Reflections on 2005, and a list of things I’m not
A nation that is successfully growing its economy is, by definition, putting more and more distance between its citizens and poverty, in the aggregate—and that is just as true for the USA as it is for any other country. Giving that message a little more attention was one of the main reasons I started this blog a year ago.
Economics—or, more specifically, the overwhelming importance of economic growth—is what this blog is about. Why? Because sufficient, robust growth would diminish or eliminate the (potential) economic problems that continue to grab all the headlines; those potential problems include the growing national debt and the looming challenge of financing Social Security and Medicare.
The feedback I've received in the past year has been encouraging. Ninety-five percent of it (nineteen out of every twenty emails) has been positive, gracious, constructive, and motivating. Some of it is leading to new acquaintances and even new friendships; I will soon be traveling to Chicago, Washington DC, and California to meet a few of these folks. Interacting with all of my responders has been a two-way street, too; I've gained some new perspectives from several insightful questions and comments that forced me to think a little harder about several things. This group has been objective, open-minded, and constructive. What a pleasure that has been.
The remaining five percent of the feedback came from people whose approach was the opposite of objective or open-minded. These people already have their political minds made up, and they behave accordingly. They include Bush-haters, debt-haters, big-government-haters, big-corporation-haters, Republican-haters, Democrat-haters, immigration-haters, FDR-haters, Reagan-haters, military-haters, social-spending-haters, and even growth-haters. Many are experienced at demonizing perceived opponents by slapping a label on them, then attacking the label. Their favorite weapons are bumpersticker-mentality name calling, pre-cooked dogma, oversimplifications, mischaracterizations, and personal attacks. Their top priority is "who" is right, not "what" is right (...and because they already have their minds made up, they already know who’s right and who’s wrong, of course). Although I have little use for their tactics, I figured out a long, long time ago that politics trumps economics.
Therefore, even though I prefer to spend most of my writing time converting my understanding of economics into plain talk, I decided to use this year-end post to explain my politics—or, more specifically, to explain why my views don’t fit neatly within any of the conventional-wisdom political categories.
As you’ll see below, there are a lot of things I’m not. I’ll finish with what I am. (And if you’d rather skip all that, allow me to wish you a happy new year now.)
Why I’m not quite a “supply sider”
Although I am a growth advocate, the term “supply-sider” doesn’t quite fit me any more, because conventional wisdom has oversimplified its definition as “one who always advocates tax cuts, no matter what.” One critic found my old website, found the Capitol Hill presentation I gave in Feb 2001, read the last two slides, concluded that I’m a supply-sider, and proceeded to discredit the label he’d picked out for me. His only mistake: he was five years too late. Back when I was advocating tax rate cuts, the government’s tax “take rate” was 21% of GDP—far too much, in my opinion. Subsequently, tax rates were cut, to my delight. Now, for more than a year, our economy's growth rate has been accelerating (as have tax receipts), also to my delight. (Coincidence, or true cause-effect? In either case, we are in a very nice circumstance today.) Currently the government’s tax “take rate” is around 17% GDP, and the economy is growing at a brisk pace; I like those conditions very much... but I would need more convincing before I'd become an advocate of yet-deeper cuts. [I love the idea of growth-friendly tax simplification, though.] Bottom line: I’m not quite a supply-sider under today's distorted definition of that term, because I’m not quite convinced that today’s 17% isn’t a low-enough, growth-maximizing, debt-burden-minimizing take rate.
Why I’m not quite a “libertarian”
Libertarians think a lot like I do—but we also have some differences. For example, I don’t think deficits and debt are necessarily burdensome or inflationary (...they can be, but don’t have to be, as long we stay inside the guard rails of growth-oriented fiscal management).
Another example: I think the idea of going back to a gold standard, in this day and age, is not a good one. A good friend of mine, Dr. Rick Boettger, put it succinctly when he said: “Using gold to back up money is like using old poker chips to back up new ones... Gold is nothing but an old-fashioned form of money.” Consider this: What if the real economy could grow at a 6% rate, but we could only expand the gold supply at a 3% rate? Answer: The gold standard would stifle growth, that’s what would happen. And that’s why I do not favor going back to a gold standard. We have better ways of preventing inflation that wouldn’t stifle growth.
Why I’m not a “left-wing Democrat”
Income redistribution is their goal, class warfare is their schtick, rich Republicans (but not rich Democrats) are their hated enemy, name-calling and oversimplification are their weapons, dogma and bumpersticker slogans energize their minions. To them, growth is an unpleasant, environment-unfriendly result of cold-hearted fat-cat greed. But that kind of thinking is politics, not economics; emotion, not objectivity; revisionism, not history. Please, please count me out of this group, thank you very much.
Why I’m not a “right-wing Republican”
I find it ironic that many quintessential capitalists—who got rich in the private sector by utilizing prudently-managed leverage (“other people’s money”) to maximize their firms’ microeconomic growth—find it difficult or impossible to admit that the government, too, can benefit from prudently-managed leverage to enhance their country’s macroeconomic growth.
Also: I will have a hard time forgetting the embarrassing episode of 1995, when a tiny group of powerful Republican politicians chose to play a political game of chicken with the Clinton administration—by placing our nation’s creditworthiness at risk(!). Thankfully, Robert Rubin found a way to stymie Newt Gingrich’s game plan, and averted an unnecessary default on our nation’s debt instruments. It was one of the few times I have ever cheered an action by the Clinton administration.
Why I’m not anti-government
Big military, big intelligence-gathering capability, and big civil defense proficiency are all part of “Big Government.” All of those put together are called “National Security.” When we oversimplify our political battle cries by railing against “Big Government,” we have only ourselves to blame when our opponents give us what we asked for. That is precisely what the Clinton administration did in the 1990s: they (and Congress) felt our pain, and reduced military spending from 4.6% GDP (1992) to 2.9% GDP (2000). In retrospect, it was a really, really dumb idea to do that—wouldn’t you agree?
Why I’m not anti-FDR
Franklin Delano Roosevelt reunited the country, except for an intractable contingent of right-wing partisans. In my judgment, his convictions and his leadership probably prevented an overthrow of the United States government—and because of that, I think he was one of our greatest presidents. The debt that accumulated during his presidency to produce that result was worth every penny, and more.
Why I’m not anti-Reagan
Ronald Reagan reunited the country, except for an intractable contingent of left-wing partisans. In my judgment, his convictions and his leadership probably prevented a thermonuclear war—and because of that, I think he was one of our greatest presidents. The debt that accumulated during his presidency to produce that result was worth every penny, and more.
Why I am a growth advocate
I’m a poverty-hater, and “growth” means “escape from poverty.” It’s that simple.
Last but not least:
Happy new year to you, your family, and your friends.
