Newt in 2006: "Renew Milton Friedman's Conservatism"

After Milton Friedman's death in 2006, Newt, along with David Merritt, penned a piece on NationalReview.com titled "Renew Milton Friedman's Conservatism."

In it, they called for the types of solutions Friedman always wanted -- those that powered individuals, and thus markets -- in two areas specifically: health care and education. "Friedman would agree that government can and should play a role in overcoming these challenges. But he would warn that its role must be limited, as he often said that a government solution to a problem is usually as bad as the problem itself."

On education:

The success of school choice, when properly administered, is indisputable -- proven by hoards of academic studies and thousands of personal experiences. School choice attracts better teachers, encourages creative curriculum, and improves student achievement. Friedman was a passionate advocate for school choice, particularly through his work at the Milton and Rose D. Friedman Foundation. He argued -- correctly -- that by applying market principles to education, you empower students and parents at the expense of bureaucratic government control. This combination, of limited government and a vibrant market, never fails to deliver better outcomes -- even in public education.

On health care:

We need to put the consumer at the center of the health-care system, just as we do in every other market. And the surest way to do this is by creating a national market to purchase health insurance.

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More competition among insurers in a national market will encourage more creative products, better services and lower prices — just as it always does wherever competition thrives — and every American will be able to find affordable coverage.

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A vital part of this rational market is the availability of information. Information on performance, cost, and quality allows consumers to make informed decisions, but health care is perhaps the only market in which consumers have virtually no access to this information. When Americans shop for a new car, home, or thousands of other items, they quickly and easily gather information on cost and quality from an endless array of resources. But in health care, consumers are blind. Try finding out how a doctor stacks up against his colleagues. Try finding out how much a hospital charges for an elective surgery. Try finding out which surgical team has the lowest mortality rate.

Gingrich and Merritt wrap the article up this way:

Friedman was right: The only way to do this is to allow markets to work. A fitting tribute to him — and our country — would be a new generation of leaders who see intrusive government as part of our problems and markets as part of the solutions. By applying the conservative, market-based solutions that Milton Friedman so passionately and eloquently advocated, we will undoubtedly bring about real change and build a brighter future for America.

January 19 newsletter: "1,968 Reasons to Repeal"

Newt's group Center for Health Transformation released a chart this week that shows "1,968 new and expanded powers given to Health and Human Services (HHS) Secretary Kathleen Sebelius" [and my former governor -- how lucky am I?].

In his newsletter, Gingrich lists five of the most egregious powers given to the HHS:

• "The Secretary will decide what clinical drugs seniors can access."
• "The Secretary will instruct physicians and nurses exactly how to give a drug to their patients in long-term care facilities"
• "The Secretary will determine how dentists and dental hygienists should examine your teeth."
• "The Secretary can overrule states on what insurance rates can be whether they like it or not."
• "The Secretary can use comparative effectiveness research to determine access to care for seniors, like they do for patients in the British National Health Service." 

After writing that "the rush to socialism under the Obama administration puts all our freedoms at risk," Gingrich gives some explanation:

Of course, I am hardly the first to warn about the inherently totalitarian nature of big government.

Thomas Jefferson warned in a letter to Charles Hammond that 'When all government, domestic and foreign, in little as in great things, shall be drawn to Washington as the center of all power, it will render powerless the checks provided of one government on another and will become as venal and oppressive as the government from which we separated.'

Freidrich Hayek warned in the Road to Serfdom that 'The more the state ‘plans,’ the more difficult planning becomes for the individual.' Hayek also wrote in The Constitution of Liberty, 'Once wide coercive powers are given to governmental agencies for particular purposes, such powers cannot be effectively controlled by democratic assemblies.'

Even George Orwell, who was a left wing intellectual, understood the danger of giving too much power to unelected bureaucrats. Orwell’s novel, 1984, described dictatorship in London, not Moscow. He agreed with Hayek’s concerns in a review of the Road to Serfdom: 'It cannot be said too often…collectivism is not inherently democratic, but, on the contrary, gives to a tyrannical minority such powers as the Spanish Inquisitors never dreamed of.'

Gingrich again:

Flushed with the promise of these 1,968 new grants of authority to her office, Secretary Sebelius recently made a series of threats to use one of these new powers to punish health insurance companies who have dared to tell the truth about how the health reform law has led to rate hikes for their customers.

The idea of an unelected bureaucrat using her power to punish those who exercise their right to free speech should be considered abhorrent in a society that values liberty.

Also, as Karl Rove astutely pointed out in the Wall Street Journal, Secretary Sebelius has also used her new powers to reward her friends. The Secretary has granted a number of companies exemptions from key requirements in Obamacare. More than a third of these companies’ employees are unionized compared to a mere 7% of the national workforce....

No unelected bureaucrat should have this amount of power, whether he or she is in a Democratic or Republican administration.

