Saturday, January 1, 2011

David Stockman Rails at GOP Incompetence

Last month I gave a talk at the Kingston-Rhinebeck Tea Party.  I pointed out that the GOP's commitment to the Fed has permitted the flourishing of a wide range of special interest groups. In turn, the Fed engenders income inequality, American economic decline, especially in manufacturing, and Wall Street's expansion.  Howard S. Katz has been making these points since the 1970s and earlier, and they key off the Austrians  Ludwig von Mises and Murray N. Rothbard.  Ron Paul and his son Rand make similar points as well, and they should be viewed as the leaders of the political movement that aims to undo the massive damage that the the parties of the elephant and the donkey have caused (the Democrats are worse than the GOP).

Marketwatch's Paul B. Farrell reports that the cornerstone of the legacy media, the New York Times,  has published David Stockman's article making these points with the clarity and specificity of an insider with important historical knowledge.  Stockman was President Reagan's budget director who lost a battle against Reagan' supply siders.  Stockman argues that the GOP destroyed the American economy in four steps:

1. Richard Nixon's dropping of the gold standard at the behest of Milton Friedman and his defaulting on the American obligation to redeem dollars for gold internationally

2. President Reagan's neo-Keynesian doctrine of supply-side economics

3. The expansion of Wall Street and the recent expansion of the money supply

4. The financing of American credit through foreign debt, resulting in increasing income inequality and the exit of factory jobs.

I have made all these points since 2004.  Stockman is specific as to much of the historical detail.  The Marketwatch article is well worth reading.  Stockman notes:

"the top 1% of Americans -- paid mainly from the Wall Street casino -- received two-thirds of the gain in national income, while the bottom 90% -- mainly dependent on Main Street's shrinking economy -- got only 12%. This growing wealth gap is not the market's fault. It's the decaying fruit of bad economic policy."

That the GOP continues to support the stupid policies of the Rockefeller-Bush Republicans contributes as much to American decline as do Obama's policies.  While the Democratic Party is lost, the GOP should serve as the rational alternative. Instead, it has followed the ideology of the Democrats into big government extremism and economic decline.  When questioned about the Patriot Act, many Republicans simply spin and lay the blame on President Clinton.  The large circulation legacy media contribute to the absence of mass level debate.  Stockman's recent article conveniently appears in the Times a year after the massive bailouts and money printing escapades (chiefly under the Democrats, incidentally) that may have put the nation's collapse into third gear.

Those Democrats who wish to make partisan hay out of Stockman's Op Ed might consider that the only people making these arguments for the past 40 years have been Republicans.  Which does not mitigate the ill effects of Milton Friedman and his colleagues in academia along with the Rockefeller-Bush Republicans.

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