Age of Clinton
Llewellyn H. Rockwell, Jr.
before Bill Clinton was inaugurated, an ill wind blew in the land.
Soldiers were turned into armed social workers, and old- line Keynesian
economists came out of the closet for Clinton's Economic Summit.
may not be FDR with a sax, but his two-day meeting paid for by
the Democratic National Committee, showcased by the media, and attended
by special interests as well as economists showed that happy
days are here again for big government.
Hobart Rowen swooned at Clinton's "amazing grasp of the complex
problems facing the nation" and his "brilliant mind at work." Author
Robert Kuttner gushed at "the president the teacher."
fact, with its 329 babbling voices, 46% of them representing special
interests, the summit was an awful spectacle. Those on the federal
teat cried for more, and the economists urged Clinton to make these
babies fat and happy.
All said we should spend billions more to "stimulate" the economy.
But where will the Great Stimulator get the dough? Your paycheck
and bank account, of course, as if you had any doubt. By the end
of Clinton's term, we will see a $2 trillion federal budget, and
tax collections at 50% of national income.
upon a time, the central message of economics was "work and save."
Now, at least at the Arkansas gabfest, it's "you can have it all,
courtesy of the feds."
laureate James Tobin argued that "the country needs some stimulus
in the short run." But isn't it time we started worrying about the
long run? Our children's well-being is far more important than the
seemed impressed by the pleas of his friends in banking for "deregulation."
William H. Brandon, president of the American Banking Association,
promised to inject $86 billion into the economy, if bank examiners
would just look the other way for a moment.
if the goal is to dump new money into the economy, here's a shortcut.
On January 20th, just after his inaugural parade, Clinton can stop
off at the Bureau of Engraving and Printing and turn the presses
on high. Then he can gather up the cash and throw it out the window
of Air Force One as he flies across the country. That would provide
a short-term stimulus too.
Yet such actions as printing money, injecting credit, or spending
billions on construction boondoggles ("infrastructure") not only
do not create prosperity now, they make us poorer in the dreaded
long run. Real prosperity can only come from private savings and
capital accumulation, whose enemy is Washington, D.C.
the summit, Clinton made one announcement that went almost unnoted:
the rules that have governed the budget process since Gramm-Rudman-Hollings
will be scrapped. This weak 1985 law didn't reduce the deficit,
but it did put a very slight restraint on increased spending. But
we need more taxes and more spending? Big unions and government
contractors, not to speak of liberal economists, say yes. We're
all supposed to think that the government cut back during " 12 years
of neglect," when spending almost tripled.
of talking on C- SPAN, the economists who advised Clinton need to
go back to school. There they can learn that everything has a cost,
that demands are always unlimited, that resources are always scarce,
that taxes affect incentives, that the price system allocates rationally,
unlike central planners, and that special-interest government subverts
worse than Tobin is Laura D'Andrea Tyson, professor of economics
at the U.C. Berkeley, and Bill Clinton's pick to head the Council
of Economic Advisers. For she did much of her academic work on Eastern
European socialism, and liked what she saw.
Adjustment in Eastern Europe, prepared for the U.S. Air
Force and published by the Rand Corporation in 1984, Tyson praises
the economic performance of Rumanian communism, without a mention
of the nightmare created by Nikolai Ceausescu. In fact, her description
of the centralization process is so coldly naive that it could have
come from a government handout.
a "brief but abortive flirtation with some decentralizing economic
reforms of the Hungarian variety," she writes, "Rumania embarked
upon a major 'remobilization' effort" to increase "the already substantial
investment program" and "renew pressure on all levels of the planning
and enterprise hierarchy to achieve increased growth rates."
Rumanian leadership" was committed to "rapid economic growth, emphasizing
industrialization, based on the rapid transfer of agricultural labor
reserves to industry and on a major investment effort." Is "transfer"
of "labor reserves" a euphemism for forced relocation and slave
labor? We're never told, since to Tyson, the only question is, did
the Rumanian "investment" plan 49 work"?
she says. Rumania achieved "dazzling growth rates in the 1970s,"
most impressive for an economy which, she freely admits, "conformed
to the traditional Stalinist model."
the 1980s, Rumania was also "remarkably successful" in imposing
the "austerity measures that are required for rapid short-term improvements
in the balance of payments." Indeed, "continued austerity measures
may produce some efficiency gains" in the Rumanian economy.
course, "austerity" actually meant a palace for Ceausescu and his
vampire-like family, while the Rumanian people got pathetically
little food, heat, electricity, or medical care. Communist Rumania
had one of the most brutally repressive regimes in this century,
and its economic policies produced not "dazzling growth," but poverty
and death. Yugoslavian "market socialism" was the subject of Tyson's
doctoral dissertation, later published as The
Yugoslav Economic System in the 1970s (University of California,
Berkeley, 1980). The dictator Tito's policies were disastrous, and
she is critical of them ... for including a smidgen of the market.
mixture "failed to live up to expectations." Thank goodness that
during the 1970s, Yugoslavia saw "renewed attention to democratic
centralism and to limiting open dissent among party members," with
a "recentralization of authority within the party" away from "republican
a consequence of these changes," Tyson writes in an astounding passage,
"by 1977 Tito could justifiably claim that the unity of our working
people has never been greater than today."
last academic work on Eastern Europe was published in 1986, Power,
Purpose, and Collective Choice: Economic Strategy in Socialist States,
a volume she co-edited with Ellen Comisso (published by Cornell
University Press). In it, she labels economic shortages in Eastern
Europe as merely a "widespread perception," while praising these
countries for being "willing and able to provide a socialist safety
after the fall of socialism, in her newspaper column she urged "massive
investment efforts" in state-owned industries (July 1989). And in
January 1990, she said that the "free market frenzy in the United
States during the past decade" demonstrates why we should have "collective
ownership of firms by groups of workers."
is also on record as favoring industrial policy (i.e., U.S. central
planning), protectionism (artificial barriers to international trade),
and more of our money for the central government ("we are not overtaxed.
