In recent years, fiscal conservatism has been demonized by the press, mostly for “aiding in the rise of corporatocracies“. However, what exactly is a fiscal conservative? And how do their views differ from other types of conservatives?
Last week, we covered the concept of social conservatism, which has similarly become demonized in recent years. This got me thinking, how do the two forms differ from one another?
What is Fiscal Conservatism?
Fiscal conservatism is a form of conservatism that focuses primarily on the government’s role in the economy. Most commonly, this is to do with how much government intervention there should be in the market.
Whilst many fiscal conservatives may also hold socially conservative views, both are not mutually exclusive. Many fiscal conservatives are actually socially liberal and vice versa!
Fiscal conservatives believe that it’s the government’s job to be small, and limit its expenditure. This helps to reduce the towering national debt as many of them can see that it won’t end well. For anyone.
Whatever remains in the government’s coffers at the end of the years from taxes should be used to cut down the national and / or regional debt.
Naturally, this appeals to many high earners and entrepreneurs. However, many poorer families tend to be left behind, which is often why fiscal conservatism is so despised in some areas.
How do Their Views Differ?
As said before, fiscal conservatives are a subsect of conservatism. As such, their views on certain issues will differ, usually pertaining to the economy. Whilst each fiscal conservative holds differing viewpoints, they commonly include:
Tax Cuts
Almost every fiscal conservative can agree that taxes are necessary for government to function. However, in recent years, governments have gotten too big, and have raised taxes for almost no reason whatsoever.
Due to this, most fiscal conservatives believe that the government should lower taxes to a more sensible rate, with the definition of “sensible” varying from person to person.
A large minority of fiscal conservatives also believe that corporations should be given similar tax breaks, be it on income taxes or corporation taxes. And yes, some do believe that it should be both.
This is supposed to stimulate the economy and create more jobs. For people, as they have more income, they’ll spend more, and corporations will need more employees to cope with demand.
In theory, this should help to increase everybody’s standard of living. If done correctly, even with lower taxes on paper, the government should receive more tax dollars in total, thus help them…
Lower Government Debt
To date, government debt for the world’s largest economies is at a record high. And it’s not just the US who have a debt problem, the UK, Canada, France, Germany and Australia all have piling debts.
Fiscal conservatives understand that if we keep on adding more and more money to this pile, eventually, it will consume us. This has been shown in terrifying proportions in Venezuela in recent years.
In order to avoid the UK, US or whatever country they live in, from suffering a fate far worse than that in Venezuela, they propose that the government should cut down on spending to focus on paying off debt.
Within fiscal conservatism, there are several trains of thought on how to best approach it. For the most part, it has something to do with cutting back non-essential government services, and putting all excess taxes towards paying back debt.
Some fiscal conservatives believe that governments should temporarily raise taxes for a few years in order to speed this process along, before lowering them exponentially afterwards to make up for it.
There are also a few fiscal conservatives who believe that slashing welfare might be a good idea in the short term, in order to clear the national debt. From here, the government would be able to offer more comprehensive welfare.
De-Regulation
Fiscal conservatives are some of the most ardent supporters of de-regulation. For the most part, they agree that some regulation is good for all parties, however, a few do believe that all regulations should be removed.
Whilst each person has different reasons for believing in de-regulation, the vast majority of fiscal conservatives are interested in the increased productivity that it will have.
If these industries are less regulated, it allows the companies in them to cut corners (and therefore costs) they couldn’t before. Whilst this may sound bad, these extra savings often end up in the R&D division.
Soon, these R&D divisions will bear more fruit, in the form of a newer, better and cheaper product. This makes the company richer, as more people are able to buy their product, so they need to hire more people.
On top of this, we all get a higher standard of living, especially if this is done on a large scale. After all, you get better quality products at a much cheaper price than you did previously.
In the short term, as in, right after the regulations are lifted, you may also see lower prices as well. This is because the companies can pass on these savings to the customer, however, this doesn’t always work.
Privatization
Coupled with de-regulation is privatization, with the two often going hand-in-hand. Often, following privatization, these industries need to be regulated, with other closely related industries being de-regulated to help.
In the so-called heyday of fiscal conservatism, during the 1980’s under Reagan and Thatcher, privatization became quite popular. Not only does it provides the government with a lot of cash quickly, it also gets rid of an cash vacuum.
The vast majoirty of them also understand that whilst a noble idea, state-owned companies are inefficient at best. They have seen that they produce inferior goods at a much higher price than they would be otherwise.
Many of them have seen towering state-owned enterprises become a vacuum for tax-revenue as well. There’s a common saying among many fiscal conservatives to describe this:
They have to plan a meeting to plan a meeting to plan a meeting.
Instead, by letting private individuals set their own companies up to compete with one another, they produce better goods at a much cheaper price! Thus, we are all better off, even if a few do become far richer than the rest.
Capitalism
For the most part, fiscal conservatives are ardent supporters of our capitalist system. For the most part, it is the only thing fiscal and social conservatives can 100% agree on: socialism and communism are bad.
Many of them grew up in an era where the West was pitted against the East, under the rule of the USSR. Many of those who didn’t are vivacious students of history and understand why the USSR failed. Because its economy did.
The vast majority of them have seen what has come out of socialist and communist rule: not a great deal. Today, some of the most impoverished countries outside of Africa are formerly communist or socialist countries.
Fiscal conservatives simply don’t want their children, and their children’s children to have to suffer the same fate.
Many of them have also seen the oppression that people have suffered under communism and socialism. Living conditions are often far worse than they were prior to socialism/communism.
