential candidate. "The president came into office with so much hope offering so much change. He got the power he wanted. He got his party in control. He passed almost every item on his agenda. It's law now. And now we're seeing the results. A country with a health care system that's about to be taken over; a country with four years of trillion dollar deficits; a country in economic stagnation; the worst economic recovery in 70 years; the largest deficits and the biggest government since WWII. Nearly one in six Americans are in poverty today — that's the highest rate in a generation. You know what? We're not going to take that. We're going to turn this thing around."

"Our dad would say that in his calm voice all of the time, 'Be part of the solution or the problem,'" Ryan's brother Tobin Ryan told National Review. "Paul really took that to heart after Dad died. And I think, when you look at his views, if anything shapes his ideology, it's that. He wants to throw himself into the solution."

Copyright 2015, Deseret News Publishing Company