Ideas abound on what initiatives should be pursued to restore American economic prosperity. A significant by-product of the election is that a much broader range of options will be heard and hopefully, the discrediting of sound fiscal policies that has dominated the dialogue will cease and desist. Contrary to popular wisdom and the Democratic spin machine, the Republicans have rolled out a number of great ideas. Unfortunately, the one that received the most media attention, the “Pledge to America”, wasn’t one of them. It included a few good items, like the repeal of Obamacare, no tax increases, hiring freezes, and spending rollbacks, but according to analysis by the American Enterprise Institute, the collective impact of the Pledge on overall spending and the deficit are negligible at best, and it makes no fundamental changes in entitlement spending or earmarks. No wonder it wasn’t much of a factor in the recent elections.
As I have previously noted, the new American culture war as identified by American Enterprise Institute President Arthur C. Brooks will be a major battle between free enterprise and big government, read “social democracy”, as the central engine of prosperity. This election has not settled that issue; it will require at least another Presidential election and the validation of the Republican majority in the House to even begin to resolve it.
But the most important aspect of this battle must begin now, and that is to put a halt to the following notions: (1) that the so-called “industrial policy” of government “investment” that was badly discredited in the 1970’s has any relevance; (2) that the Reagan supply-side policies of the 1980’s and the Bush tax cuts were failures; (3) that the problem that created the recent financial meltdown was under-regulation of the markets; (4) that free trade is job-destructive and that protectionist policies are the antidote; and (5) that monetary policy that ignores America’s role in the stewardship of the world’s reserve currency and the preservation and stability of the value of the dollar can be successful. The ideological elements of these issues must be urgently, directly, and publicly addressed if we have any hope of a recovery to meaningful economic growth. The question is, who will frame and lead the debate? And don’t make the mistake of assuming that these issues break along party lines; this is not Democrat vs. Republican, and both share in the mistakes that have moved us closer to European-style democratic socialism, not to mention the business leaders who have been complicit along the way in their rent-seeking.
In a poll conducted last April, the Rasmussen firm found that only 53% of Americans agreed with the proposition that capitalism was better than socialism. I am aware of the pitfalls of such polls, but we shouldn’t take any comfort in this data point, nor in the obvious turn of the electorate over the past several months toward fiscal conservatism. We have a lot of work to do, and much of it involves educating opinion leadership.