The only way to test Bush’s bold plan
By John Kay
October 19, 2004
If the world’s most powerful leader were chosen by its whole population rather than that of the US alone, the result would be in little doubt: there would be a new incumbent in the White House after January. But this support is probably a hindrance rather than a help to John Kerry. Let me redress the balance by explain why I may be one of the few foreigners to vote for the re-election of George W. Bush.
American is engaged in a bold, ideologically motivated experiment, in defiance of conventional wisdom about international affairs and economic policy. If it succeeds, its architects deserve their political success and there will be important lessons for us all. If it fails, which seems to me to be far more likely, it is important that the connection between policy initiatives and their consequences should be obvious to both those who opposed this course of action and those who favored it. If there is a change of administration there will certainly be another neo-conservative experiment and the myth of democratic betrayal will fuel it.
Socialism is no longer a serious political force because it was tried and did not work. It did not work in centrally planned countries or poor economies; nor did attenuated forms of socialism work better in western Europe. People in the states concerned had to pay a high price for this. Ideology is never defeated by political argument alone, but, in the long run results counts. So when the ship hits the rocks, those who set that course should be on the bridge to accept responsibility; and if the vessel sails triumphantly into port, the captain and his navigators should also be there to accept the plaudits of the cheering crowds.
Mr. Bush came to office a little over a year after the bursting of the dot.com bubble and has presided over the greatest fiscal and monetary stimulus yet given to a western economy. Interest rates were cut to 1 per cent in a largely successful attempt to keep asset prices high. Tax cuts were implemented despite soaring military expenditure and rising spending in other programmes. The Reagan administration was austere in its approach to public spending, and tax cuts had previously been justified as a means of controlling the size of the government, but the agenda of the past few years has made tax reduction a goal in its own right.
The idea that you can spend yourself rich has enduring appeal. A left wing version is maintained by Utopian socialists and Keynesian economists. A right-wing version is supported by self-help guru’s and supply-side politicians. The text of the left was been The General Theory of Employment, Interest and Money, the text of the right The Power of Positive Thinking. The mathematical tool of the left is the multiplier while the right employs the Laffer curve.
In the left-wing account, spending by government makes taxpayers rich. In the right-wing account, spending by individuals makes individuals rich. And both theories contain a small amount of truth: demand does, to some extent, bring forth supply. Government spending gives some stimulus to industrial production; personal profligacy gives some stimulus to personal effort. The flaw in both theories is that only in exceptional circumstance is the consequent effect on output as large as the initial impact on demand.
And so both typically end in debt and devaluation. Such expansionist efforts by the left normally come to an end quite quickly, because financial markets are never persuaded of their viability. Such policies are more rarely adopted by the right because central bankers are generally rather conventional in their beliefs and act as a restraining influence. The US Experiment is only possible because the chairman of the Federal Reserve board broadly believes in supply-side economics.
Perhaps hope and ideology will prove victorious, in Iraq and on Wall Street. But real life and budgetary arithmetic generally win-out. If you must read a self-help manual, How to Win Friends and Influence People may be a more useful title than The Power of Positive Thinking. The next four years man enable us to see for sure.
i agree with Kay to the extent that imagine Kerry pulls the upset off, there will still be 50% of the nation stuck in complete ignorance... and they will almost definately try to empower this set of morons again.
Almost rather the whole thing go up in smoke, so that people really know what the deal is... but then again who's to say that another 4 years of failure will convince anyone of anything. It was this time 2 years ago we were discussing the "oh-so-scary" WMD and how it was a threat to national security...
s--t, half this board still thinks we lost Vietnam because of Fonda and Kerry.
reality is just not something GOP supporters take easily to.