The cloud over our economic future

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The United States will decide its economic future in the next presidential election. And it appears that it will choose a bad future indeed.

As unlikely as a Bernie Sanders presidency remains, his successes in Iowa and New Hampshire have forced his opponent to tack hard to the left. Hillary Clinton will not be able to campaign or serve as the centrist that her husband was. As for the Republican side, the continued strength of Donald Trump in the polls, combined with his still-divided opposition, make him look like the eventual Republic nominee. And Trump is no conservative. A candidate who promises to make things happen by the sheer force of his personality is reminiscent more of Mussolini than of Calvin Coolidge.

Thus we have the prospect of a new president, who can be expected to expand the reach of the federal government into the private economy, whatever the consequences of doing so. And it appears more and more likely that this new president will take office during another recession. If you want to imagine a perfect economic storm, don’t think of Herbert Hoover in 1929. Think of Bernie Sanders in 2017 attempting to rescue the economy by taxing Wall Street. Or Hillary Clinton cracking down on executive pay. Or Donald Trump slapping tariffs on products from countries he doesn’t like.

What we have is a state of affairs in which the leading contenders for the presidency have in common the view that the way to get elected is to pander to those among us who see themselves as victims of someone else’s greed or ineptitude. Do you want young people to vote for you? Then tell them that their poor job prospects are the fault of Wall Street billionaires. Do you want women to vote for you? Then tell them that they are hurting because men get paid more. Do you want blue collar workers to vote for you? Then tell them that their low wages are the fault of the wily Chinese.

The problem with people who campaign in this style is not that they actually believe what they say (though these candidates seem to believe exactly what they say). It is that when the time comes to deal with an economic crisis, they are bereft of any comprehension of what drives economic activity. Unlike any member of this cast of characters, Ronald Reagan did understand what drives economic activity, and he used that understanding to steer the economy out of the “malaise” he inherited from Jimmy Carter.

Trump would cut the corporate rate to 15 percent, limit the tax on repatriated foreign earnings to 10 percent and cut personal income taxes. This certainly shows more economic savvy than we can find in the Clinton and Sanders soak-the-rich proposals. But Trump differs from his prospective Democratic opponents in that he has no ideological grounding other than Trump himself. With Clinton and Sanders, we can predict ruinous economic policies because of their lifelong commitment to a progressive ideology bequeathed to them by their predecessor in the White House. But with Trump, we might have an even bigger worry, what with his penchant for making himself, rather than the market economy, the instrument for economic progress.

Voters who see the likes of Sanders and Trump as anti-establishment are letting their, very understandable frustrations with government cloud their judgment. The problem is not the “establishment,” but the wrongheaded policies of the Obama administration that have put the country in its current state. In 1980, voters faced economic and national security issues much like voters face today. But they dealt with their frustrations by electing a candidate who appealed to their intellect as well as their hearts. Today’s voters need to find a candidate whose intellect and comprehension of our current malaise is equal to the task – lest they get the world they deserve.

David G. Tuerck is executive director of the Beacon Hill Institute. Read his past columns here.