Disaster Of Kansas' Supply-Side Utopia Holds Lessons For Both Parties

The supply-side experiment in Kansas was officially ended last night as the Kansas legislature voted to override Governor Sam Brownback's multiple vetoes and basically restored business and income tax levels to the pre-Brownback era. Those massive supply-side tax cuts that were implemented in 2012 were supposed to jump-start the Kansas economy and lead to economic growth on steroids. Instead, the cuts led to massive tax avoidance, devastated the state budget leading to massive cutbacks in education and road maintenance, and job and economic growth fell below the national average and the state's regional competitors.

The same principles outlined in Sam Brownback's vision for Kansas are essentially embodied in the Trump/Ryan budget and the same group of deep thinkers that advised Brownback, Arthur Laffer and Stephen Moore, are providing advice to the Trump administration. The results will largely be the same for the country as they were for Kansas if that budget is passed as is.

In Kansas, the pain just became too much for even Republicans to bear. While Brownback did manage to squeak out a victory in 2016, moderate Republicans made some inroads into the domination of the legislature by hard-core conservatives. Distressingly, even after 4 years of enormous self-inflicted pain by Republicans, Democrats could not gain enough seats to erase the super-majorities that the GOP holds in both the Kansas House and Senate. Yes, Democrats did close the margin significantly in the 2017 special election for a House seat in the 4th Congressional District. But the fact remains that Democrats are just not competitive locally in much of the state.

As most Democrats realize, it will take more than revulsion at Donald Trump and at the cruelty behind the GOP policies for Democrats to win in rural red-state America. Martin Longman has proposed rebuilding the progressive coalition from nearly a century ago in what he calls the Anti-Monopoly agenda. It focuses on creating job growth outside of metro areas by using anti-trust and other local policies to break apart the business concentration that dominates nearly all important industries and therefore all aspects of our life.

As Longman says, "People in rural and small-town America know the dangers of industry consolidation better than anyone, having seen it strip away the livelihoods of independent farmers and local banks and merchants long before most city slickers even realized that corporate concentration was an issue...An airline industry in which just four companies now control 85 percent of the market increasingly gets away with overcharging and mistreating fliers, including forcibly removing paying customers thanks to an overbooking system that jacks up corporate profits.
At the same time, platform monopolies like Amazon and Facebook are stripping away the ability of musicians, authors, and journalists to make a living. Consolidation in health care means fewer and fewer hospitals competing to hire nurses, while independent doctors are forced to sell their practices to corporate masters." He summarizes, "All this points to a simple conclusion: Democrats should make fighting monopolies the central organizing principle of their economic agenda. This approach holds the promise of bringing together groups that seem inherently at odds: nativists and cosmopolitans, fundamentalists and secularists, urbanites and rural dwellers."

While I don't agree with Longman in his analysis of Democratic elitism, I do strongly agree that this is one path to winning in those deep red states that have been decimated by globalization, concentration, and automation over the last decade and a half. In Kansas, this would mean taking on the broadband monopoly and offering high speed internet in all corners of the state as well as breaking up Monsanto's seed monopoly, the Big Ag giants who have gobbled up family farms, and the meatpacking oligopoly of Cargill, Tyson, JBS, and National Beef. It could include the retail liquor monopoly and even restricting the ability of big box stores to move into certain areas.

This approach, at least, provides a plan to grow jobs in the rural America where Democrats find it so hard to compete. And one thing we know for sure, this plan has a much better chance at succeeding in delivering job creation and growth than Sam Brownback's tax cuts ever did. I encourage you to read Longman's article in its entirety.

There are lessons for both parties in the Kansas "experiment". For Republicans, Kansas has shown irresponsible supply-side economics causes so much pain even the GOP finds it unbearable. For Democrats, it shows that Republican failure is not enough to make Democrats competitive without an accompanying economic message that specifically targets job creation and growth in addition to the palliative policies such as access to affordable health care. Hopefully, both parties will learn these lessons.