The Most Economically Illiterate Paragraph You’ll Read Today
It comes courtesy of His Gaseousness Victor Davis Hanson:
As we see in New Jersey, Ohio, Texas, and Wisconsin, the cure for the present economic malaise is not rocket science — a curbing of the size of government, a revision of the tax code, a modest rollback of regulation, reform of public employment, and holding the line on new taxes. Do that and public confidence returns, businesses start hiring, and finances settle down. Do the opposite — as we see in Mediterranean Europe, California, or Illinois over the last decade — and chaos ensues.
It’s hard to know where to begin pulling the treads of this dollar-store fabric. So let’s start at the surface. Hanson is monomaniacally focused on deficits. In his mind, if they are reduced — preferably at the expense of constituencies of the Democratic party — economies will grow. The example of Spain (a Mediterranean European country, according to my atlas) proves this is not necessarily the case. The country was running budget surpluses before the Eurozone’s financial crisis began. Spain is not suffering because of big-government profligacy, but rather because it is party to an ill-conceived transnational currency.
Returning stateside, the picture is similarly muddled. Hanson, the classicist military historian, clearly enjoys the image projected by governors like Wisconsin’s Scott Walker, Ohio’s John Kasich, and New Jersey’s Chris Christie. According to this image, these governors are guys’ guys who are not afraid to kick some ass. They’re the poli-sci version of his “savior generals.”
Getting state budget finances under control is a fine and good thing. But it’s not clear that these policies translate cleanly into prosperity. Texas has experienced more robust growth than the rest of the country for a variety of reasons including high oil prices and cheap imported labor. Ohio has been buoyed by growth in manufacturing that’s tied in part to the revival of America’s domestic auto industry — surely not the narrative that Hanson would care to embrace.
I’m not even sure what Hanson is taking about regarding New Jersey. The state still sports a 9.2 percent unemployment, fifth-highest in the country, and it’s still looking at a budget shortfall of somewhere between $705 million and $1.4 billion.
Why pick on Hanson? My sense is, a lot of conservative voters are under the same false impression that he is. He believes that bringing the public sector to heel will restore the confidence of investors and consumers, and thus spark broader economic growth. I wish it were that simple.