Saturday, December 05, 2009

Newt Gingrich's Town Hall at Millsaps

I was busy the night it happened so this is my blogging while watching the webcast.

Prayers and Bryant's blatantly political speech (How did you like that tax holiday we gave you?) a bit jarring. I think the Speaker would do better to have a more academic, less overtly political introduction and framing.

He runs several companies. Does that mean that he comes out of the private sector? Surely that is not his claim to fame? It wasn't even by his own choice. I think he would be just as good a candidate if he had never been in the private sector. Surely we would all be better off today if he had been in the Congress all this time as leader.

Discusses the composition of the Obama cabinet and focuses on the mere 8% with private sector backgrounds. Why make it private sector vs. everyone else? Why not make it an attack on lawyers? Lawyers literally do not produce anything, They merely redistribute it. Also, the "populist," anti-elite focus is not especially effective for Newt. He could easily teach at Harvard. Part of his appeal is his intellectual accomplishment, a conservative that can go toe to toe with the smartest in the other party, the one willing to make complicated and difficult arguments instead of reading sound bites and applause lines from a teleprompter.

The egg analogy is not very effective. It is merely a funny image. In contrast to the corn growing vs. corn distributing example. The corn example actually focuses on the causal process focusing on the difference between creating and redistributing wealth.

How about "I am so old I don't even know how to use a teleprompter." It was good to see him there so the students could actually see a national political figure that could speak without a teleprompter. It is striking how much his answers are completely question driven. The first time it sounded like he had a bag of analogies he used every night, but this time it sounds, on a more careful listening, to be entirely specific to the questions he is being asked.

Should we really be holding up the Chinese as an example for emulation? Not just because of the political system but because they have been living out the living-on-credit, artificially cheap money model on an economy wide scale (though through their currency restrictions rather than direct government borrowing).

He makes the interesting argument about welfare reform that giving money to people was not helping them it was hurting them. Welfare rolls go from 140,000 to 20,000.

Dream big, work hard, work everyday, be true to yourself and …..

Why "dream big"? I hate all this dreaming. Let the Democrats have "dream." MLK, etc., it is always going to be theirs anyway. Besides, Newt's message is about getting up in the morning and going to work at any job, starting a small business one day. That isn't a dream, that is a plan.

He should mention that he was fired by the Republican party for being a real Republican. he was replaced by a "compassionate conservative" who agreed with the Democrats about spending more money and putting more power in Washington but who just wanted to run it with a bit more reliance on market mechanisms: We'll grow the government and run it better. Newt should present himself as a real alternative to the Bush years, which, as it happens, is true.

The direction of causality is in question in the car company example. Wasn't it that the worst car companies are the ones that took the money? They didn't become even more poorly run because they had taken government money.

First spontaneous applause comes on the line about Czars being unconstitutional. Seems an arcane point but it really strikes a chord.

Then he goes into a bunch of applause lines tying things to Mississippi.

Being competitive with China and India is the big returning theme.

Spontaneous applause on China's capital gains tax is 0. Do we really want them as our model? Isn't' there a danger of a huge blow up in the Chinese economy?

Uses the Irish corporate tax rate of 12% as a target.

Gets huge applause on the death tax. It seems that he built up to it and almost cued people to applaud. Then he backs it up by saying the argument is moral getting even more enthusiastic applause.

If we did…..we "would" be able to compete with China and India? Do we really need to build them up like that? It reminds me of the way Japan was viewed in the 80s. But the Japanese model seemed like a real alternative. Does anything think that China and India are really a better model? That they have the rule of law and limited government? Surely they are cases of large economies with low wages. They gain an advantage in some labor intensive areas and from their artificially low (in the case of China--I have no idea about India) currencies.

Ends like a professor with no applause line and goes straight into taking questions. Refreshingly genuine.

First question softball, doesn't even need an answer.

Second, from a small business man. Argues that corporate income tax discriminates against domestic corporations and proposes a consumption tax to remove the discrimination. Sounds like an economist. Feels like I am back in Hyde Park listening to Becker. Gingrich wants a follow up and clarification with the guy. Really does have a conversation.

The guy's second proposal is to make credit more available to small business. complicated plan that sounds a lot like the stuff that Gingrich was denouncing as getting us in the housing crisis.

Gingrich asks how much writing it off in a year helps. The guy says no, you have to be making money for it to help and in the end you will write it off anyway. Probably not the answer Gingrich was looking for but almost surely the right one. A simple, clean tax code is certainly better than gimmicky marginal changes.

Too big to fail: "if you have capitalism on the way up you have to have it on the way down." This gets two rounds of spontaneous applause.

Applause for letting GM go into bankruptcy. I don't think that politicians elsewhere have quite caught on to the way that people in the South resent the extra help that northern companies are getting while companies in the South are out in the cold just because they happen to be listed on foreign stock exchanges. The people in Mississippi view the Nissan company and the Toyota companies as their companies.

How to keep manufacturing in the US.

The big analogies that my students were talking about (and to a large degree, puzzling about) the next day. Henry Ford. What is the point about the guy talking while the wheel of the car was on his chest? Trial Lawyers? Needs some contemporary figures to back that up, no? Some comparisons (with China or some other country)? An example of frivolous lawsuits? Point was lost on the audience, I think.

Wright Bros. Comparison with Smithsonian. Wright Brothers expected to fail. The Smithsonian doesn't take into account the possibility (inevitability) of failure. Does not bring it back to a point but promises the audience that he will. (Not sure what the point is myself. I agree that the reason private companies are better able to innovate is that they have the freedom to fail, but I don't think that Gingrich makes that point.)

