Like father, like son. That kept running through my mind during the State of the Union address Tuesday. As his father did 16 years ago, President Bush ignored a golden opportunity to alter history by boldly advancing conservative ideas on natural-resource and environmental problems.
Instead, he took refuge in the familiar but often ineffective measures initiated by Democrats in the 1960s that presidents and Congresses of both parties have followed ever since.
The two Bushes choked on the same issues, but in different situations.
By 1990, the work of dozens of bright conservative economists who had labored away in think tanks like the American Enterprise Institute or Heritage Foundation had reached a critical mass.
These economists, many of whom viewed themselves as supply-siders, had sought ways to apply market forces to domestic issues like transportation, communications, education, health, natural resources and the environment.
Their work was a reaction to the centralized, top-down policies originated by Presidents Lyndon Johnson and Franklin Roosevelt. They correctly saw that existing policies featured similar flaws to the Leninist central planning then failing in the USSR and China. All depended on a common assumption that all-seeing bureaucrats could micro-manage allocating resources without sacrificing economic efficiency.
Trying to specify pollution hardware for new power plants or vehicles from Washington was no more successful than trying to manage the design of truck factories from Moscow. It repudiated the idea that intelligent, resourceful workers might find more innovative or effective ways to solve problems than engineers and attorneys back in the capital.
Young conservatives argued it was better to ensure that households and businesses paid the true cost to society of things they purchased. Then let them respond creatively in their own ways.
Market-oriented approaches to government regulation were part and parcel of supply-side economics. Government’s role in the economy not only was too large, but also misdirected. Keynesian macro policies wrongly emphasized manipulating total demand. Encouraging the “supply side” by lowering high income taxes and by overhauling regulation worked better.
Even some Democrats recognized that much existing regulation was counterproductive. Air travel and railroads were deregulated during the Carter administration.
By the early 1980s, ideas on market-oriented regulation suggested that publicly owned natural resources — oil, timber, minerals, radio frequencies — should be sold at auction, not given away. All price regulations should be abolished. Environmental laws mandating specific technology or arbitrary standards, as for vehicle fuel economy, should be scrapped.
When some activity like generating electricity or driving cars imposed external costs on society as a whole, two alternative tools were proposed: Emissions from large plants should be capped and permits to emit auctioned off. Polluting businesses would face strong economic incentives to reduce emissions, but could find their own ways to accomplish this.
An alternative tool was to tax emissions or the inputs like coal or gasoline that created harmful emissions.
Eager conservatives hoped the Reagan administration would heed their advice. They were disappointed. Its focus was on lower taxes and beating the Evil Empire. Economic efficiency was a low priority.
Hopes rose again when the first President Bush succeeded Reagan. The Soviet Union was now a hollow threat. High inflation and unemployment were becoming memories. The time was ripe to overhaul regulation.
But Bush stiffed conservative reformers, sending Richard Darman, his domestic policy guru and Office of Management and Budget chief, to Congress to say that Bush Sr. saw no need to change anything. This was regrettable.
Bill Clinton, while well aware of the advantages of market-based approaches to resources and the environment, was pusillanimous in pushing change.
For the first six years of his administration, the current President Bush continued the tired old command-and-control policies, only more half-heartedly. When possible, as on climate change or wetland loss, his tactic simply was to deny any problem existed.
The father passed on an opportunity out of complacency. The son’s position is more desperate. He could have saved his legacy Tuesday night by championing the energy and environmental measures that conservatives have advocated for 25 years. He did not.
© 2007 Edward Lotterman
Chanarambie Consulting, Inc.