The voters of South Carolina succumbed on Saturday to the considerable charms that former Speaker Newt Gingrich holds for conservatives. As a conservative myself, I too had succumbed to those charms not too long ago — before we learned that Freddie Mac had made Gingrich the world’s highest-paid “historian”; before Gingrich unveiled his bizarre ideas for bringing recalcitrant judges into line; and, most importantly, before he blithely threw capitalism under the bus in his vengeful rage against Mitt Romney. These and other things eventually brought me to my senses about Gingrich. If the GOP is to have any hope of defeating President Obama, Republicans who are getting swept up in the second coming of Newt-mania will also have to come to their senses.
Gingrich attempted to display some uncharacteristic modesty in his victory speech, demurring at the suggestion that he was “a good debater.” Alas, that modesty could not even survive into the next sentence, where he declared: “I articulate the deepest-felt values of the American people.” You’re supposed to let other people say that, Newt.
But speaking of American values, it is precisely on this score that Gingrich has shown himself to be unfit to be the Republican nominee. Gingrich’s ham-fisted attack on Mitt Romney’s career at Bain Capital has inflicted considerable collateral damage on the cause of economic liberty. And economic liberty, as embodied in free market capitalism, is the one cause that unites all three branches of modern American conservatism: fiscal conservatism, foreign policy conservatism and religious conservatism. We do not have a separate branch called “free market conservatism” because such a term would be redundant — every conservative is presumed to subscribe to the principles of free market capitalism. Libertarian Ron Paul, a fiscal hawk and foreign policy dove, is a staunch defender of free market capitalism. Rick Santorum, a religious conservative and foreign policy hawk, is a staunch defender of free market capitalism. Mitt Romney’s impressive career exemplifies free market capitalism. And with the departure of Rick Perry, whose clownish blabbering about “vulture capitalism” fittingly capped off his unfortunate campaign, Gingrich’s assault on Romney’s business record has left the former speaker isolated in the Republican field.
Gingrich wants to have his cake and eat it too, persisting in attacking Romney over Bain Capital while protesting that he is not attacking capitalism in general. Gingrich, however, has displayed an understanding of capitalism that is no better than that of your typical, well, community organizer. In the days before the South Carolina primary, Gingrich asserted that Bain’s business didn’t qualify as “venture capital” because “[v]enture capital is when you go in and put in your capital and you stick it out.” That’s actually not what venture capital is; venture capital involves making early-stage investments in promising but risky young companies (like Staples, in Bain’s case), nurturing them through their crucial initial growth phase and then getting out.
Gingrich also suggested that Bain’s business model was not “good capitalism.” He went on to say: “I’m proud of real capitalists. I’m proud of guys who say to their workers, ‘I’m in it with you. If I lose money and you lose a job, we lost together because we both tried.’” Gingrich was of course implying (rather presumptuously) that Romney was not a “real capitalist.” Gingrich’s description of “real capitalism” comes off sounding like a European-style model where the state forces businesses to accommodate the demands of various societal “stakeholders.”
One of the best defenses of Romney’s record at Bain has come from an unlikely source: President Obama’s former “car czar,” liberal Steven Rattner. According to Rattner, “Bain Capital’s record was extraordinary, among the best in the business.” Rattner mocked the Gingrich/Perry/liberal caricature of Romney’s former company, insisting that “Bain Capital is not now, nor has it ever been, some kind of Gordon Gekko-like, fire-breathing corporate raider that slashed and burned companies.”
In addition to being inaccurate, Gingrich’s attacks on Bain bear a disturbing resemblance to diatribes typically spouted by people who have no clue about how capitalism works. Gingrich draws false distinctions between “good” capitalism and “bad” capitalism, between “real” capitalism and “exploitive” capitalism. He is channeling liberals who pay lip service to the virtues of capitalism even as they decry the very mechanisms that allow it to work.
According to Gingrich, Romney should be quizzed about whether Bain took out too much money in dividends from one or two companies that failed years later. It’s easy to question such decisions with 20-20 hindsight. But would President Gingrich decide the amount of dividends that should be paid to a private equity firm under his conception of “good capitalism”? How would that be any different from President Obama deciding the “certain point” at which “you’ve made enough money”?
The oft-described “creative destruction” of capitalism can unfortunately cause short-term pain that is easy to demagogue. But that creative destruction is necessary to free up capital for vibrant businesses that can use it most productively. This results in more jobs, more opportunity for workers (ultimately including those who have lost their jobs), more prosperity, more tax revenues, a stronger economy and better lives for us all. Creative destruction is an essential element of free market capitalism, a system that has lifted far more people out of poverty than any other, that allows even poor people to live in relative comfort, that allows poor people their best opportunity to become rich, that maximizes opportunity for all. Interfering with creative destruction might postpone some short-term pain, but creates much greater long-term pain by choking off growth (see: Europe).
Gingrich declared in his South Carolina victory speech that November’s election “is the most important election of our lifetime.” That was not merely one of those “grandiose” statements that Gingrich prides himself on making. The election is indeed that important because our free market system is being undermined by President Obama’s statist policies — and by the misguided and mislabeled notion of “fairness” that Occupy Wall Street and their enablers on the left have thrust into the national debate.
In the face of this threat to American-style capitalism, Republicans need to nominate someone who can make the case for economic liberty. We need someone who can argue convincingly that free market capitalism is not just a conservative value, but is a fundamental American value. It is the source of our prosperity and the foundation of the American exceptionalism that Gingrich celebrated in his South Carolina speech. Through his attacks on Romney, Gingrich has stripped himself of the moral authority to make that argument. Those attacks have also placed a burden squarely on Romney: Supporters of economic liberty must now count on him to make a robust, compelling and inspiring case for the brand of capitalism that he now, thanks to his opponents’ attacks, embodies.
Gingrich’s ego would undoubtedly be buoyed by the notion that he has made the presidential race a battle of ideas. He has indeed done so — although not in the way that he might have planned. Gingrich started a battle of ideas inadvertently through his politically motivated attacks on Romney’s record at Bain — it was an attack that Obama was poised to launch, but Gingrich got it started early. But this is not the fight that Gingrich wants: Gingrich has unwittingly started a battle that conservatives cannot afford to allow Romney to lose, either in the primaries or in November.
David B. Cohen served in the administration of President George W. Bush as U.S. Representative to the Pacific Community, as Deputy Assistant Secretary of the Interior, and as a member of the President’s Advisory Commission on Asian Americans and Pacific Islanders. He hosted the debate show “Beer Summit” for PBS Guam.