According to the jacket blurb, THE WAY FORWARD challenges conventional thinking, outlines his political vision for 2014 and beyond, and shows how essential conservatism is for the future of our nation. I found the book unreadable. Oh, the biographical notes were somewhat interesting, and Ryan makes some nice statements about how government should care for its populace. But in the back of my mind were the fact that Ryan has acquiesced in the obstructionist tactics of the House since the Republicans took over and the deceptive nature of his budget proposals which rely on unspecified cuts to balance. But these are quibbles compared to what I consider a fundamental philosophical problem, which is Ryan's insistence that our problems stem from government placing impediments in the way of free markets. More over the jump.
The problem here is that for any economy above the barter level, there is no such thing as an unfettered free market. Government activity is necessary at some level to facilitate the exchange of goods and services. In a simple economy, that might only entail some oversight of a physical market, roads for transport, some kind of medium of exchange and protection for the participants from thieves. While you could argue that such facilitating actions, while more complex, are all that is required in economies at larger scales, there is another factor that comes into play. There is a strong tendency for people to try to manipulate the market to their advantage. For instance, the “robber barons” engaged in monopolistic practices and had to be restrained by government anti-trust measures. Should a chemical company be allowed to dump its waste in such a manner as to foul your drinking water simply to add a few dollars to its bottom line? Must workers accede to unpaid overtime as a condition of retaining their job? I could go on and on in this vein, but the point is simply that government oversight is a necessary counterweight to such tendencies.
Ryan cites the bankruptcy of Solyndra as an example where the government would have better left the research and development to private enterprise. That statement, standing alone, is grossly misleading. The Department of Energy has funded solar research since its inception, and there is no doubt that such funding has been a significant factor in the declining costs of solar technologies. Were one to run a tabulation of the funding and the results thereof, I've no doubt there would be both successes and failures. This is also true of private research and development. However, most would acknowledge the government plays an essential role in basic research and development, with advances in knowledge being taken up, developed further and commercialized by private interests. The internet is a striking case in point.
Ryan also disparages the Obama stimulus, which raises the question of the proper government role in mitigating the regular boom and bust cycle, of which the 2008 experience was the latest example. In a truly free market, the banks would have been allowed to fail and the economy would have collapsed. Thanks to massive government intervention, that did not occur, and according to the Congressional Budget Office, the stimulus “ raised the level of real (inflation-adjusted) gross domestic product (GDP) by between 1.7 percent and 4.5 percent, lowered the unemployment rate by between 0.7 percentage points and 1.8 percentage points, increased the number of people employed by between 1.4 million and 3.3 million, and increased the number of full-time-equivalent (FTE) jobs by 2.0 million to 4.8 million compared with what those amounts would have been otherwise.” Oh, and we have a rather healthy auto industry, which some extreme free marketeers would have let go by the boards.
Ryan's argument that market forces can be relied upon to produce better results is therefore akin to saying get government out of the way so pixie dust can work its magic.