Rodney Johnson | Tuesday, November 6, 2012 >>
Today is a great day to remember Bill Clinton. He’s not dead, but he is a shadow of his former self thanks to heart troubles that led to a drastic change in diet. But that’s not what I learned from him.
I learned that many things I THOUGHT were sexual are not, since Bill gave us the famous quote of “I did not have sexual relations with that woman!”… and then we all found out that he had extremely intimate contact with her. Why it was not sexual relations I’m still not sure, but that’s beside the point.
I also learned that choosing to do nothing can really be a blessing….
A common theme this election season is that the U.S. economy did really well under a democrat (Bill Clinton), even though taxes were higher. This is certainly true, but it doesn’t lead to the corollary that democratic leadership led to a rising economy.
I’m not taking a swipe at a democrat. I’m taking a swipe at the notion that the president of the U.S. can make the economy grow dramatically. He cannot. But he can certainly work to screw it up!
Clinton was a pretty smart operator. He understood when to stay out of the way. His main interest was the wonky side of international politics (hence the Dayton Accords). Wall Street only interested him if there was a campaign contribution in the offing. He backed dismantling Glass-Steagall, but was probably led there by Rubin. All in all, Clinton let things run. And it worked.
Unfortunately, we aren’t so lucky today.
Either President Obama or Governor Romney will wake up tomorrow as the president-elect of the United States of America. Whichever one finds himself in that position determines what the rest of us will have to live with, and that’s where the fight starts.
Over the past four years, we’ve heard and read way too much about what the government can do, and even must do, to end the economic downturn that grips the country. Both sides of the aisle have a “plan,” which should be enough to scare anyone.
Democrats have a tax-and-spend plan that redistributes wealth. Republicans have a don’t-tax-but-don’t-spend plan that is supposed to lead us down the primrose path.
Neither one will work, but that’s not the bad part. The bad part is that both of them can lead to significant harm.
Right now we have tried the “spend” part of tax-and-spend and it hasn’t led to sunshine and roses. It has put us further in debt with little appreciable gain. Adding higher taxes to that doesn’t sound like much of a plan. At the same time, cutting taxes even further and cutting government spending doesn’t sound like a robust way to boost aggregate demand either, because it isn’t.
Unfortunately, we’ve all been the guinea pigs in a grand experiment that has proven Keynes wrong and Hayek and Von Mises correct.
Keynes believed that governments could tinker with the economy through boosting government demand in weak times to even out the business cycle.
Hayek believed that years of poor economic choices (like cheap credit and overspending in one area) had to work themselves out, allowing the markets to set prices for borrowing and assets.
With the government so heavy handed in the economy today, we have savers suffering while workers earn less.
It doesn’t sound like a win.
The best news we could get tomorrow morning is that the president-elect has chosen a new path. That he intends to allow markets to find their own equilibrium in interest rates, in housing, in assets, etc. so we can actually begin healing the economy instead of providing hospice care.
A critical eye toward current spending would be nice, as would a clear-eyed assessment of how we tax citizens and companies.
This would indeed be welcome. But I’d take a different news flash. I would be almost as excited if the president-elect channeled his inner-Bill Clinton and stated he was going to spend the next four years focusing on international affairs. Then maybe he wouldn’t mess up our economy so often.
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