Friday, July 23, 2010

Addicted to Bush? Addicted to Socialism!

I have no reason to doubt most of Mr. Krugman's figures (See Paul Krugman's editorial in the July 23 edition of the New York Times). Although I suspect the 9% of GDP deficit number being assigned to Mr. Bush is probably not totally accurate. As Mr. Law from Texas who supports "His Eminence" Mr. Krugman's arguments notes the "newly-elected POTUS was required to go to work early by going to DC to engender confidence and leadership during the '08 financial crisis". If so, then he can also take some responsibility for the current deficit. You can't have it both ways.

As a Libertarian, I don't support Republican or Democrats as they are two sides of the same coin and have basically similar policies that change only on the margin. But should the Republicans regain control of Congress in November, something I doubt will happen, the constraints of our current financial situation will hopefully force them to embrace something considered radical. We cannot extricate ourselves from this current mess by traditional tax cuts, or by the quasi-central planning schemes of the Democrats.

We need to change our tax system and go to something consumption based like the FairTax. We need to release private business to do what only free-market capitalism can do, create wealth. If one looks at the miracle of the American experiment since its founding, it has been our belief in the free-market and the actions of individuals in that free-market that has created the wealth we have enjoyed. Even the poorest in this country live lives of relative plenty compared to the poor in the 3rd world.

The causes of our financial situation extend back much longer than the recent Bush administration and I would argue go back decades when the seeds of the housing crisis were planted. Those policies and subsequent Federal Reserve policy and the belief of our ruling class in Keynesian economics' reliance on perpetually low interest rates, promote boom-bust cycles. And so here we are.

It's unrealistic to believe that the ruling class will come to embrace some of the lessons of "Austrian" economics any time soon but leaving that alone, releasing capitalism by radically changing our tax system offers the best hope for the future. Some may consider it risky and ill-advised. I think it's safer than going back to the policies of George Bush or even worse European-style democratic-socialism, both of which won't work and can only make the situation worse.