BY JOHN REINIERS, More Than Words
Economic growth is the mother’s milk of conservative thought. Conservatism is not an ideology. It is a philosophy. In fact it is opposed to hard line ideologies. It is a moving target because it is based on practical principles, respecting tradition but accepting change.
The ultimate in profound economic change was the Industrial Revolution, which transformed the course of human history and has morphed into the technological revolution, which ushered in economic conservatism as we know it today. An explosion in economic activity followed, resulting in the creative destruction of existing jobs. The net result was more productive jobs, as less productive jobs were destroyed. Automobile assembly lines versus wagon manufacturing, word processors versus manual typewriters, etc.
Undergirding this stunning achievement was the hallmark of conservative principles — that the notion that property rights and freedom should be inseparable in the hands of creative, entrepreneurial inventors who attract investment capital. (Turn the entrepreneur loose.) Conservatism is, and remains, all about economic growth and private sector jobs.
Command and control economies could never have inspired the Industrial Revolution. Even China has embraced market capitalism, referred to by their own communist leaders as a “socialist market economy with Chinese characteristics.” Here’s what Chinese President Hu Jintao tells his bureaucrats: “The functions of government must be separated from those of economic enterprises … Government should not intervene in economic operations.”
How about that! Economic growth with job creation. A communist ordering his government to get out of the way of business — totally antithetical to the ideology of U.S. progressive liberals. This is not meant to be a partisan slam, but rather to suggest economic policies that focus on government regulation are misguided in this global economy.
Countless numbers of inventions created by the legions of brilliant European entrepreneurs as the Industrial Revolution unfolded would have would have never seen the light of day in contemporary America. Englishman George Stevenson’s first steam locomotive used in coal mines (1840) and German Gottlieb Daimler’s first modern gas engine (1850) would still be on the drawing board if they had to deal with U.S. federal government bureaucracy, (EPA, NHTSA, NLRB and OSHA, to mention some) plus state and local permitting agencies — and sadly these start ups would probably go broke lobbying and from incurring attorney’s fees.
Big government enthusiasts have no interest in property rights and even less interest in individual freedoms; whereas the philosophy of economic conservatism implies robust support for private sector economic progress.
As we become more like European socialists, the U.S. economy will become less dynamic and entrepreneurial. Socialism is an ideology, not a philosophy. It is a belief system that advocates the control of production with the government. Its focus is on big government — not property rights, and surely not wealth creation with its capital investment and entrepreneurship.
Look: Economic growth should clearly be our priority to get us out of this recession; not bigger government, more rule-making and higher taxes. And this bears repetition: The only way out of this mess is to encourage capital investment in our economy to stimulate economic growth which leads to jobs.
The extraordinary challenge American business now has is how to remain at the top of the global value chain. This is also the goal of emerging market countries, as it was for Japanese industry years ago.
Japan educated and trained a hardworking, dedicated skilled workforce to manufacture the highest quality products. They didn’t innovate. They weren’t entrepreneurial. They simply copied and mastered western technology of that time with unmatched quality standards. But the government, (“Japan Inc. as it was called then) did not get in the way of industry with regulatory restraints. This made the difference.
This brings to mind the missionary zeal of progressive ideologues mixing social policies with economic and financial policies, ever since the New Deal. We’re so used to this, we don’t realize it. For example economists agree that the genesis of this financial crisis really started with the FHA and their Fannie Mae and Freddie Mac G.S.E.’s promoting home ownership — on the surface a laudable social policy; but look where this policy took us: another bubble that created a lot of jobs from Main Street (construction and related jobs in the real estate business) to Wall Street. But it also created a lot of crooks along the way from the ordinary guy, up the food chain to the crooks on Wall Street.
A more recent example is the fetish this administration has for solar energy that resulted in an ill-conceived federal loan of an astounding $535 million to Solyndra that was doomed from the beginning, and is now in bankruptcy, throwing 1,100 people out of work. The Department of Energy has already granted a whopping total of $38.6 billion in loans for “green” projects.
It now appears as though two top executives will take the 5th Amendment and refuse to answer questions at a Congressional hearing. This will end up as another classic case of political corruption. Behind the scenes is a billionaire Democratic fundraiser with close ties to the administration. Obama’s political advisers were pushing for a “green jobs” photo op for the president at all costs, to promote his economic stimulus plan.
There is no doubt that entrepreneurial, innovative Americans will develop cutting edge, affordable solar energy over time. But clearly, at this time in history, it would make more sense for the government to fast-track drilling for oil and natural gas in the U.S. (we have more natural gas than the Saudis have oil) or the development of clean coal technology, rather than sending all our dollars offshore to the Middle East. Private industry would jump at the chance with no loans required.
Our only priority should be economic growth with the end goal of private sector jobs. This is what pragmatic economic conservatism is all about.
If the president and his inner circle of power abandoned yesterday’s failed socialist nostrums and focused on common sense, confidence in government would return.
- Economic Growth Hinges on ‘Frontier Economics’ of Entrepreneurial Upstarts and Reduced Government Intervention (kauffman.org)
- The President’s Plan for Economic Growth and Deficit Reduction (whitehouse.gov)
- How About ZEG (Zero Economic Growth), Instead Of GNP? (patriotwarrior.org)
- Europe’s Austerity Pipe Dreams (economicsintelligence.com)
May 19, 2010
On May 6, US stock markets opened down and trended down most of the day on worries about the debt crisis in Greece. At 2:42 pm, with the Dow Jones down more than 300 points for the day, the equity market began to fall rapidly, dropping more than 600 points in 5 minutes for an almost 1000 point loss on the day by 2:47 pm. Twenty minutes later, by 3:07 pm, the market had regained most of the 600 point drop.t-On May 6, US stock markets opened down and trended down most of the day on worries about the debt crisis in Greece http://en.wikipedia.org/wiki/2010_Flash_Crash
A Black Swan Event – An event or occurrence that deviates beyond what is normally expected of a situation and that would be extremely difficult to predict.