It’s the Economy, Stupid: Version 2016

Investors watched in dismay as global markets spiraled into chaos Monday, sending the Dow plummeting 1,000 points within several minutes of the opening bell. But for some 2016 presidential candidates, the massive selloff was nothing short of a political opportunity. In an election cycle that has so far been dominated by issues like immigration and foreign policy, the abrupt course correction on Wall Street brought sudden renewed focus on the health of the U.S. economy. [CNN.com 8/24/15]

I sincerely hope the U.S. economy does not get worse than it already is.

But I also know it has to do so; it’s not a question of if, but when, because the government has done so much to mess up the economy as it is.

Our government is killing us: High taxes, unprecedented regulation, unsustainable entitlement programs (Social Security, Medicare, Medicaid and now Obamacare), not to mention a dramatically weakened foreign policy and military which make everything, including the economy, more vulnerable. All this, and the biggest national debt (relatively or absolutely) in all of human history.

I’m not saying we’re all doomed, necessarily; but this cannot end well.

The last time the economy went down (2007-08), the prevailing wisdom was: “Low taxation, insufficient government spending and lack of regulation caused it all.” George W. Bush was associated with these policies, and because he was president, these policies got the blame.

In reality, Bush did lower taxes somewhat, but he spent domestically and regulated more than any Republican (or just about any President) to date. Obama, with a compliant and self-effacing Republican Congress, has taken debt, spending, socialization and regulation to unheard of extremes in all of American history, and as a result developing economies like China have begun to — in some ways — overtake us.

If government control and management over the economy was always the answer, Bush’s hugely interventionist policies (especially in the last year of his term) should have brought us more success than they obviously did. And Obama’s mind-numbingly interventionist policies should have brought us incredible and lasting success, not the floundering and warning signals of trouble ahead we’re now seeing.

The “recovery” that followed Bush’s time in office was credited to Obama’s policies of massive debt, spending, taxation, regulation and socialization of medicine, among other things. That’s why Obama got reelected, fairly easily, even though the recovery was the weakest in history.

Now as we face the possibility of another economic downturn, what will the new narrative be?

So far, there are two answers being offered. One is Donald Trump. Trump is saying, “See? I told you so. China is the problem.” Trump is partly right, in that the United States has reduced its economic growth and prosperity so much that China has now, in some respects, become the world’s leading economy.

Trump’s answer seems to be one of anger and retaliation against China. “If China weren’t doing so well, we’d look better.” But negating China — especially through blocking trade — is not the answer. What could the answer be? Reducing taxes, massively reducing regulations, and really reducing the role of government in the economy. Shutting down entire cabinet departments. Privatizing education, Social Security and Medicare (for future generations, at least) and getting the government the hell out of the economy, as quickly as possible.

Next, restoring a strong military, and while not being so prone to start ground wars with foreign countries, standing ready to use the full force of our weaponry, if needed, against ISIS, Iran, North Korea, Russia and even China. (China will most likely respond to strength through deterrence, while Iran and ISIS will not.) In other words: peace through overwhelming firepower and strength, the only way to ever achieve peace in a world filled with irrational villains.

The other major answer, aside from Trump, comes from the Establishment: the Democrats. But the Democrats can’t run on more of the same, at least not if the economy flounders or collapses again. What will they run on? Unimpaired, uninhibited, all-out socialism. That’s all they have left, and it’s the logical dead-end of all their policies. As socialist Bernie Sanders says, enough with these tepid yet decisive steps in the direction of all-out socialism; let’s have the real thing, once and for all, kind of like the Soviets did, only with democratic elections (where all the winners must practice socialist economics, of course.) Joe Biden, who may supplant Hillary Clinton as the front runner in the event she’s criminally indicted or politically ruined, can ride the socialist train by signing on socialist Elizabeth Warren as his running mate. Indications from over the weekend are that he’s proceeding to do exactly that.

If the economy bounces back to its mediocre normal for another year or two, perhaps the 2016 election will be limited to debates about abortion, gay marriage and immigration. If it doesn’t, or if it worsens, then it looks like we’ll have a choice between two futures: Donald Trump’s angry reproach of trade wars with China, or the Bernie Sanders-driven/Joe Biden/Elizabeth Warren transition to all out and complete socialism.

By the way, I don’t assume Trump will be the Republican nominee. But I don’t yet see that any of the other candidates in that party can fire up large majorities of voters much about anything, other than abortion or gay marriage, to people who agree with them on those issues.

Years ago, Atlas Shrugged author Ayn Rand, as well as many free market economists, wrote about the mixed economy (what we still have now), as an unsteady, unstable and inherently untenable mixture of socialism and free market capitalism. Rand argued that sooner or later we’d either have to repeal the welfare-regulatory state (government as we now know it), or collapse into complete socialism. The mix is unsustainable. Bernie Sanders and his supporters realize this, and he votes for socialism. Where is the candidate who likewise recognizes the mix is unstable, and who wants unhampered capitalism, individual rights and strictly limited government, and who will walk the talk?

The rumblings involving China and the stock market indicate the early stages of the climax between socialism and capitalism many of us might live to see. What’s the old saying? “May you live in interesting times.”

That much seems assured.