GOP and economic realism

Several weeks ago I suggested in this space that the Republicans should select a presidential nominee with business experience and know-how, such as Mitt Romney or Jon Huntsman, to exploit the biggest impediment to President Obama’s reelection: the incredibly slow emergence from his recession.

To some, doubtless, this advice was received as sophomoric, the sort of insipid drivel you too often hear from political strategists “as seen on TV,” the cable talkers. Most Democrats, independents and even some Republicans would not recognize that my recommendation is nearly incendiary to some of my libertarian brethren. You see, my recommendation suggests that the next president, hopefully a Republican, should know how to manage government and business issues in a way that enhances commerce and gets this economy turned around. That implies far too much government activism for many Republicans, like the ones who not only opposed Obama’s most extravagant stimulus efforts, but tried to block all of them. It’s the same rabble that tried to savage the census two years ago, fully failing to recognize that census data is incredibly valuable to business. It’s the same crew that let American manufacturing fade into the sunset as China’s star rose. They oppose anything that feels Keynesian. Targeted tax breaks for industrial development policies might as well come from Lenin’s cookbook. The naysayers love to spout ideologies like “government shouldn’t pick winners and losers” and “markets are inherently efficient.”

One of the foundational beliefs of the movement to get government out of the economy is that government and economics aren’t really business-savvy, that to let the pointy-headed bureaucrats and ivory-tower academics set business and economic policy would produce results that fall short of what the real world of the economic marketplace would do on its own, if only left alone. This is where the hands-off-the-economy crowd loses touch with the real world it says it embraces. Government and the economy are bound like prisoners in a chain gang, whether we like it or not. Government could try to ignore business, and vice versa, and both would fail. Their fates are inexorably linked. To nominate a Republican who fails to appreciate that government can and should act to help business is folly. 

Even the Euros, who have adopted some policies that many Republicans would characterize as Marxist, seem to understand this more clearly. A personal example is illustrative. As regular readers know, I am embarked on a grand tour of Europe and have bought some souvenirs along the way. Last Friday morning in Denmark I had the pleasure of getting a refund for the VAT charges I’d paid thus far. The European Union wants to boost tourism, bringing dollars into their countries. They also know that tourists love a bargain. American tourists also watch Fox News and hate taxes inherently. So everywhere, you see signs urging you to “shop here tax free.” Keep your receipts and then go get your dough back — almost 20 percent of the purchase price. To make it even less bureaucratic, they have evidently privatized much of the process, as I got my refunds at the customer service desks in two Copenhagen stores, even for purchases made elsewhere. 

 While going through this process, I started thinking about the debate that would ensue if a state like Florida offered to refund the sales taxes paid by out-of-state tourists. It would be ugly. And even the libertarian anti-tax mob would rebel if you suggested that the policy was intended to help the tourism industry. Charges of socialism and centralized economic planning would reverberate through the state capitol’s halls.

I’m not looking for a Euro-style nominee for the Republican ticket, but I’d like to have someone who is realistic about how government can help businesses thrive.

David Hill is a pollster that has worked for Republican candidates and causes since 1984.