Paul Ryan’s Free-Market Crusade

Unlike most Republicans, Wisconsinite Paul Ryan has a plan to rein in entitlement spending.

As today’s Republican Party appears without direction, few among the opposition’s lawmakers remember the free-market principles once so staunchly defended by conservatives. It was a Republican president who gravely extended government’s interference with the housing market and it was a Republican administration that initiated the massive Wall Street bailouts which represented the single greatest distortion of American free enterprise since the New Deal.

There is however one GOP congressman who did what none of his colleagues dared — design a plan to control long-term government spending and deficits. Representative Paul Ryan of Wisconsin proposes to freeze domestic discretionary spending, privatize Social Security and turn Medicare into a voucher program that depreciates against medical costs.

Ryan, who serves as the ranking member on the House Budget Committee, found himself denounced by fellow Republicans. The reason? Ryan is an admirer of Ayn Rand’s free-market philosophy and reportedly requires staffers and interns to read her novel Atlas Shrugged (1957). In a speech before the Conservative Political Action Conference in February of last year, he even warned that some of the Democrats’ initiatives sound eerily similar to the collectivist measures enacted in Rand’s novel. “Citizens who had governed themselves will become mere subjects of the state,” he said, “more concerned about security than liberty. Once we reach this ‘tipping point,’ the friends of freedom will be reduced to silence.”

This sort of rhetoric is apparently considered controversial even by Republican standards. Before moving on to his critics however, a quick look at Ryan’s precise budget proposals is in order.

The Wisconsinite intends to largely privatize Social Security for those who are under the age of 55 by 2011. For citizens over that age, the program would remain unchanged. His alternative is to establish individual investment accounts, funded with part of peoples’ payroll taxes and protected against inflation by a government guarantee.

Medicare would be similarly dismantled if Ryan had his way. Current recipients and those enrolling over the next ten years could continue to enjoy today’s program whereas in 2021, the system would become voucher-based for new recipients. With their vouches, people could buy Medicare-certified, private insurance.

“Rather than depending on government for your retirement and health security, I propose to empower people to become much more self dependent for such things in life,” explained Ryan in a speech to the Hudson Institute last June.

His budget further involves a simplification of taxes, with people able to choose between either the existing system or his alternative which includes no deductions and virtually no special tax breaks. Above a taxfree amount ($39,000 for a family of four), taxpayers would know only two rates: 10 percent up to $100,000 for joint filers and 25 percent on incomes over that.

Critics are positively infuriated. While Republicans have been reluctant to admit support for Ryan’s proposals, economist Paul Krugman believes that his vision “does, in fact, represent what the GOP would try to do if it returns to power.” Ryan’s economic agenda, claims Krugman, “hasn’t changed one iota in response to the economic failures of the Bush years.” The opposite is true — Ryan is trying to steer his party toward the promotion of free-market capitalism once again after President George W. Bush not only expanded government but left the country in serious debt.

Krugman’s response to the proposed dismantling of Medicare is all the more revealing. Where on February 1, he complained that the Republican Party “literally has no ideas about how the nation should actually be governed,” in his bashing of Ryan, the New York Times columnist describes the one plan that is distinctly different from anything the Democrats offer as “deliberately confusing gobbledygook.”

Younger people wouldn’t be covered by Medicare as it now exists, cries Krugman. Instead, they “would receive vouchers and be told to buy their own insurance.” What could possibly be more gruesome? Surely, you can’t expect of people that they take care of their own insurance! That, apparently, is much too confusing.

Jonathan Chait, editor at The New Republic, closes ranks on the left by blaming both Rand and Ryan for their supposed “inability to grasp the enormous differences between American liberalism and socialism or communism, seeing them as variants on the same basic theme. The historical reality,” according to Chait, “is that the architects of American liberalism saw it as a bulwark against communism.” Of course, the “historical reality” is that communism didn’t exist at the time American liberalism was framed but this, perhaps, is just such another inability to grasp the obvious.

More significant is the consequence of this alleged confusion on the part of those who champion the free market however. “The result is a tendency to see even modest efforts to sand off the roughest edges of capitalism in order to make free markets work for all Americans as the opening salvo of a vast and endless assault upon the market system.” Chait leaves readers with the impression that this sort of thinking is nothing short of lunacy.

