 Reagan's
Real Revolution, Part One
Bill Bonner
The
Daily Reckoning
March 14, 2005
The Daily Reckoning PRESENTS:
On the
outside, the U.S economy looks just fine and dandy, thanks to
the "world improvers"... but if you dig a little deeper and
open your eyes a little wider, you'll see something quite different.
Read on . . .
(Much of the
following is adapted from our largely unwritten, and completely
unpublished new book... watch for it.)
A long line
of long time Daily Reckoning sufferers is forming. All seem to
want to say, "I told you so." Many are hoping for an
apology. Some expect a confession. A few would prefer a hanging.
They will say
we've been wrong about a great many things. Five years after
the initial shock, the U.S. economy is still intact. Indeed,
it seems to be doing just fine. During those five years, more
than once we thought we saw it falling apart. Every day, we thought
it should. Many readers must think we were wrong and should say
so. "There is nothing wrong with the U.S. economy,"
they say now. Alan Greenspan pledged to "mitigate the fallout
when it occurs and hopefully ease the transition to the next
expansion," even before anything fell out. His mitigation
was so catastrophically swift, hardly anything had time to fall
before he had picked it up and boosted it higher than ever before.
And if anything ever does fall out, he or his successors will
mitigate even more.
What's to worry?
They will say
we were wrong about foreign policy, too. The papers are full
of backslapping today. Earlier in the week, President Bush spoke
to the National Defense University. He told the audience that
the constitution in Iraq, "must take place without external
influence." Sounds strange, coming from a man with 100,000
troops in the country. Then, in a line that sounded like it was
taken from a popular world improver of the previous generation,
he added: "No matter how long it takes, no matter how difficult
the take, we will fight the enemy and lift the shadow of fear
and lead free nations to victory." All over the world, people
are wondering if George W. Bush was right, after all. Are not
"reform" and democracy on the verge of breaking out
- all over the Middle East? Wasn't it worth killing people, after
all, for the benefits these "reforms" promise? Is not
George W. Bush the heir of Ronald W. Reagan, after all?
The world can
be improved; we don't deny it. But the only improvements that
really make the place better are those that remove the eyesores
and prevarications of previous improvers.
Ronald Reagan's
genius was that he was able to see that high taxes and regulation
did not make the world a better place, but a worse one. Milton
Friedman's three-part formula for better government - cut taxes.
Cut taxes. Cut taxes - seemed like a decent solution.
Reagan had
the right instinct. "Get big guv'mint off our backs,"
was almost his campaign theme song. And when he had the chance,
he often did the right thing. Faced with a strike by air-traffic
controllers - the only union to back his campaign - he fired
10,000 of them. That is, when he saw some improvement created
by his predecessors, his instinct was to generally to get rid
of it.
The trouble
was that once in Washington, the actor still remembered his lines,
but he lost the plot. Almost before he could get his cowboy boots
off, he was making improvements of his own.
This was especially
notable in what is known as "foreign policy." As mentioned
earlier, Republicans had learned their lesson from the Vietnam
War. They were generally content to mind their own business overseas,
seeking only to "contain" communism - which they saw
as a menace. But Reagan fell under the spell of the proto-neoconservatives
in Washington. Not content to leave things alone, he decided
he could improve the world by actively trying to defeat communism.
Of course,
this is celebrated as a great and good victory. In her comments
on Reagan's death, Britain's Maggie Thatcher said he would be
mourned by "millions of men and women who live in freedom
today because of the policies he pursued."
Maybe this
is true. Maybe it is not. It is impossible to know what might
have happened had Reagan left things alone. Most likely, communism
would have fallen apart anyway, perhaps sooner.
When a man's
investments go up, he is a genius. Those who failed to invest
are fools. And when they go down it is because of events he could
not possibly have foreseen. Likewise, in public spectacles, the
link between action and consequence is forged in a way that always
flatters the activists. If something turns out reasonably well,
it is because some world-improver took action and made it that
way. If something turns out badly, it is become someone failed
to act when he should have. It is always the activists that get
the monuments. Abraham Lincoln is credited with having abolished
slavery - at a cost of 618,000 American lives, 2% of the entire
population. (An equivalent death toll would wipe out 5 million
Americans). Everywhere else in the world, slavery was abolished
- at about the same time - with hardly a single corpse. The Great
Emancipator might better be cursed than praised.
Likewise, Woodrow
Wilson is given credit for all manner of extravagant improvements.
That he almost single-handedly brought about WWII, with his appalling
meddling in WWI, is never mentioned. Instead, when the subject
of WWII comes up, Neville Chamberlain's name arises almost immediately.
The poor man gets the blame for trying to avoid war - that is,
for not taking action when he should have.
We don't know
whether people are freer because of Mr. Reagan or not. We don't
know whether Mr. Bush's meddling will pay off or not, either.
What bothers us is the immodesty of it all.
Reagan "also
helped engineer a huge surge in American patriotism," writes
Ross MacKenzie. "The Carter years were a period of American
self-doubt: about the economy and about American power (with
the memory of Vietnam still tormenting most policymakers). Mr.
Reagan set about wiping this away. He increased military spending
by a quarter between 1981 and 1985. He talked to the American
people not about 'malaise,' (as Mr. Carter had done) but about
'morning in America.' By the end of his second presidency, much
of the talk about American decline had gone out of fashion: the
country regarded itself once again not only as the world's greatest
superpower, but also as the world's most dynamic economy."
Now, we look
around and we see no trace of self-doubt. Instead, we have become
the most confident bunch of blockheads on the globe. That alone
would be no disgrace, but it comes with the most immodest plans
for world improvement ... and the biggest rush of liquidity the water planet
has ever seen.
Regards,
Bill Bonner
 The Daily Reckoning
Editor's Note:
Bill Bonner is the founder and editor of The Daily Reckoning.
He is also the author, with Addison Wiggin, of The Wall Street
Journal best seller Financial
Reckoning Day: Surviving the Soft Depression of the 21st Century (John Wiley &
Sons).
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