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 Location : Ether-Sphere
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 |  Subject: Free People, Free Markets: The lessons from 125 years show how to revive American prosperity  Sun Jul 13, 2014 2:00 am | |
| Surveying a century and a quarter of journalism is a bracing exercise—at intervals depressing and inspiring. Depressing because bad ideas never die. But inspiring because a free society can rescue itself from periods of decline and despond not unlike the current moment. This is one lesson of 125 years of Journal editorials that promote free people and free markets.
It won't surprise our long-time readers that the debates over principle have changed little over the decades even as events have. We opposed high tariffs when they were the patent medicine of the Republican Party in the 1920s as much as when they are now the resort of labor Democrats. We endorsed cuts in marginal tax rates when Andrew Mellon and Calvin Coolidge proposed them in the 1920s, when Walter Heller and JFK did the same in the 1960s, and when Jack Kemp and Ronald Reagan did it again in the 1980s. Each tax cut was followed by renewed growth.
There have been mistakes along the way, notably the endorsement of Hoover, whose austerity program turned recession into Depression. We would also not repeat the too-easy counsel of retreat from Vietnam we offered in 1968. The lesson we draw from that conflict and those in Iraq and Afghanistan is not to start wars you don't intend to fight vigorously enough to win.
Another lesson is how the political pendulum swings between freedom and equality, those competing poles of Western political thought. These columns emphasize liberty, but on occasion those who prize equality can provide a necessary corrective. The best example is the civil-rights movement, which used federal power to break the government-enforced tyranny of Jim Crow.
Yet those who promote freedom typically do better by equality than the progressives who elevate equality do by freedom. The progressive project invariably descends into subsidy and mandate to coerce men and women who resist the commands of those in power. See ObamaCare.
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And what of the current moment? Seen through 125 years of setbacks but generally forward progress, it looks all too familiar. The bubble and bust of the last decade gave progressives a renewed chance to govern, this time with a rare supermajority. President Obama and Nancy Pelosi turned to the old nostrums that government spending can conjure growth, that regulation can productively steer investment, and that equality should be the main goal of economic policy.
The results have been predictable: An historically slow recovery now going on five years, declines in real household income except for the rich, the slowest pace of startups in decades, and a barnacled leviathan state that botches a website in the era of Amazon and lies about its waiting lists for veterans.
Perhaps worst of all has been the impact of these failures on American comity and confidence. Gridlock is built into the American Constitution, but the current rancor and paralysis reflect a deeper anxiety about U.S. governance. The public has begun to believe that the country's best days are past and the future belongs to others—perhaps China.
This pessimism contributes to a zero-sum politics that on the right becomes a hostility to immigrants, and on the left a disparaging of the successful. Both impulses lead to policies—income redistribution, rejection of human talent—that compound economic decline. And decline in turn leads to an inward-looking mood that pretends that if America ignores the world's disorders they will somehow leave America alone.
One particular challenge today that wasn't evident a half century ago is the entitlement burden—fiscal in its demand for ever-higher taxes, but also psychological in sapping the incentive to work and succeed. The Reagan restoration saved us from Europe's welfare fate for a time but Mr. Obama's progressive reversal has revived the danger of an entitlement state that is too big to afford but also too big to reform.
Yet for all our current ill temper, the lesson of 125 years is that the national direction can turn, and quickly. Experts said the aftermath of World Wars I and II would be depression, but government shrank and America boomed. In the 1970s the successive failures of Vietnam, Watergate, the energy crisis and inflation led many American elites to wonder if democracy was capable of defeating Communism. A decade later, amid the Reagan boom that added a Germany to U.S. GDP, those anxieties had washed away and the Soviet empire had disintegrated.
The answer to our current slow growth and self-doubt isn't a set of magical "new ideas" or some unknown orator from the provinces. The answer is to rediscover the eternal truths that have helped America escape malaise and turmoil in the past.
These lessons include that markets—the mind of free millions—allocate scarce resources more efficiently and fairly than do committees in Congress; that the collusion of government with either big business or big labor stifles competition and leads to political cynicism; that government will be respected more when it does a few things well rather than too many poorly; and that innovation and human progress spring not from bureaucratic elites but from the genius of individuals.
Above all, the lesson of 125 years is that whatever our periodic blunders Americans have always used the blessings of liberty to restore prosperity and national confidence. A free people have their fate in their own hands.
http://online.wsj.com/articles/the-wall-street-journal-125-years-of-free-people-free-markets-1404770480 |
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