Telling the Story of America's Economic Success

Today, twenty years after it became obvious that Ronald Reagan’s economic policy of hard money and low tax rates had succeeded and had dispelled the economic malaise of the 1970s, Democrats still turn their faces away from reality. They still talk about the Eighties as a lost decade of deficits and greed.

That is why conservatives and Republicans must hammer away at the truth, that 1980 represents a watershed for America. The Wall Street Journal edit page folks understand this, and so they put up a column every so often to ram home the point. This month they have Pete du Pont telling the story.

In the 1980 election the American people chose a new course. For the first time in half a century we retreated from the expanding-government philosophy established by Franklin D. Roosevelt and pretty much adhered to by every subsequent president through Jimmy Carter. Ronald Reagan's emphasis on individual opportunity--as opposed to the liberals' on government-created opportunity--was to have a substantial and positive impact on the prosperity of the American people.

Ever since, Democrats have resisted—to the last welfare recipient—the notion that Reaganomics is the basis of our current prosperity. Bill Clinton ran for president on the notion that 1992 was the worst economy in the last 50 years. Not exactly.

As Robert Samuelson recently noted in The Wall Street Journal, in the 13 years before 1981 there were four recessions lasting a total of 48 months. In the next 23 years--nearly twice as long--there were just two recessions, lasting 16 months.

Yes, Democrats. The 1990-91 recession was a mild one, caused partly by the Saving and Loan debacle (a New Deal era subsidy program going belly up), and deepened by the Democrat-inspired 1990 tax increase. (There’s political talent. A tax increase in a recession!)

Until the Democrats finally give up, conservatives and Republicans must keep hammering the lesson home. The economy can’t be sacrificed to interest group politics, subsidies, privileges, pensions, entitlements, and targeted tax cuts. It needs sound money, low tax rates, and solid property rights.

Chances are that we are still a couple of presidential elections away from the moment when Democrats “give up.”

Senator Clinton Worries Vouchers Could Lead to Jihad Academies

If you were national Democratic politician and a bribed apologist for the teachers’ unions, what would be an easy way to take a cheap shot at school choice in the post 9/11 world?

Well, of course, you’d raise fears that if parents had the right to send their children to the school of their choice, pretty soon people would be spending taxpayers’ money on Jihad Academies.

That’s the argument that Senator Hillary Clinton was making in the Bronx the other day, according to Glenn Thrush, as she spoke to the South Bronx Overall Economic Development Corp.

"First family that comes and says 'I want to send my daughter to St. Peter's Roman Catholic School' and you say 'Great, wonderful school, here's your voucher,'" Clinton said. "Next parent that comes and says, 'I want to send my child to the school of the Church of the White Supremacist ...' The parent says, 'The way that I read Genesis, Cain was marked, therefore I believe in white supremacy. ... You gave it to a Catholic parent, you gave it to a Jewish parent, under the Constitution, you can't discriminate against me.'"


As an adoring, if somewhat puzzled, audience of Bronx activists looked on, Clinton added, "So what if the next parent comes and says, 'I want to send my child to the School of the Jihad? ... I won't stand for it."

I see. So, on the off chance that some whacko jihadist parent might turn up and create division and discord we have to keep the rest of American kids imprisoned in the schools coincidentally run by the political supporters of Hillary Clinton.

The truth is it is one-size-fits-all government school systems that create division and discord and not the other way around.

The elitist “common school” movement in the 19th century that created our current school system was deliberately trying to purge the schools of their Puritan culture, and pretty soon they were using their power to try to cure the Irish Catholics of their Catholicism. By the end of the 19th century the schools were ramming a bland Christianity down the throats of Eastern European Jews.

It didn’t work. The Catholics got their revenge by creating their own system of schools. The Jews got their revenge by purging the schools of all religion.

Now, of course, you can’t talk about religion at all in the government schools. Except the religion of positive self-esteem. That just happens to be the religion of Hillary Clinton and the teachers union activists.

We school-choice proponents are in this for the long haul, Senator Clinton. We think that ordinary Americans should have the same right that you enjoyed when you sent your daughter to Sidwell Friends School in Washington DC. We believe that all Americans should have the right to educate their children at the school of their choice.

And for politicians like you, who stand in the school house door like the segregationists of 50 years ago, we have nothing but contempt.

Islamists Don't Do Patents

It’s all very well to worry about the Islamists taking over the world, and resetting the culture with sharia law and various 8th century concepts thoughtfully set forth by the Prophet in the Qu’ran through direct divine revelation.

