By John Tamney
On March 30, 1981, the Times of London published a letter signed by 364 prominent economists that predicted disaster for England under Margaret Thatcher’s economic policies. Reality has a way of removing the clothes of the so-called experts in a rather embarrassing fashion.
Does anyone remember the collapse of communism? Same idea. Experts said that what suffocated human nature had a long shelf life, while ridiculing Ronald Reagan’s confident assertion that what was morally and financially bankrupt wouldn’t last much longer. We know the end result there too.
Which brings us to the New York Times editorial board’s recent piece decrying the Republican tax proposals because, among other things, “just one of 38 prominent economists surveyed by the University of Chicago agreed that the Republican tax cut would substantially lift the economy.”
All of this speaks to how unfortunate the Times editorial board’s tax musings are. They’re unfortunate because they’re not even challenging. After the polling data, the rest of the editorial was either ridiculous, unoriginal, or both. And that’s too bad.
It is because there’s so much wrong with the Republican tax proposals, but that the Times’ editorial board has glossed over. Presumably unable to construct coherent arguments, the Board has taken familiar shelter in the unoriginal with its laughable assertion that the proposed GOP cuts are all about “windfall tax cuts for corporations and the wealthy.” Ahh, if only.
The Oddballs of the US Economy
Indeed, Sarah Palin is incorrect about the importance of “Real America” to the U.S. economy, as are pandering politicians incorrect when they tell us that the middle class and small businesses are the “backbone” of the U.S. economy. They’re not serious.
What makes the U.S. economy great are those who are not part of “Real America.” What makes the U.S. economy great are the oddballs who think a fast food hangout in sleepy San Bernardino (Ray Kroc) has national and global potential, who see the value of overnight delivery (Fred Smith), and who come up with the wild idea that people would prefer to purchase books and other products on their computers (Jeff Bezos) over buying them in physical stores. Goodness, the experts thought Orville and Wilbur Wright completely nuts.
Those who author abundant economic growth are from way outside the mainstream, full of ideas that the prominent and established often haughtily dismiss. When their ideas succeed they become immensely rich for achieving against all odds (is the Times aware that 9 out of 10 Silicon Valley start-ups go bankrupt?), but that’s what makes the U.S. the greatest country on earth. It’s where seemingly outlandish ideas can become reality.
Yet we have a tax code that penalizes remarkable achievements. Worse is that the Republican tax proposals would penalize this achievement even more. If the Times’editorial board is to be taken seriously, the outsiders who relentlessly change how we live and work while rapidly boosting our living standards should face even higher rates of taxation than the Republicans already want.
Notable is that these outsiders can only innovate insofar as they’re matched with capital. But precisely because they’re on the outside, they require particularly intrepid investors to back their visions. They’re not trying to join the established order as much as they’re trying to knock the big corporations (at which the Times looks askance) off of their lofty perches. Despite all this, the Times editorial board decries tax reductions for those who are already rich, and who have the courage to back outsiders in pursuit of what is remarkable.
And then rather than offer up alternative tax policies meant to one-up the limp Republican proposals when it comes to reducing barriers to achievement, the Times offers up faux, and quite transparent deficit hawkishness. In the process, it unleashes overwrought criticism that even the slightly schooled can respond to, with ease. One of many is the Times’ assertion that the proposed GOP tax cuts will lead to “the addition of more than a trillion dollars to the federal debt in just 10 years.”
Ok, but taxes (on income and capital gains) went up under President Obama during his two terms in the White House, yet federal debt surged by roughly $9 trillion. In the edits process for the Times’ faux takedown of the easily takedown-able Republican tax proposal, didn’t anyone see fit to reveal this inconvenient truth to the author(s)?
Trade “Deficits” and the Value of the Dollar
At one point the same editorial confidently laid out the various calamities that will come to pass if Republicans get their tax cuts. Readers of what’s ahead can be excused for chuckling a little, or maybe a lot:
Economists also expect the tax bills to lead to bigger trade deficits because the government would be forced to borrow more to pay its bills, driving up interest rates. Those higher rates would prompt foreigners to buy more United States bonds, driving up the value of the dollar. That would make American exports less attractive to other countries and imports cheaper to American consumers.”
More realistically, so-called trade “deficits” that needlessly spook people like President Trump are an accounting abstraction that result from something positive: voluminous “export” of U.S. company shares to voracious foreign buyers. That’s why “deficits” in trade were so high under Presidents Reagan and Clinton. The economy was booming, and as such, Americans were exporting lots of company shares in return for imports of the world’s plenty. It’s always and everywhere the rich and fully-employed countries that have abundant shares to export.
As for a rising dollar, it was strongest once again under Reagan and Clinton, and that’s when the U.S. economy was healthiest. Yes, good money is a magnet for the investment that is the source of all job creation, including foreign investment. Notable is that exports aren’t harmed by good money. We know this intimately as evidenced by the surge of Japanese imports into the U.S. despite the yen’s stupendous rise against the dollar in the 70s and 80s. In attempting to construct a doomsday scenario, the Times unintentionally revealed good things.
At the same time it never explained why it’s bad if Americans import more than they export. Isn’t importing the main purpose of work? What do the Times’ editorialists exchange their editorials for other than goods and services, or savings that will purchase for them goods and services when their policy views are no longer needed at the Times?
After that, it was also never explained why it’s so important that the federal government have so much money to spend in the first place. Aren’t the Times editorialists “liberals” in the choice sense? Wouldn’t they prefer that Americans who are endlessly different have endless choices about what kind of government they want? Why, if the federal policies they seek are so great, do so-called liberals and progressives demand that their ideas be forced upon us in national fashion? Instead, and if their ideas about health care, welfare and taxation are so good, why don’t they seek a return to a limited federal government in concert with more activist state governments? If so, as in if their policies are so enriching, voters will migrate to states most likely to offer up the sizable government that the Times editorial board desires.
Policymaking Shouldn’t Be National
Seemingly missed by the Times is that the debate should be about freedom. Much as many ideas hatched by Republicans terrify Times editorial board members, so do many of its ideas terrify Republicans. And that’s the point. Policymaking shouldn’t be national. People should be free to pursue their own bliss. For the Times to suggest otherwise is for its Board to reveal how non-progressive its progressivism actually is.
In short, the Times editorial board is not progressive enough. It is, dare one say it, quite conservative. Rather than compete on ideas, or better yet, let cities and states compete on the way to innovative outcomes, it wants to control. And in seeking control, it brings little to the policy debate. Central control’s been tried before, and it’s failed. Not only is the Times failing in seeking top-down solutions, its unreasonable stance allows an increasingly flabby right to stay that way.
There’s once again so much to criticize in the Republican tax proposals, but the New York Times lacks any good criticism, or new ideas that could be tried locally, and in place of the failed ones that the left continues to revive. The Republicans desperately need competition in the arena of ideas so that they too can improve. But the Times and others on the left have nothing. And that’s too bad for voters on the left and right.
Reprinted from Real Clear Markets.
John Tamny is a Forbes contributor, editor of RealClearMarkets, a senior fellow in economics at Reason, and a senior economic adviser to Toreador Research & Trading. He’s the author of the 2016 book Who Needs the Fed? (Encounter), along with Popular Economics (Regnery Publishing, 2015).
This article was originally published on FEE.org. Read the original article.