Reagan is Dead - Long Live Reagan

The Hacks on both sides of the political fence are saying one thing and one thing only about Barack Obama’s bid of the Presidency. He’s left wing.

Not only that, but he’s the most left-wing candidate for the Democrats since Carter, if not beyond.

While I don’t doubt his social liberalism, and many of us have read his notions of increased protectionism, something doesn’t quite fit right about this.

Richard Nixon’s daughter, one of Ronald Reagan’s speechwriters, Professor David Friedman, son of the late, great Milton Friedman and countless others who are of the Ronald Reagan free-market small-‘l’ libertarian-tribe are either backing Senator Obama, or working for him behind the scenes. I’ve heard many reports, outwardly played-down by the Obama machine for now, of the people who really have Barack’s ear right now.

These people were the men and women who were junior interns, working for the people who directly worked for Ronald Reagan back in the 80s. Now, many being middle-aged themselves, they seemed to have found a candidate that will bring their values and views back from the margins. They now have the ear of a new Ronald Reagan – Barack Obama.

But what of his protectionist policies?

Well let’s take this in generalised chunks. First of all, When Ronnie Reagan was campaigning, or trying to make any statement about social policy, he was always clear to give a brief nod and a wink (especially during election times) to the social conservatives. Did he really feel strongly about a lot of the things they did? No, not really. But what was the harm? He kept them onside, and was able to carry on a path of both economic freedom, and social freedom. A path of success for America.

Barack Obama has the opposite problem. His base are more than happy for him to talk about social freedom. Barack also is at home linking this to social mobility.

But his supporters are economically less inclined to hear about liberalisation. Like Reagan’s social conservatives, who wouldn’t be happy hearing Ronnie wax lyrical about abortion rights, equal rights for people regardless of sexuality, etc., the left-wing of the Democrats wouldn’t be so happy to hear their golden boy talking about why supply-side economics is the answer to so many of our problems.

But the people who will be shaping his decisions on matters of the economy DO understand the type of supply-side economy that works – they helped implement one very successfully in the 80s. Obama appears open-minded enough that he will see their vision through. I do feel – hell, I hope – that Obama will eventually feel completely the same way as they do. So many of his positive beliefs about the US seem like he would adopt the policies required for an economic boom.

And it’s not just because the likes of Colin Powell are hinting at their support of Obama, it’s all the people I named above, and more.

Reaganomic acolyte, the Republican Senator from Nebraska Chuck Hagel, is tipped as a possible Vice-Presidential candidate on Barack Obama’s ticket. Remember where you hear that first. That would be a true masterstroke. The pair of them could be in office for 4 terms. Hillary Clinton’s hopes of a shoe-in in 4 or 8 years time could be dead in the water if that happens.

Classical Liberal Professor David Friedman, son of the greatest (in my opinion) economist the world has ever season – the economic libertarian guru of Thatcher, Milton Friedman, points to Obama’s choices of advisers for further evidence of Obama’s libertarian economic direction. You don’t hire advisers like Jason Furman and Austan Goolsbee if you’re going to be increasingly protectionist.

Friedman suspects that Obama is sympathetic to school vouchers for example. A key demand for supporters of a free market in education, although the Illinois senator kept quiet about them while wooing Democratic activists in the primaries. He also points to how uncomfortable Obama is at compelling people to buy health insurance. The free market of choice, it seems, is better in Obama’s eyes.

Even high-ranking members of the Washington libertarian free-market think-tank, the Cato Institute are leaning more in favour of Obama. Brink Lindsey of the institute for example, is becoming increasingly more vocal in his support.

And finally, if nothing else, let’s think about this: Obama’s general main promise is to take on the fat, turgid, slow, incompetent, ineffective, public-sector-style Washington D.C., and replace it with a lean-mean, fast, competent, effective, competition-based, private-sector-style of D.C.

How can anyone with that attitude to public-sector reform REALLY believe the opposite when it comes to the economy?

I suspect – I hope – that the answer is simple. Obama will be the next Ronald Reagan. A social and economic liberator that will put us all back on Ronnie’s road to freedom and prosperity.

Come on Senator Obama. A nation, a world and a freedom-loving people expect.

So This is How Liberty Dies?

The Hacks are concentrating on Gordon Brown’s narrow victory, and how that’s kind of bad for him, popularity-wise. That’s only half the story.

As I type this, just over an hour has passed since we heard the news. Labours proposal to increase the time the government can arrest and detain someone without trial rise from a terrifyingly long 28 days, to an horrifically long 42 days.

The victory was as narrow as it could be. It appears Gordy had to bribe the DUP with something. All their 9 members, who usually have the courage to vote ‘no’ on most of these issues, voted ‘yes’ this time around. The government has won the vote with a majority of 9. The DUP have spent an awful lot of time with the PM in the run-up to the vote as well. I wonder what deal was made?

David Davis has made the big point that the Hacks are pushing slightly to one side. They are concerned that this is another nail in Gordon Brown’s coffin. I agree, but Davis’ point is much more vital. Those who were apposed to the extension of 42 days won the argument. Those who wanted to push this legislation through paid out for the victory. That’s not how democracy is supposed to work.

