David R. Henderson  

Devil Says "Sin Less"

From the Cutting Room Floor: T... Why Credit Default Swaps?...

That should have been the headline on George W. Bush's op/ed in today's Wall Street Journal. The title the Journal gave it is "The Surest Path Back to Prosperity." And the decline (that's the line underneath the title that sums up the article) is a quote from his article. Are you ready? Bush actually has the gall to say, "If you seek economic growth, social justice and human dignity, the free-market system is the way to go."

The article is actually well-written, except for the line, "There's going to be difficult days ahead." No surprise that, given the large army of writers Bush has whom we pay for. But I mean more than that. It's passionately argued as if by someone who believes what he's saying.

But Bush doesn't and, even if the actual writer(s) does (do), he/they are working for the wrong guy. We've seen over almost eight years George Bush's hostility towards free markets. First, with the USA PATRIOT Act, he increased financial regulation. Second, he nationalized airport security. Sure the Democrats wanted it and he didn't, but that didn't stop him from going along. Then he nationalized prescription drugs for seniors. Then, of course, the bailout--a huge dose of central planning in financial markets. George Bush put a huge amount of power in the hands of one man, Hank Paulsen, who has what Friedrich Hayek called "the fatal conceit," the conceit that he could plan people's financial lives with their money better than they can plan with their own money.

Bush's op/ed is based on a speech he gave this week at the Manhattan Institute. There are a lot of good people there, many of whom understand the virtues of free markets. Did any of them ask him how, in light of his speech, he justified any of his assaults on economic freedom?

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CATEGORIES: Regulation

COMMENTS (14 to date)
CannedHeat writes:

Just wait till you see what the Democrats do.

Nathan Smith writes:

For non-Russian speakers, the first comment reads: "More than once I've read similar posts on English-language blogs, but that doesn't mean that I didn't like your post." I wonder why the commenter wrote in Russian. And was it the free-market advocacy the commenter liked, or calling Bush the devil?

As time passes, I get more and more fed up with libertarian Bush-bashing. Let's look at the other side of the record:

1. Tax cuts.
2. Immigration advocacy.
3. Attempted Social Security reform.
4. Trade agreements; also, repeal of steel tariffs that he, admittedly, imposed, but that usefully entrenched the principle of compliance with the WTO-- and the more power on trade shifts from Congress to the WTO, the better.

I suppose it's useless to mention that Iraq has much freer markets today than six years ago: most libertarians have long since put beeswax in their ears on that question. But please note, too, what Bush didn't do. He didn't impose big new environmental regulations. He didn't establish welfare programs that undermine the incentive to work. For the most part, he maintained the deregulated, post-welfare policy environment established by the Clinton administration and the Contract with America GOP.

CannedHeat is right. Ungrateful libertarian malcontents may be about to get what they deserve for making the Republicans victims of friendly fire.

Troy Camplin writes:

I'm jealous. That should have been my headline on my blog! :-)

RL writes:

Nathan Smith is absolutely right.

Here are some additional things President Bush didn't do in his unhesitating defense of free markets:

1. He didn't establish an absolute monarchy.

2. He didn't announce an emergency order canceling the 22nd Amendment and nullifying the November 4th election results.

3. He didn't add a surtax of $1000/person to the income tax "for me, just cause I want to".

4. He didn't attack either Canada or Mexico.

5. Our freedoms under the 3rd amendment remain strong.

Clearly, this libertarian carping about these minor intrusions into some imagined laissez-faire regime--a major new entitlement program here, a nationalization of the financial industry there--is doing damage to the reputation of the greatest free-market President since...oh, Clinton.

Maniel writes:


"If you seek economic growth, social justice and human dignity, the free-market system is the way to go” does sound like a worthy message. My disappointment with the Bush administration is that, since they often put out similar words to paper over their actions to increase federal government scope and cost, those words are now being used against us. People who believe that the federal government can improve on the free market – as CannedHeat notes, many of their number will soon be tapping our wallets from Washington – are saying, “We’ve tried the free market and it doesn’t work.”

Mr. Smith raises interesting points. The Bush tax cuts rewarded work; a flat tax would reward work, up and down the income ladder, even more. And spending cuts would have left more money on the private side of the ledger – debt is bleeding us white at the moment. As for immigration advocacy, this came in the second Bush term, when his influence had waned, his political capital having been largely spent in a discretionary war. However much that war may have helped Iraqis who survived the violence, it hasn’t helped us.

Social Security is a very legitimate target, but I highly prefer the Ron Paul approach which is to phase it out by letting young workers “opt out.” That brings me to the issue of “Libertarian malcontents;” I’m one. I voted for Dr. Paul, scorned by the media and by “leading” (or misleading) Republicans, because I like his message of bringing the federal government back under our Constitution (and of course, changing the Constitution when and if that is appropriate). The Republican candidate for president was, by the way, leading the cheers for the bailouts. His GOP colleagues in the House and Senate presided over enormous growth in the federal government between 2001 and 2007. Gosh, where was a Libertarian malcontent to turn?