The genius of the founding fathers is that they understood the fallen nature of man and designed a system of government to prevent any one person from being so powerful that he or she could violate the rights of any citizen.

Gingrich quotes Milton Friedman -- meaning Friedman, Hayek, and Jefferson in the same newsletter -- who said, "Where in the world do you find these angels that are going to reorganize society for us?”

Gingrich discussing the free market, Reagan, and Thatcher

Two of the most important books on the benefits -- economically as well as for personal liberty -- of free enterprise were F.A. Hayek's The Road to Serfdom, published in 1944, and Milton Friedman's Capitalism and Freedom, 1960. Both men had other very important works, but those were their most influential. Two centuries before, Adam Smith wrote The Theory of Moral Sentiments and The Wealth of Nations. The latter, published the same year as The Declaration of Independence, introduced the concept of the "invisible hand":

...by directing that industry in such a manner as its produce may be of the greatest value, he intends only his own gain, and he is in this, as in many other cases, led by an invisible hand to promote an end which was no part of his intention. Nor is it always the worse for the society that it was not part of it. By pursuing his own interest he frequently promotes that of the society more effectually than when he really intends to promote it. I have never known much good done by those who affected to trade for the public good. It is an affectation, indeed, not very common among merchants, and very few words need be employed in dissuading them from it.

In a 2001 interview with PBS, Gingrich was asked of the impact of the three on his views:

INTERVIEWER: Philosophically speaking, what was the wellspring of your ideas? Were you influenced by people like Friedman or Hayek?

NEWT GINGRICH: No, I think I was influenced more by Adam Smith and by the founding fathers -- Jefferson, Adams, Madison, Hamilton, Washington -- and to some extent by the Whig historians of the 19th century. I was very much influenced by Goldwater's Conscience of a Conservative and by Reagan's speeches starting with "A Time for Choosing" in October of 1964. I actually came to Hayek backwards through Reagan, rather than the other way. In my mind, at least, what you had was a clear overdevelopment of the state in the 20th century as a vehicle for humans to organize their lives, so you needed a party of freedom that was committed, almost in the British 19th-century liberal tradition, to argue for personal choice for markets, for private property rights, and for taking Bismarck's insurance state and transferring it into a personal insurance system, as we're trying to do now on social security.

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INTERVIEWER: Do you make a connection between free markets and personal freedom, personal liberty?

NEWT GINGRICH: Absolutely. In fact, so did all the founding fathers. That goes back to the English Civil War, which is really the wellspring from which the American model of freedom emerges. It is the English Civil War and the effort of people to protect themselves from judges who are instruments of the state, not instruments of justice, to protect themselves from troops in their houses, to protect themselves from the king's right to kill you. And it's out of that English Civil War that you begin to have the rise of what we now call freedom, [the] first truly mass democratic societies in history, even more than the Roman republic. I think it's inextricable if you read Locke, if you read Jefferson, if you read the founding fathers, it is inextricable that if you don't have the right to private property, if you don't have the right to trial by jury, if you don't have the right to vote and fire the people to whom you loan power, you don't have freedom. The idea of a socialist free society in the long run, as Hayek points out, is an impossibility.

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NEWT GINGRICH: Start with a simple fact: If you earn resources, you should have the right to spend them. Now how are you going to know what to spend them on without a market? How are you going to know what the prices are without a market? Hayek's great insight, which, interestingly, mathematics only caught up with about 50 years after he wrote, is essentially the understanding of chaos theory. Hayek's intuitive understanding was that the sheer number of decisions made daily by humans is beyond the capacity of any bureaucracy or any computer to organize centrally. We now have in chaos theory, which is the most elegant current form of mathematics, a scientific explanation of Hayek having been intuitively right and of socialist bureaucracies scientifically incapable of exercising that kind of detailed control.

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NEWT GINGRICH: I don't think Americans push freedom. I think Americans define what we believe to be a fact much like the Earth is round. We go around the sun. Humans are born with inalienable rights. It is every human's right to live in freedom.

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INTERVIEWER: Had [Reagan] internalized people like Hayek?

NEWT GINGRICH: Absolutely. Reagan is the only president to have actually studied The Road to Serfdom and thought about [it]. He knew Hayek personally, [Peter] Diamond, he knew Milton Friedman personally. As governor of California he was deeply into these kinds of conversations. It's a little bit like learning how to cook eggs. Once you learn that there's a stove, there's a pan, there's water, you boil it, you put the egg in, that's a profound thing if you've never done it before. But once you've learned that you don't have to learn 700 permutations, you've learned it. Reagan's technique was for going for the basics -- learning why freedom worked, why military strength worked, why American civic culture worked, and then communicating that over and over from different angles. But he had thought profoundly about the basics of what worked.

INTERVIEWER: You yourself had a dinner with Hayek, didn't you, during the Reagan years?

