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A feast of lard
By Vin Suprynowicz
In Washington, the National Bureau of Economic Research announced November 26 that the United States entered a recession last March, after a record-breaking 10-year expansion.
Founded in 1920, the NBER is a private, nonprofit research organization. The NBER panel issuing the announcement is composed of six economists including Martin Feldstein, who served as chairman of former President Reagan's Council of Economic Advisers.
The GDP did not actually begin to shrink until the July-September quarter, when it did so at an annual rate of 0.4 percent, according to an initial government estimate. Many analysts say the economy is actually now shrinking at a rate of 1.5 percent and will also post negative activity in the first quarter of next year. By one traditional definition, a recession is defined as at least two consecutive quarters of declining GDP.
But the NBER's academic committee bases its determination not on GDP but on a more narrow set of monthly economic indicators covering such factors as employment, industrial production, real personal income and sales, noting that through October the decline in employment had been similar to the average job losses that had occurred at the onset of the past six recessions.
President Bush, whose father lost the White House mostly as a result of raising taxes that helped fuel the nation's last recession, responded by calling on Congress to move quickly to pass an economic stimulus so that he will be able to "sign it before Christmas."
Given the massive size and intransigence of the government tax and regulatory apparatus, the notion that economic policies shift rapidly following each election is a bit far-fetched -- just as it's counterintuitive to believe that businesses purposely chose to begin their contraction precisely when they saw Mr. Bush intended to keep his promises to reduce marginal tax rates and de-fang onerous regulatory policies.
The fact that the recession began when President Bush had been in office for only a few months means the blame is far more likely to rest on the ever-tightening stranglehold of government regulators over American business during the eight years of the preceding administration -- regulations Mr. Bush has only begun to root out.
But this is not to say that -- just because Mr. Bush belongs to the reputedly "pro-business party" -- the opportunity doesn't now exist to take a "bipartisan" misstep which will only make things far, far worse.
Franklin Roosevelt -- violating the solemn promises of his own 1932 Democratic campaign platform -- vastly expanded government interventions in the economy in his own version of a "stimulus package" in 1933 and '34. As a direct result, the Depression worsened for another four to six years -- by many measures, the economy was far worse off in 1937 than it had been in 1932.
Any economist not unnaturally enamored of deceased fascist sympathizer John Maynard Keynes now understands why: Government can indeed "stimulate the economy" when it lowers and simplifies taxes and tariffs (since they tend to be complex precisely to "play favorites" for political reasons, inevitably distorting the market) and when it relaxes or eliminates counterproductive "rent-seeking" regulations.
But the notion that anyone can "stimulate the economy" by looting funds from the private sector -- stripping away the ability of entrepreneurs and small stockholders to quickly and efficiently shift invested resources to more productive ventures -- in order to lavish more government spending on "favored" projects like bankrupt railroads and West Virginia "highways to nowhere" -- is not merely a mistake. It is a vicious lie.
Cornelius Vanderbilt and James J. Hill grew rich by running circles around their sluggish government-subsidized competitors in the steamship and railroad businesses -- doomed "political entrepreneurs" whose only answer to these more efficient competitors was to seek ever larger federal bail-outs as they built rail lines on sinking bogs and ever larger, disaster-prone steamships.
If vacuuming up private moneys and funneling them to those operations favored by the centralized bureaucracy could work, the world would now be turning not to the United States, but to the Soviet Union, for advice on how to build a free, vibrant, and prosperous land of opportunity.
If Mr. Bush is truly a friend of the taxpayer, the competitive businessman, and our free economy, he will sign only measures focusing on tax and regulatory relief, throwing away with the used Christmas wrappings those noxious platters full of steaming lard which the big spenders of both parties are now sending his way under the guise of "economic stimulus."
Vin Suprynowicz is assistant editorial page editor of the Las Vegas Review-Journal. To receive his longer, better stuff, subscribe to his monthly newsletter by sending $72 to Privacy Alert, 561 Keystone Ave., Suite 684, Reno, NV 89503 -- or dialing 775-348-8591. His book, "Send in the Waco Killers: Essays on the Freedom Movement, 1993-1998," is available at 1-800-244-2224, or via web site www.thespiritof76.com/wacokillers.html.
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