If you dare speak out against the socialist/communist party, you’ll disappear, if you’re lucky. If you aren’t you may end up in a work camp of some description, or worse, a gulag.
Fiscal conservatives understand that that isn’t the way forward.
Variants
Fiscal conservatism is its own subset of standard conservatism. Whilst fiscal conservatism has held onto a series of conservative principles for much of its existence, a few have changed.
Luckily, the vast majority of these changes have been through time, going through several different “eras”, defined by the most prominent fiscal conservative of its time.
Early
As with other types of conservatism, fiscal conservatism has been used throughout the centuries, albeit without the label. However, the term was first used in the 1920’s, under President Calvin Coolidge.
Prior to becoming President, Coolidge was the Governor of Massachusetts. Here, he signed into law numerous bills that made Massachusetts one of the richest states in the union. Once he began president, he did this on a national scale.
Many of these policies were business-oriented, such as reducing corporate and capital gains taxes, which affect corporations. Coolidge also used subsidies for many businesses allowing them to become larger and more profitable.
Coolidge’s policies created the economic growth that made the Roaring Twenties so good. Once he left office, his successors reneged on these policies due to public outcry during Coolidge’s presidency.
This caused what is now known as the Great Depression. President Hoover was unable to fix the Great Depression, which led to it compounding and becoming even worse.
When FDR became President, he instituted the New Deal. Many of the policies in the New Deal were derived from Coolidge’s policies. For the next 30 years, New Deal-style policies would be put in place to stimulate the economy
Reagan-Era
In 1979, the British people elected Margaret Thatcher as Prime Minister. Following this, in 1981, the American people elected former actor, turned politician Ronald Reagan as president.
Both heads of state were quite close to one another, often discussing international policy (mostly how to hamper the spread of communism) outside of “usual” channels. They’d usually spend hours talking on the phone.
One of the ways that they decided to prevent the spread of communism was through privatization. Throughout the 1980’s, both Reagan and Thatcher sold several previously state-owned companies.
Both parties also cut tax rates. Whilst this did primarily help those with higher paying jobs (as they paid more in taxes), it did also help many of the poorest in society in the short term.
Through their policies, both Reagan and Thatcher also precipitated the deindustrialization seen recently. Both heads of state presided over the mass exodus of factories from their countries, being replaced with office jobs.
Perot-Era
Reagan era fiscal conservatism continued well into the 1990’s under Regan’s successor George H. W. Bush, as well as (somewhat) by Thatcher’s successor, Sir John Major.
During the 1992 Presidential Election, famed American entrepreneur Ross Perot ran as an independent. He was the most successful third party candidate in history, mostly thanks to his fiscally conservative policies.
Ross Perot won 18.9% of the popular vote, which was down to him attracting both liberals and conservatives. Many of his social policies were liberal, yet his fiscal policies were overwhelmingly conservative.
He ran on a platform of small government, tax cuts to the rich and poor alike. Perot was quite popular among entrepreneurs and small business owners in particular, as he campaigned on several policies that helped them.
In the end, however, the two major parties were too big for him to compete against. Although he won many votes, Bill Clinton ultimately won the presidential election, becoming arguably the most hated president of all time.
Clinton-Era
During his 1992 presidential campaign, Bill Clinton also ran on a fiscally conservative platform. This differed from Ross Perot’s platform as it focused on higher tax breaks lower income families.
At the same time, Clinton also campaigned reducing taxes for the highest earners at a lower rate. However, Clinton campaigned on reducing the national debt and therefore balancing out the country’s budgets.
For the most part, this appealed to many Perot supporters once he abandoned his campaign, leading to Clinton’s victory. When he was elected, Clinton would subsequently enact these reforms.
Whilst this was mostly a Democratic thing, many Republican congressmen and senators began to agree with his ideologies, incorporating it on a much larger extent into their future campaigns.
Unlike most fiscal conservatives, Clinton also ran on a campaign of social welfare as well, albeit on a lesser extent that his Democratic predecessors. This focused on defunding certain government institutions to use their funding for welfare.
Modern-Era
For the most part, Clinton-era fiscal conservatism has remained the dominant force in American politics. Other countries such as Australia, the UK, Canada and New Zealand have all taken Clinton’s lead.
In the UK especially, under the Conservative leadership of David Cameron, he has combined Clinton-era and Thatcher-era fiscal conservatism to appeal to all parts of British society.
This continued under Cameron’s successor Theresa May, and under May’s successor, Boris Johnson. This has arguably been the reason why Johnson won a landslide victory during the 2019 General Election.
Both Democrats and Republicans alike have campaigned during the 2012, 2016 and the more recent 2020 presidential elections holding fiscally conservative viewpoints, all to varying degrees of success.
Prior to pulling out from the 2020 Presidential Election, former Mayor of New York, Michael Bloomberg, ran on a platform of fiscal conservatism. This was aimed mostly at entrepreneurs as well as low and middle families.
This made Bloomberg quite popular, with many contrasting him to President Trump, another New York billionaire. However, his other policies were somewhat unpopular, leading to him dropping out of the race,
Prominent Fiscal Conservatives?
For the better part of a century, there have been several high-profile fiscal conservatives. Some of the most famous fiscal conservatives in history include:
- Ronald Reagan
- Margaret Thatcher
- Franklin D. Roosevelt
- Jimmy Carter
- Ross Perot
- Michael Bloomberg
- Bill Clinton
- Newt Gingrich
- Edmund Burke
- Calvin Coolidge
- David Cameron
Do you know any fiscal conservatives? How do their views differ? Tell me in the comments!
Featured image courtesy of Gage Skidmore via Flickr.