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COMMENTARY
August 20, 2011
Perrywinkle
Rick Perry, the governor of Texas, made waves this week, upon entering the Republican presidential fray, by suggesting that Ben Bernanke, of the Federal Reserve, would be treacherous if he continued to "print money" to grease the government's way out of the solvency crisis. Perry's colourfully frank Texas language got him into big trouble with all the smooth people who routinely refer to politicians like him as "terrorists."That language may have been rather cleverly chosen, for the splash it created had two immediate political consequences, beyond persuading people who would never vote for Perry that they must never vote for Perry. First, it elbowed Ron Paul and others aside, by making Perry the "don't print money" candidate. His Republican rivals on the Tea Party side are now moaning about his theft of their thunder. Second, it puts Bernanke on the spot. For after the sympathy has evaporated for a man who has been verbally abused, he cannot go ahead with what in fact amounts to printing money, without totally identifying himself with President Barack Obama and the "stimulus" establishment. Perry has made Bernanke's job impossible, and in present circumstances that might just be a good thing. For generations now, governments not only in the United States have eased their way out of solvency crises by stoking inflation, and by some plausible mixture of cosmetic budget cuts and real tax increases. To do otherwise, as even the Economist now says, is to display "economic illiteracy." Sophisticated people play with all the dials, on the economy machine, and those who refuse to touch certain dials are unsophisticated. Observe, where all this sophistication has got us. There are some issues that are too simple for intelligent people to understand. Most moral issues are like that. The problem isn't distinguishing between right and wrong. That is not always as plain as day, but usually it is. The problem is finding a way to justify doing the wrong thing. And once you think you have found it, the people still arguing for doing the right thing may be dismissed as "simplistic." On the grand economic questions, "simplisme" has long been decried. John Maynard Keynes, a truly brilliant man, and an entertaining one with wide cultural interests, made wonderfully entertaining arguments for doing the wrong thing, many of them ingeniously counter-intuitive. "Public economists" (on the analogy of "public intellectuals") such as John Kenneth Galbraith in the last generation, and Paul Krugman in this, stand in direct succession to him: same attitudes, same habits. Lord Keynes' great rival, Friedrich Hayek, exploded many of the economic fallacies upon which Keynes depended, along with many of the facts which Keynes massaged to fit his own passing needs. But Hayek's strongest criticism is too lightly passed over. He said that Keynes was interested in economic theory only as a means to influence current policy. He had not, in fact, the "intellectual chastity" to examine anything on its own terms. I am cumbering my column with these assertions, because they are necessary to hear. Observers are easily distracted, even intimidated, by intellectual fireworks. They are awed into a silent refusal to think things through for themselves. Often common sense alone will guide us past intellectual impostures. But when it doesn't, we need to know that the weight of economic literature is there; that "Keynesian economics" was exposed from the start. So let us return to simplisme. If what we want is a functioning, even flourishing economy, and therefore jobs, jobs, jobs, then the policies of Texas make sense. They are, as Rick Perry says, low taxes, minimal regulation, the avoidance of debt, and business-friendly attitudes. It is a political culture which at least tries to focus on the political questions (law, order, and so forth), and leave economic questions to the free market (with its inevitable bulls and bears). If what we want instead is a dysfunctional and stagnant or shrinking economy, and therefore spreading unemployment, then California's policies are just the ticket. They are: high taxes, maximal regulation, and excruciating debt. Also, a political culture that belittles and despises business, almost as much as it belittles and despises law and order; one not merely addicted to "fine tuning" things utterly beyond anyone's comprehension, but earnestly trying to replace the free market with a "political market" for goods and services - whenever opportunity calls. ("Never waste a crisis.") I'm not saying the generation of wealth should be the sole purpose of human existence. I am saying it is one of the purposes, and further, that by politicizing economic activity we actually mire ourselves much deeper in materialism than we would ever do by just going out and earning a living. The Texas model works, and the California model fails. Quite apart from whether anyone in the States should vote for Rick Perry, they must choose between these models. David Warren
© Ottawa Citizen
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