The relief and applause of the Labour Party faithful frankly made me ill. The colour drained out of my face, and I got a little case of the shakes. They’ve won an insignificant victory that will do little to help their waning popularity, and the rest of us have lost yet more rights.

So this is how liberty dies? In a round of applause?

I usually place little respect to the institution of the House of Lords. One of these days, I’ll get around to proposing a democratic model that works much better (!) but today, I just hope the revising chamber do us all a favour and vote this bill down. Our very freedom depends upon it.

We all want to see terrorists get locked up. But everybody deserves fair due process, a notion that has been at the cornerstone of British state-responsibility since 1225. If suspected terrorists don’t receive that level of due process, then neither will we.

We have a phrase for describing countries that lock-up suspects without even telling them what it’s about for 6 weeks. And it’s not “classical liberal democracy”.

If this continues, the Islamofascist world will start to win this war.

Time to be Brave

Since we last spoke about him, Gordon Brown’s “unelected-mandate” government has gone from bad to worse. And finally, the public are more susceptible to the truth. The Hacks are slowly printing and broadcasting this truth, too.

The truth I speak of, is the truth of just how imprudent and incompetent Gordy actually is.

This blog has long since covered Gordon’s many stupid mistakes (remember his fiasco over selling off a ton of our gold? He announced to the world that he was going to do it – so guess what happened to the value of gold?).

David Cameron’s Conservatives have been totally right to criticise the government on this issue. While the government is right that the global economic conditions are something that to a certain extent can’t be helped by an individual countries government, it does prove that “boom and bust” exists and is inevitable in any economy. Labour have long since said that going back to the Tories and their policies of “boom”, will only lead to “bust” eventually. We can now say (as many of us always have) that boom & bust occur regardless.

The only difference with the Tories boom, is that it ends up generating a slightly larger bust. But the boom should (and always does) totally offset the bust. Imagine Black Wednesday happening now. We don’t have the resources to cope. But back when it did happen, we had the ‘fat years’ to get us through it.

Again, where DC and Co. are also correct, is that most other Western democracies around the world are asking a very different question than our government. They are asking “Gee, times are tight, luckily we’ve saved all this money for a rainy day. Now how do we spend it so that our people are hurt by the crunch as little as possible?” The Tories are right to point out that our government can’t ask this question, because Gordon Brown as squandered all the other money we made during that time. The British cupboard is bare.

But this doesn’t go far enough.

The Tories now, more than ever, need to sell their plan of helping us cope. Things could be much worse in 2010 when they may take office, and they need to reassure the public that they have a sound policy that will not only help us survive the storm, but will provide prosperity when the times are good again.

All of the plans for welfare, etc. that have been described in general terms need now to be (slightly) more concrete polices. These are policies that will improve public services and the general welfare of the British people, while saving us a great deal of dosh. Government will need to tighten its belt, and these Tory plans can both do that and improve things too. They need to be ‘sold’ to the public in a spirit of liberty and optimism. I still think David Cameron can pull off a ‘Barack Obama’ in this way.

The other side of things have to come in the form of tax breaks. For too long, the Hacks and government have let the economic truth of the supply-side system be presented as a lie. It’s time for that to change.

Think of it this way. There are two countries, A & B, who both generate the same level of tax, by having the same tax-rates. Business A lives in country A and makes widgets. Business B lives in country B and also makes identical widgets. They are both taxed on profits of $100k at 40%, making their governments $40k each year. Going along at that level for 3 years, the government would make $120k to invest in public services, and save for a rainy day.

Now imagine country A elects a government with a mandate for the economic liberalism that the Tories could introduce. Suddenly, the corporation rate is slashed to 25%. That year, Business A is able to keep more of the money it makes, investing in the business and in its people. The staff earn more (so ultimately pay more in taxes, even though their rates are lower too), and the business is able to employ more people (taking people off welfare which saves the government money) and buy more raw materials.

With the economies of scale therefore, the widgets it makes are sold for less. Because everyone else in country A is experiencing this same economic boom, they buy more of Business A’s widgets.

At the end of year one, Business A makes $150k. At year two, $200k, by year three, it posts a pre-tax profit of $270k. At the rate of 25%, the government makes a total of $248k. Remember if it had not slashed the tax rate, and stuck with the ‘stable’ 40% rate, it would have only made $120k off that business.

Now imagine country B elects a government with a mandate for the economic socialism that is being described by some of the left-leaning Hacks and the Labour government as the ‘only way’ to escape our current threat of recession.

Suddenly, the corporation rate is raised to 60%. That year, Business B has to give the government more money in taxes, leaving less to reinvest in the business and in its people. The staff earn less (so ultimately pay less in taxes, even though their rates are higher too), and the business has to let some people go (putting more people on welfare) and they can only afford to buy less raw materials.

With the economies of scale therefore, the widgets it makes are sold for more money per widget. Because everyone else in country B is experiencing this same economic recession, they buy less of Business B’s widgets.

At the end of year one, Business B makes $75k. At year two, $65k, by year three, it posts a pre-tax profit of $45k. At the rate of 60%, the government makes a total of $111k. If it had not slashed the tax rate, and stuck with the ‘stable’ 40% rate, it would have made $120 off that business.

That is the supply-side economic model, in basic generalised terms. It’s bold. It’s scary. It works.

Come on Tories. Show us your strength. It’s time to be brave.