I Want a President Who 'Gets' the Economy

Oh well, another day, another dollar, as the Obama economy continues to disappoint with a 0.2 percent growth rate for GDP in the first quarter for 2015.

I'm sure that President Obama and his administration are just as frustrated as you and me. But the truth is that liberals like Barack Obama just don't “get” the modern exchange economy. You could see this in their response to the Crash of 2008. Step One: Press the Keynesian “stimulus” button. Step Two: Back to the important stuff: health care, blaming Bush and greedy bankers, and green energy.

It's understandable. Politicians deal in power; so time spent in tending to the economy, to them, is time taken from the all-important power project. But politicians that think this way are deluded, because the power of the modern national politician is grounded in the health of the national economy. If a politician want to strut upon the world stage, first of all he needs a world-class national economy.

According to Michael Mann in The Sources of Social Power the national economy became really important around the time of Britain's Henry VIII. The problem was the expense of the standing army that a king needed to fend off rival powers. A monarch could no longer pay for his army out of his royal estates; he needed more money, lots more money.

Fortunately help was at hand. The big-time merchants, beginning to spread their wings in international trade, wanted the protection that a strong state could provide for their ships and cargoes. They agreed to be taxed to support the standing-army state and they also showed the monarch how their credit could finance his all-important foreign wars.

I just finished season one of The Tudors, and the non-stop sex doesn't leave much time for the Tudor economy. Perhaps it's all covered in Wolf Hall. But I doubt it.

Ever since the 16th century, politics and economics have been joined at the hip. If a king or president got the economy right he could go for world domination. If he got it wrong, then his dynasty or his party would get flushed down the toilet.

The British and the French staged a test of this in the Second Hundred Years War of the 18th century. The Brits founded their credit system on the Bank of England, run by London merchants, and won a world empire while cranking their national debt from nothing to 250% of GDP in 1815. The French went through multiple bankruptcies, culminating in the Revolution of 1789 and the epic defeat of 1815.

Since the battle of Waterloo, France has never been the same.

What was the British secret? They got the economy right, and never wrecked it to fund their imperial expansion.

But our time is different, because today war doesn't solve anything, and we spend money on useful social programs at home, right? Wrong!

We moderns are in a more difficult situation because, since World War II, we use taxes not to reduce the national debt but to fund social programs in general and middle-class entitlements in particular.

This was okay, they said, because Keynesian economics provided the tools politicians needed to “fine-tune” the economy and also pay for the social programs and entitlements. Politicians could forget about the economy and concentrate on ginning up new social programs.

Only the economic experts were just telling the politicians what they wanted to hear: tax, spend, and borrow, especially during recessions. It messed up the economy in the 1970s, and again in the 2010s.

This isn't rocket science. Every politician should know in his heart that every spending program and every subsidy and every regulation damages the economy. Any politician that doesn't “get” that is deluding himself.

Any politician that doesn't “get” the economy is setting up his party for a trip to the political wilderness. Because when the economy doesn't work, the voters get to thinking that it's time for a change.

But we read, from John C. Goodman, that the Democrats are unconcerned about the economy and reform. He reckons that the Dems are committed to the following agenda for 2016:

  • Support for maintaining all major entitlement programs and resistance to any major reform.
  • Support for maintaining high taxes on high-income Americans.
  • Keeping the current financial reform regulations.
  • More action on global warming.

For Democrats, and Democratic voters, the economy can look after itself.

Meanwhile, the focus groups are telling the politicians that they should pivot to the economy. That's what catchphrases like “growing the economy from the middle out” are all about.

But I don't want politicians fobbing me off with yet another catchphrase. I want a president who really “gets” the importance of the economy.

Christopher Chantrill @chrischantrill runs the go-to site on US government finances, usgovernmentspending.com. Also see his American Manifesto and get his Road to the Middle Class.