Ryan’s proposed reforms of Medicare and Social Security aren’t actually so radical as Krugman and Chait would have us believe. He still sees a role for government which is certainly not what Ayn Rand favored. What’s more, both entitlement programs are by no means “modest efforts” in response to alleged shortcomings of capitalism — they rank among the greatest expenses of government and are, in part, responsible for the high costs of health insurance in the United States.

Upon closer scrutiny, Chait’s argument falls apart entirely for it follows the familiar logic of those who vain to speak in favor of free-market capitalism but really forward its undoing. Chait defends the correction of just the “roughest edges” of capitalism; the “excesses” of laissez-faire so commonly persecuted these days. The charge rests on the premise that in order for the free market to work best, it needs to be less free. The inevitable result of “making it work” for everyone, is that everyone has to make do with less.

Paul Ryan’s plan deserves attention for it is without doubt the boldest and forward looking the GOP has offered since the Democrats most recently assumed power. Republicans hesitate however because Ayn Rand seems such an easy target for critics to shoot at. Indeed, Rand herself and blatant misrepresentations of her philosophy are often denounced yet her ideas are hardly ever specifically assessed, let alone undermined. Ryan has adopted just part of her thought to plan for America’s future. Legislators of both parties ought to pay attention.

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Comments

  1. The road back to freedom has to start somewhere. Cutting government spending is a necessary first step so the people who make the money can determine where and on what it is spent. We will not have Capitalism unless we use gold as money, so the prices of everything in the economy used to plan our lives is not at the mercy of the printing press of the Bureau of Engraving and Printing.

  2. Howard Roark’s jury summation from Fountainhead best describes the kind of individual freedom and pebble dropping that reflects America, while John C Calhoun described the American governing system for the only nation on this planet that prospered because of individual freedom. It was opposite what Obama said, that community interests are more important than are individual interests and what amounts to his promise to sink America, as cited in The Changing Face of Democrats on Amazon and claysamerica.com.

  3. Liberty vs. tyranny. Galt’s Gulch vs. Leviathan. We make our choice and fight for it; else others will choose our futures for us. It means both fighting against what we oppose and fighting for what we support, sallying forth on both fronts armed with sound reason. Alas, it’s far easier to oppose the socialist/collectivist axis of Obama than to elucidate a positive vision. Mr. Ryan is clearly imperfect, but it is far better to embrace the positive in his proposals than to do nothing.

  4. When change toward a free society (capitalism) comes, it will probably come first in this form — confused, inconsistent and partial. So, I do pay attention to Ryan’s positions. However, positions on particular issues are merely the end of a long chain of ideas.

    The more important question, in terms of endorsing someone, is this: What are his fundamental principles? That means asking a lot of probing questions. Examples are:

    – Is the man a theist and therefore a mystic and an altruist? A quick internet search suggests he is a theist, but possibly he is the deist type who might be able to disconnect his theism from his politics, to some extent.

    – More specifically, does he really support a free market? If so, then — as a test — what are his positions on open immigration (a hallmark of capitalism), drug laws (a sign of statism), and abortion (the right to control one’s own body)? The answers should help us grasp his understanding of the principle of individual rights and its foundation.

  5. Interesting article. I’d like to make one correction.

    The author said that: “He [representative Ryan] still sees a role for government which is certainly not what Ayn Rand favored.”

    But Rand did a role for the government.

    “If physical force is to be barred from social relationships, men need an institution charged with the task of protecting their rights under an objective code of rules.

    This is the task of a government—of a proper government—its basic task, its only moral justification and the reason why men do need a government.”
    http://aynrandlexicon.com/lexicon/government.html

  6. Burgess Laughlin, I suppose Ryan still maintains some of the Republican positions on things as immigration and drug laws. The fact that he outspokenly defends free market capitalism and is reportedly an admirer of Ayn Rand’s philosophies is a lot to be grateful for, as an Objectivist, considering the state of US politics today though.

    Roderick Fitts, you’re absolutely right, I should have been more specific. I meant to write that Rand didn’t see a role for government in the economic sphere whereas Ryan still wants the government to be involved in Medicare and Social Security, if only in a limited way.

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