Kudlow - Cowboy Capitalism
While the mainstream media keeps carping on the notion that Bush’s 2-day economic conference was comprised of supporters rather than dissenters, as though this is some great surprise, there is a much bigger picture that has been missed. Namely, the President used this conference to speak directly to the nation regarding his economic plans for the second term.
Including a revealing news conference with Silvio Berlusconi, Bush gave 3 full-fledged statements on his economic intentions. Reading through his comments, one is struck by the clarity of his message. Every one of his key points is pro-growth incentive, investor- and owner-oriented, favoring entrepreneurs, importuning for more saving and capital formation, as well as a healthy dose of deregulation. In short, market-oriented measures to spur prosperity and wealth creation. A clear rejection of government planning or engineering. To be blunt, it is cowboy capitalism. Schumpeterian capitalism. Entrepreneurial capitalism.
In this light, take a look at the Texan’s key point: tax reform, social security reform, tort reform, energy reform, budget restraint and, surprisingly, dollar stability or even greenback strength. This last point comes as something of a surprise, but is real nonetheless. Worried about budget deficits? The President intends to combine economic prosperity with intensified budget restraint. Worried about trade deficits? The President argued for more purchases of US goods by foreign customers, which is rather a polite way of saying Europe and Japan should take measures to grow their economies more rapidly. Worried about savings? Let’s have more private saving through lower tax rates, expanded and simplified tax–free savings accounts, as well as shrinking government budget deficits. Saving fuels capital formation, and capital funds businesses that create jobs.
Worried about the shrinking dollar? I’m working with Fed Chairman Greenspan to slow money growth and normalize interest rates. Worried about healthcare affordability? Reform of medical malpractice lawsuits will go a long way, as will health savings accounts and small business community group purchasing power. Let’s work through consumers exercising responsible choices rather than governmental benefit explosions that leverage business and insurance costs. If you think the US is about to lurch toward a European style economy, think again.
There will be no explosion of payroll taxes. Nor will there be sales or VAT taxes layered on top of income taxes. Does the president know every detail of each program that will make up his economic reform plan? Not yet. Will he get absolutely everything he wants from Congress? Never happen. But, will this most underrated politician succeed in implementing his broad-based vision? Don’t bet against it. This is the guy who barely won in 2000, yet he was able to get big pieces of his reform plans for education and healthcare, not to speak of four significant tax cuts. Mightn’t international events get in the way of his domestic agenda? It is possible. But then again, following free elections in Afghanistan, itself rather a miracle, it is possible that in a little more than a month’s time, the world may witness free elections in Palestine and Iraq.
Indeed, Bush’s strong belief in the transformational power of international freedom and democracy is nearly equal to his strong belief in the transformational power of a free economy. And that is a visions thing worth fighting for. One of the best barometers of the health of the political economy and the future outlook for business and economic growth are the broad US stock averages. Since the election, the equity marts have gained 6%. Since Bush took a lead way back last August, the averages are up over 12%. Question: what do stock markets know that the MSM doesn’t? Answer: almost everything.
posted by Money Politic$ |