NEWT GINGRICH: There were a group of us, younger members of Congress, activists around the city. Hayek had come to the city to visit Reagan at the White House and we had the very good fortune -- I think the Heritage Foundation sponsored it -- to have it that evening with us listening to him. And it was intriguing to me to realize that there were men who had by force of intellect, and I would certainly say Hayek and Friedman are two of them, [they] moved the entire debate and began to change what had been for almost 70 years the dominant intellectual assumptions about how the world worked. You could see it happening, and Reagan was in a sense their popularizer. So he was this person who could take these people who were very profound but not very easy to communicate. I don't think you'd ever get Hayek on the Today Show, but you could get Reagan explaining the core of Hayek with better examples and in a more understandable language. It was a great thrill for me as a history professor by background to really see right in front of my eyes that a person could dedicate their life to ideas and have a very deep, very profound impact on history through people of action who read them and studied them.

Here was a man who had intellectually changed the world without really ever leaving the university. It was the power of his books, the power of his ideas as then captured by Ronald Reagan and Margaret Thatcher, that had changed things. And I really did feel like I was having dinner with a historic figure.... He was this very unprepossessing person who was very self-defined as an intellectual and had zero interest in politics, and he had helped change the world.

He came across as low key and pleasant but very self-defined. He knew what he believed. He wasn't particularly interested in worrying about people who were wrong. He was pretty cheerful about being pleasant and saying this is where the world's going. This was still at the peak of the Soviet empire, so it was a remarkable act of optimism on his part to be as confident as he was that freedom would win.

INTERVIEWER: What is your impression of the historical importance of Margaret Thatcher?

NEWT GINGRICH: Margaret Thatcher was the forerunner who made Reagan possible. The 1979 campaign was the direct model from which we took much of the 1980 Republican campaign. Reagan drew great strength from Thatcher, and her courage and toughness in living through that first recession and toughness in the Falklands Wars rallied Americans in a remarkable way.

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INTERVIEWER: And her impact around the world?

NEWT GINGRICH: I think Thatcher and Reagan were the duo that defeated the Soviet empire, relaunched the legitimacy of freedom and free markets, and created the intellectual framework for the modern pro-freedom movement. In a lot of ways Tony Blair is Margaret Thatcher's adopted son. He has actually been running a fairly Thatcherite Labor government.

Newt's take on free trade:

Trade increases the likelihood that you and they will engage in win-win activities. The difference between politics and trade is that in politics I may take something from you to give to somebody else, even though you don't want to lose it, so I raise your taxes. I charge you a fee. I confiscate your farm. In a free market you only do the things that make you happy in order for me to get the things that make me happy, and if we're not both happy the trade doesn't occur. So free markets dramatically lower the friction of human relationships and increase the relative pleasure and the relative success of human relationships. The more the Chinese and Americans [sit] down together to create more wealth, the happier they'll be with each other, the less likely we'll have conflict. I've always said that was true in the Palestinian-Israeli conflict, that if you could find a way to launch genuine joint ventures of Palestinian and Israeli entrepreneurs who could only succeed together, you would in a matter of 10 or 15 years have a significant shift in attitudes.

While all Republican candidates will espouse the virtues of the market, how many have the deep knowledge of why it works -- and not just is the popular thing to say in front of Republican primary voters -- that Gingrich possesses.

Craig Shirley, the author of of two books on Ronald Reagan and who will soon publish a biography of Gingrich, put it this way back in 2007: "Among the 2008 GOP aspirants, [Gingrich] is probably the only one who knows the difference between Friedrich Hayek and Salma Hayek."

Gingrich on the flat tax vs. Fair Tax debate (with video)

Starting in 1960, when Milton Friedman called for a flat tax, through the publication of a book devoted just to it by two Hoover Institution scholars, to Steve Forbes basing his Presidential campaigns around it, the flat tax had been the desired reform among most conservatives who wished to get away from the convoluted, wasteful, job-killing tax code.

In recent years, however, an increasing number of conservatives have pushed for the Fair Tax, which would eliminate all taxation of income and savings and replace it with a 23% national sales tax.

Personally, I think -- from a pure policy perspective -- that the Fair Tax may be the better of the two; there are some potential pitfalls with that system, though. But from a realistic perspective, the flat tax, in my opinion, is where the energy of the conservative movement should be. The worst-case scenario is that it accomplishes 90 or 95% of what the Fair Tax would. The big advantage the flat tax has is two-fold:

1. For the Fair Tax to be implemented, and to avoid both a national sales tax and income tax, the 16th amendment would have to be repealed. The effort, even if successful, would take years and untold amounts of political capital.
2. It is very popular right now, with a 17% optional flat tax being supported by a margin of 61-32% where only 43% support the Fair Tax.

In 2008, Newt, along with Texas Representative Michael Burgess, penned an op-ed in support of the flat tax.

Here is a video of him talking about the fair tax: