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October
8, 2002 2:55
p.m. |
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he
complaints we hear that the president hasn't given attention to domestic
economic problems recall the wisdom of our ancestors. It is that most
economic problems are best met by — doing nothing. Always provided,
of course.
The basic engines
of economic activity have to be in motion. If, for instance, the incentive
to work declines as state welfare rises, the lines will intersect at a point
that leaves the marginal worker undisposed to bestir himself to work. This
complaint is repeatedly made in Germany and Great Britain, where about 10
percent are unemployed year after year. That is a distortion, correctable
only by progressively reducing welfare payments after what, in other contexts,
has been called a decent interval.
Conversely, if the person engaged in work abuts on taxes that eat up a disproportionate
part of his income, the impulse to work hard and more is reduced. Only government
can levy taxes. The obligation of government, then, is negative: Do not
overtax.
If government "does nothing," natural inclinations, as prophesied
by Adam Smith, are unharnessed, productivity increases, and prosperity is
enhanced. But the political adage goes further than that. It tells you to
do nothing but to affect to be doing a great deal. That is necessary because
democratic mechanisms are a part of the modern condition, and it is, so
to speak, un-American for a president to intone from the Oval Office in
a message to America: We must all consecrate ourselves to doing nothing.
When President Bush spoke most roundly about his economic policies, it was
at the economic forum plenary session in Waco back in August. He relied
heavily on the artillery of optimism. He expressed his confidence in America,
in the strides we are making, in the productivity of the worker, the integrity
of the vast majority of chief executive officers, and the inherent vitality
of our system.
At the interventionist level (what can the government do?), he said that
we needed a terrorism "insurance bill" to get American hard hats
back to work. He didn't define the bill. He said that we needed an "energy
policy," but did not give its specifications either. He said that to
repeal the tax cuts of 2001 would be "an unmitigated disaster,"
indeed that those cuts should be made permanent.
On corporate mores, he pledged to prosecute malefactors, he said that employees
should not be bound to invest in the stock of the company that employs them,
and that employees should be permitted to unload their stock even as CEOs
have that right.
We need (he continued) medical-liability reform. Doctors' care depends heavily
on continued consumer sovereignty over their own medical care and on protection
from frivolous lawsuits and excessive judgments. The president feels strongly
about home ownership and wants a "down-payment assistance program out
of Washington, D.C."
There followed a
plea for spending restraint, and a combative line or two about what he
could do to Congress when Congress tries to put something over on him.
Then we had an exhortation to trade, nicely wrapped in tributes to American
productivity: "I'm confident in the American entrepreneurs, I'm confident
in our high-tech industry, I'm confident in our farmers and ranchers.
I'm confident that when we compete we're the best in the world, and therefore
I want to trade." He directed a personal word to Robert Zoellick
who was in the audience. "You're the Trade Representative, you've
now got the tools, go out there and start negotiating free-trade agreements
around the world." Yes, Zoellick, and start in with foreign steel
manufacturers and farmers.
That, two months ago, is the kernel of President Bush's economic policy.
Much of it is indeed laissez faire, but there is a hard sprinkling of
government programs there, to give at least rhetorical help to those Americans
who have lost their jobs, lost their pension funds, and struggle to meet
their mortgage payments. What is being asked now, a month before the political
payday, is: Are those words from Bush in August hard-hitting enough to
persuade the voters that he has a serious concern other than the future
of Saddam Hussein?
That question cannot be answered by economic theorists. And whatever Mr.
Bush's general optimism, there is cause for distress over rising unemployment,
sluggish business profits, and what appears a gestating domestic fear
to spend, prompted by crystallizing convictions that there are rainy days
ahead, and that economic meteorology is outside the powers of government
to control.