Quite the reverse"). She has even claimed as "elementary economic
principle": "there is no relationship between the level of taxes
a nation pays and its economic performance." That is, no matter
how big a percentage of our incomes the government takes, it will
have no effect on our incentive or ability to save and invest.
is voodoo economics, or considering her interest in Rumania, Draculanomics,
in which politicians and bureaucrats are allowed to drain away as
much of our economic life blood as they see fit.
never learned the lesson of the 1989 revolution that discredited
much of her academic work, and neither did Bates College professor
and Clinton advisor David Aschauer.
plots on a graph the growth in productivity (as measured by government)
with the value (as measured by government) of publicly owned assets
like highways, dams, and mass transit, i.e. infrastructure. Charting
from the 1950s, he finds the two growth rates to be almost parallel.
As government infrastructure spending increases, so does the economic
is a logical fallacy. Say, for example, the government spends $1
00 billion next year on dams, and, at the same time, the economy
grows by $200 billion. Are we justified in assuming that one caused
the other? Hardly.
might there not be a reverse causation? Could government tax and
spend more when the economy is booming than when it is in the doldrums?
Or we could conclude that government spending during economic booms
contributes to the economic busts that follow?
Maynard Keynes made similar claims about government spending during
World War II. He thought that public works had a stimulating effect
in the short-run, and in the long run we're all dead."
Soviets also took this idea seriously and spent enormous sums on
public works. But like the Clintonites, they had it backwards. Prosperity
needs an infrastructure, but it does no good to create the effect
without paying attention to the cause.
costs of the Aschauer Curve show up later, in higher deficits, a
weakened structure of private property, and failed and costly government
projects. The highest cost, however, is the loss of freedom caused
by a steadily growing government sector. No curve can justify that.
tough to get teary-eyed over George Bush, but we ought to be terrified
of his replacement. There hasn't been this much celebrating on the
Left since the Bolshevik revolution, and for good reason.
why, based on Clinton's statements, his advisors' writings, and
the Democrat platform: higher taxes on income, energy, cigarettes,
liquor, wine, and beer. We will also get a value-added tax, a form
of national sales tax popular with European socialists. The exemption
from inheritance taxes will be lowered by two-thirds, making all
but the smallest estates subject to heavy assessment. The luxury
tax will be reimposed. And churches will be taxed, while gifts to
them and all other charities will be taxable.
will get increased spending on bank bailouts; the cities; AFDC;
food stamps; and government "jobs".
Americans with Disabilities Act will be enforced to the hilt, destroying
many small businesses now on the brink of bankruptcy. An armed civil
rights police will be created.
justice Department's anti-trust division will be revivified, cracking
down on successful firms that try to merge or expand their market
share. The computer industry will be regulated, freezing innovation.
The airline and trucking industries will be re-regulated. Unemployment
benefits will be lengthened, further subsidizing non-work. And the
minimum wage will be indexed to inflation, permanently shutting
out the poorest and most marginal workers.
will have fully socialized medicine and therefore rationed care.
And we'll have hymns to euthanasia, and why terminal patients should
do the government a favor and kill themselves.
national curriculum and federalized teacher selection and student
testing will abolish what little local autonomy is left. National
sex and environmental "enrichment" will be imposed on the smallest
school, but chastity and capitalism will not be considered enriching.
Private schools will come under federal regulations, and Head Start,
a failed babysitting service for welfare mothers, will receive a
pro-bug environmental controls will be ratcheted up every few months,
and we will have federal recycling. We'll also get higher automobile
fuel-economy standards (and therefore smaller, lighter, and more
dangerous cars), more public transportation, restricted non- HOV
commuting, and a war on styrofoam (psst, buddy, want a cheap, strong,
insulating coffee cup?).
see prohibitions on logging, federal permits for new factories,
and bans on production to fight non-existent global warming and
ozone depletion. (The earth isn't getting warmer, and ozone, which
is scattered throughout the upper atmosphere, isn't even a "layer,"
let alone in danger.)
feds will wage a war on middle-class gun ownership, and teenagers
will be pressured, and then drafted, into "national service."
will be an explosion in "childrens' rights" litigation, with parental
authority replaced with bureaucratic power.
military policy, we will see more welfare-warfare missions. We will
send more cash to Russia, the UN, the International Monetary Fund,
and the World Bank. Foreign trade will be hampered, especially imports
of autos and computers.
Rico and New Columbia (formerly the District of Columbia) will be
states 51 and 52, adding four left-liberal seats to the U.S. Senate.
Welcome, for example, Senators Jesse Jackson and Marion Barry.
there be a reaction in academic and public life? One that leads
to a sweeping away of the statism that engulfs us? That's the biggest
fear the media and our government managers have. And it's up to
us to make that fear a reality.