On the Right - Bush's economic policy; paradoxical current events; campaign fund ethics - Column

Is Bush's Economic Policy Enough?

NEW YORK, OCTOBER 8

The 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."

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.

While You Were Out

NEW YORK, OCTOBER 11

A single day's news sometimes looks like the distillate of an irony factory. It's there to remind us of contradictory human behavior on almost every scale, reaching back into history, and projecting paradoxes for tomorrow.

On the broad scale, we get Argentina. It has defaulted on $140 billion in bonds outstanding to the private sector, and faces now its debt to the International Monetary Fund. The news is that that's being worked out, a rescheduling of a debt that reflects the profligacy of Argentine policies dating back to the reign of Juan Peron. It seems nowadays incredible that only 50 years ago, Argentina's level of income exceeded that of France.

Sharing the news is Brazil's impending election of a far-out leftist as president. Brazil's socialists have working for them the starkness of the contrast between those who prosper, and those who suffer a dire poverty. But Brazilians are being ushered into one more chapter in attempts at political alchemy, the substitution of political for economic means of achieving economic progress. Yes, and the same day gives us Venezuela, with 1 million protesters against the socialist and autocratic rule of Hugo Chavez. Populist revolts against left-minded government rule are unusual, because the structure of the Left's policies is designed to appeal to the appetites of the many, leaving us with another political cauldron in Latin America.