Gary Rogers writes:

The important thing we need to recognize is not whether W was a good or bad president, because he was both, but that he did not do enough to stop the unsustainable growth of government when it mattered. This is leading to economic disaster. To make matters worse, his bailout is rapidly turning a serious economic downturn into a full fledged depression. I see historians describing Bush the same way they describe Hoover; as a free trade conservative who tried conservatism and proved it did not work. What most of the readers of this blog understand is that government intervention is the root of the problem and intervention only makes things worse.

What I think we know is:

Government intervention in housing, medical care and education drive up prices to the point that they become unaffordable without increasingly larger subsidies.

Government borrowing in combination with low savings rates results in borrowing from foreign countries. This means we are borrowing money that should be used to purchase our exports and that hurts our exports.

Low interest rates over time will shrink savings and increase the amount of leverage in our economy. This, more than anything else, leads to the rich getting richer, the poor getting poorer and a shrinking middle class.

Encouraging consumers to spend more and to increase borrowing through low down payment loans, mortgage interest rate deductions and encouraging the use of college loans is not necessarily doing them a favor.

Running our government with an accounting system that would result in any CEO going to jail is not responsible government. We continue to put big items "off budget" because they are politically unpalatable rather than facing up to the fact that we either pay for them or they need to be eliminated.

These are the things macroeconomists should be teaching.

ck writes:

Do you mind if I ride my hobby horse for a second?

President Bush's first major initiative was the now-infamous No Child Left Behind Act.

This was supposed to be visionary, sweeping legislation that took the best ideas from every faction in the mainstream education debate. Specificaly, it was supposed to feature a school choice (voucher) provision AND tough accountability standards AND more money from the FedGov WHILE retaining some local control.

Now, guess what was the first thing to get steamrolled--or thrown overboard, if you prefer--when legislative negotiations got tough? You guessed it. The school choice provision bascially got chucked. (Okay, technically it was eviscerated...it still technically exists.)

Since NCLB managed to piss off both the left and the right, it's actually one of the few federal programs that has a WORSE reputation than it deserves. And it did cure some complacency and festering malignancies in the old system. But it also further centralized control and created requirements that added little to students' outcomes. [The spending hikes don't seem that effective, either.]

Now why is this appropriate to an economics forum? Because, in the long-run, human capital (education, basically) is a fundamental determinant of growth. I know Arnold disagrees with them, but Goldin and Katz are pretty convincing on this front.

Bottom line: judge politicians what they do, not what they see. George W. Bush has been the most effective opponent of the free-market since LBJ. He has been so devastating because he has undermined free-markets from within the ideological tent.

His failure is being attributed to markets. That's a cryin' frickin' shame. Bush's legacy should be his incompetence, cronyism, and hubristic use/waste of American power. It should not retard the advance of markets. It is the unique accomplishment of the market that, throughout history, it has lifted hundreds of billions from poverty.



mgroves writes:

"George W. Bush has been the most effective opponent of the free-market since LBJ."

I was kinda shocked by this statement, but then I thought about it a little bit and I think there may some truth to it: Nixon and Carter were no darlings either, but Bush has allowed a lot of damage.

However, I imagine if Clinton had a democratic majority in Congress for most of his two terms, he probably would have been as bad or worse (nationalized health care, for instance).

The lesson, I think is: one-party rule doesn't bode well for economics or liberty. So, strap-in for at least the next two years, sports fans, it's going to be a wild one-party ride.

Eric H writes:

You can't put all of this on George W. Congress had a significant hand in it, and I mean the members of both parties. 13 years ago, we had "The era of Big Government is over." Today, Big Government is back, baby, and it has an attitude. The worst thing people like W and McCain have done is to invoke free market rhetoric while doing the opposite (okay, not 180 degrees, maybe more like 135 degrees), so that now when things are tanking, the Left can pretend with great effect that their "free market" policies are to blame.

The same thing happened with California's electricity market "deregulation", which was in fact re-regulation. Now, thanks to that horrible legislation and Enron, deregulation is so toxic that we may never again see anything like real deregulation in our lifetimes.

RL writes:

Eric H argues: "The worst thing people like W and McCain have done is to invoke free market rhetoric while doing the opposite (okay, not 180 degrees, maybe more like 135 degrees)"

Well, I agree that the angle McCain and Bush have taken is certainly obtuse...

Jacob Oost writes:

No different from the Blinders, Krugmans, and Summers of the world saying one thing in a textbook and another thing in an op-ed.

Greg Ransom writes:

Bush is walking in the footstep of Hoover, who did a million things to wreck havoc with the process of market coordination, then offered himself as the very poster boy of the free market. He spent much of his time, post Presidency "advocating" for liberty and the market.

I can't think of many things that did more to discredit the idea of the market.

If these guy are going to wreck the economy, they need to just do it and shut up. But they don't seem happy with just destroying the market, they also want to destroy the reputation of the idea of the market.

Thanks, Mr. President.

Matt C writes:

>George W. Bush has been the most effective opponent of the free-market since LBJ.

I made the same comparison to my friends last night. Sorry to doom and gloom, but I don't think the U.S.A. will ever get back on the right track again.

John Fast writes:

Ah, you left-wing bloggers are always comparing Bush to Satan.

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