Edison. 6% of GDP. 9,000 failures? No, successfully eliminated 9,000 possibilities. 49,000 failures to invent the lightbulb.

Point: we have been a high cost society since 1790. that is based on innovation. the innovation is based on allowing people to have big rewards. that will make us competitive.

(The next day my students did not see the connection between the stories and the point that Gingrich was making. I think it is fair to say that he left out some steps in his reasoning. I think these analogies would be much stronger if they were tied to a more specific policy area, like how to encourage innovation, say, in drug development. One of the greatest dangers of the government's expansion into health care is that it will stifle innovation by basing it purchases for drugs on their marginal cost of production. The government in effect will pay Edison for the 49,001st try, the one that leads directly to a working light bulb and force Edison to eat the cost of the first 49,000 tries. But the attempt to tie these stories to the vitality of the US manufacturing base required too many steps of reasoning for people to keep it all in their heads while he is telling the story. Teacher to teacher: keep it one story per point.)

Finally points out that our economy is much larger than China's economy and that we are a much bigger manufacturer. I think the real use of the Chinese example should be the advantages of the free market, limited government system. The Chinese system should be a target for ridicule, not an example for emulation. The few places where they do allow free markets should be contrasted with the much larger parts of their economy where the government is still in control. I think that China is headed for a crash just as Japan's was and I don't think the Speaker should connect himself to their example in such an unqualified way.

The point of the analogies seemed clear enough to me but my students did not get it.

General question on our government becoming estranged from our first principles.

Makes the anti-party statement. Citizens over party. He really should position himself as the guy that was fired by the Republican party by the smart guys that thought we should triangulate, become more like Democrats, to be more like Clinton. But it worked for Clinton because our policies are actually right. It doesn't work to triangulate closer to a failing model. He is the one conservative in the race that doesn't have to worry about being accused of being a Republican party lackey. He was the guy that balanced budgets, that was willing to argue for spending cuts along with tax cuts. He is the answer to both the Clinton years and the Bush years. Clinton appeared successful because Gingrich forced him to cut spending. Bush was a failure economically because he and the Republican party repudiated Gingrich and the fiscally responsible conservatives, the "non-compassionate" conservatives. After the fake-conservatism of Bush and the fake-centrism of Obama people may finally be ready for a real conservative who will fight, argue and get things done.

Lao Xio Hoa's question. China: 27 million; Mao: 48 million; Tibet: 21 million (how many people are in Tibet); India: 48 million.

For one thing, this should point to the danger of using India and China as rhetorical exemplars of the free economy. Their examples should be used much more carefully.

Kids look miserable. They are on crumby chairs on the stage. I warned maintenance about that.

Gingrich goes to Hayek, Orwell, planned economies. (Did Orwell really say that 1984 was about "planned economies"?)

Planned economies lead to the gas rationing. Planned economies lead to 13 year olds getting around the rules. (That would apply to liquor laws, too, no?)

If you react to that situation by saying that you have to get more license plate police then you might be a liberal. Interesting line. That actually brings it back nicely to the point the woman from China was making. I am not sure the audience got it, though.

Black Cat/White Cat story. That seems to be a sword that cuts both ways. Labeling everything market or government could be seen as equally simplistic.

Then he gets into his talks with the Chinese officials. Praises their plan to build high speed rail system. Is that really an example we should follow? More public works? Instead of a bunch of small projects have one big public works project? That seems like the Obama plan with a slight variation. Is that the Republican criticism of the Obama stimulus? That he should have used it to build a high speed rail system?

And the Chinese stimulus is arguably as irresponsible as Obama's, it is just that the Chinese stimulus plan comes in the form of an undervalued currency and a lot of government accounting smoke and mirrors?

He gets an outsourcing question and mans up. He says that the solution to outsourcing is to make our economy so competitive that people don't want to outsource. Where do we get such men? More to the point, how do they ever get elected?

Immigration question: wants an expanded H1B visa program. He has a good example of Micro-soft moving a facility to Canada. Gutsy.

40% of the founders of companies in Silicon valley are from India.

Illegal immigration used to make a statement in favor of English only.

Advocates a guest worker program because enforcement won't work. Not a popular argument here. is that also an argument in favor of drug legalization? What about closing the border? Is that physically impossible?

Thinks criminal penalties are "a waste of time" but that the economic penalties can work.

Comes out against giving guest workers a spot at the front of the line and comes out against amnesty (didn't he support Reagan's amnesty?). --yes he did. quotes Reagan's diary and says that he won't make that mistake again. This is convincing.

Question: Drop in welfare leads to children dropping out of school to supper their families.

"Dropping out for the purposes of work may be a rational decision but that we have to have a way for them to drop back in." No schmatzy "I feel your pain" dodge. Goes into the tour with Sharpton and throws a prop to the President. Points out that Obama is fighting the very powerful teachers union. Nice compliment that also points out the fact that the democrats are the ones in bed with the teachers union (not a problem if you elect me and the republicans) and deflects the inevitable racism charge.

Talks about the anger management programs in charter schools. this suggests to the democrat that we need a national program of anger management. should be careful.

Very impressive. Nothing harsh about him in the presentation. the films I had been watching from the 90s seemed so combative. Age agrees with him. It makes him seem not aggressive but just honest. TV also makes him look thinner for some reason. Maybe I should try it?

In conversations with faculty afterwards someone said that he drew the wrong point out of the analogy from the Wright brothers about failure, but when I was watching it he seemed to get it just right, failure is good and inevitable (or, as my colleague said to me, part of the scientific method). What I thought was weak was his connecting it back to the economy question that brought it up. We will keep manufacturing jobs here because we are willing to fail? Is China relying on the private sector to build its massive train system?

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