How Republicans Get The Economy Wrong
I’m often mistaken for a die-hard Republican because of my criticism of the progressives on the economy and especially the current administration. These people who label me a Republican simply show how little they understand and how unwilling they are to dis-engage from partisan politics and from the two-party system which dominates the media and political arenas.
The reality is that I don’t line up with most Republicans either on my views of the economy, and after watching the Republican debate the other night on CNN, most of what I already knew was confirmed.
So, how do the Republicans get it wrong? Well, if you pay attention to the debate and the constant rhetoric, most good Republicans would have you believe that fixing the economy is a two part plan: repeal ObamaCare and lower taxes. The reality is that any politicians who espouses repealing ObamaCare and lowering taxes as a panacea for getting the economy going again does nothing more than reveal their lack of understanding of the economy.
Don’t get me wrong, I firmly believe that ObamaCare should be repealed and we should have much lower tax burdens across all people. But, these two policies are not sufficient to move the economy enough to get real organic growth. If you listened to Ron Paul during the debate (the only one who understands economics), you heard ideas and explanations that actually was founded on economic principles versus political rhetoric. For instance, when asked how to get manufacturing back in the country, instead of jumping in to bash Obama which everyone else did, Ron Paul explained that you need capital to come back into the country. This is done by getting back to sound money (ending the inflation Federal Reserve policies), lowering taxes and getting rid of massive regulations that does nothing else but stifle business creation and create barriers to markets for small businesses.
Listen to Ron Paul talk about the economy, then listen to every other Republican candidate and you will see a stark difference. The reality is that the government needs to get out of central planning of the economy all together if you want to move the economy. This means liquidation of bad debt, sound money, lower taxes (and thus smaller government), fiscally responsible government, market-set interest rates, protection of private property, cutting of all or most of regulations that do nothing to prevent further crises, and let the relentlessly productive class of America go hit it and make things happen like an efficient army of ants building an insanely complex home underground. You must let the market allocate capital, labor, resources, profits, everything. You can’t pick winners and losers in the name of “economic stability” because it results in anything but stability.
Until the mainstream Republicans start talking like this, you won’t hear me label myself a Republican. The Democrats? Sheesh, they’re so far off that they aren’t really even worth mentioning.
Ron Paul being labeled “extreme” says much, much more about the state of the country and its citizens than it says about Ron Paul. Why? Because he restricts all his views to what the Constitution makes clear about the roles of government. Extreme indeed. Unfortunately, he won’t be elected because Americans are a nasty combination of ignorant and superficial, and Ron Paul doesn’t tell them what they want to hear. His solution for the housing crisis? Let the market bring down prices to find a true bottom so we can have a real recovery. Is he the only politician that has ever said the solution to housing is to let the prices fall? Probably. And he won’t be elected President saying crazy stuff like that!
The reality is that we have a crisis of definitions in this country. The majority of people who say they believe in capitalism don’t believe in anything close to capitalism. They believe in some quasi-socialist version of capitalism that allows the elite to bail themselves out and to implement inflationary policies to fleece the middle class in the name of “economic stability.” They use fear tactics by screaming that the entire world will end if we don’t raise the debt ceiling or bail out wall street. Capitalism in this country doesn’t refer to free markets.
Even George W Bush famously said we have to get away from the free market to save the free market (in the bailout of the auto-manufacturers). Yeah, that makes a ton of sense. A company going out of business is about as capitalistic as it gets and it allows resources to be re-allocated into more productive means. Instead we get inflation and the elite get richer. And the Republican party is completely complicit in all of this.
The ultimate reality is that the market will win. Politicians from either party can’t hold back market forces forever. Bad debt will be liquidated and the market will win. It’s only a matter of time. Enjoy your day in the sun Bernanke.