But just think about the Islamic world and intellectual property, you know, inventions and stuff, as Thomas Lifson does.

Actually, the Islamic world hasn’t been doing much of anything in the intellectual property line.

Saudi Arabia, which only established a patent office in 1990, has not granted a patent in six years. Iran in 2001 granted only one patent. Egypt, home to a quarter of the world’s Arabs, is only now getting around to mandating the task of undertaking a substantive investigation of patent claims before granting patents...


The US granted 157,000 patents last year, and has a cumulative total of seven million.

You can set up a scenario in which the Islamist culture takes over the world by getting lucky with its raiding strategy. But you cannot imagine it thriving if it keeps its present culture.

Right now, the Islamists are busily taking over southern Sudan and southern Nigeria. Does anyone think that, after the takeover, these two areas will zoom up to the top in the world league tables of peace and prosperity?

Even if, say, Europe becomes Islamified, the process would look rather like the Mongol invasion of China. Within a generation after the invasion, China’s new Mongol invaders were getting seriously sinicized. And if the eager-beaver Muslim rulers of a future “Eurabia” wanted to enjoy the perquisites of power for any extended period—and by and large politicians and their hangers on definitely do—they would europeanize themselves, and fast.

McCain Flip-flops on Taxes. So Far So Good

Good. John McCain has voted to extend the president’s key investment tax cuts, the 15 percent rate on dividends and long-term capital gains. So he’s started a veer back towards the Republican base, back from the comical position he took in 2000 when he was campaigning for the Republican presidential nomination by running against the Republican base.

Will it be enough? Has he really converted and seen the light on supply-side economics? Donald Lambro assembles the quotes of Republican activists who aren’t too impressed.

"It's a big flip-flop, but I'm happy he's flopped," said Grover Norquist, president of Americans for Tax Reform.

"It looks like a further morphing of McCain into George W. Bush. He's mailing to his list of campaign contributors, and now he's supporting the tax cuts," said economist Larry Hunter, a longtime Republican tax-cut strategist.

The trouble with Senator John McCain is not just his opposition to rax cuts, or his tone-deaf run for the presidency in 2000. The trouble is everything else as well.

Let us forgive his for his role in the Keating Five scandal. Bill Muller’s report in the Arizona Republic suggests that McCain was pulled into intervening with federal regulators to help S&L crook Charles Keating against his will, and when he had only been a United States Senator for three months.

The problem with McCain seems to be a much bigger question about his judgment. How could a Republican push through the monstrous McCain-Finegold campaign finance bill, an incumbent protection act that clearly narrows the public space afforded by the First Amendment? What kind of a First Amendment is left when you have to check with your lawyer before posting on the Internet?

How could McCain spend most of the Bush administration clearly working to embarrass the president?

And, returning to the 2000 election, how can McCain not understand about the fundamental cleavage in the electorate between the Republicans, the party of religion, marriage, work, and babies, and the Democrats, the party of secularism, sex, creativity, and fetuses?

That is what is worrying about McCain—a vast echoing tone-deafness that calls into question his fundamental judgement.

That is why, for this Republican, Rudy Giuliani, for all his New York social liberalism, rings true while John McCain rings false.

Babies, Houses, and Babies

On Saturday I went to a fringe theater on the last day of the run of DOB, a play by John Kaufmann about birthing. Yes, he went down to California just as his sister was having a baby, and the whole thing turned into a play.

Most of the play takes place in the hospital operating room during his sister’s labor.

The play was a delight, and a real shock.

Here were your young starving actors and your avant-garde types dressed in artistical black and they were putting on a light-hearted, nicely crafted play about having babies. Whatever will they come up with next?

This matter of babies is important, particularly as the voters of the United States are dividing up between the party of babies and the party of, er, fetuses.

In Britain, columnist Minette Marrin is also thinking about babies, or rather the British baby problem.

[T]here is a shortage of babies in respectable, middle-class, middle-income families. The rich and the poor are having plenty of babies. In upper-middle-class circles it is now a status symbol to have four or more children. Among the poor it is perfectly possible to have babies with or without a man or a job; the state will pay. Although it won’t pay much, it will offer as good a life as any other that seems available.


The women who are not having children are what would have been called in the 19th century the deserving mothers; they are hard working, competent and responsible but have come to recognise that they cannot, as feminism once promised, have it all. They either need to work or want to work, or both, but for those on middling incomes it is not possible to have lots of babies as well. It is too expensive and too risky — expensive in childcare and risky in job prospects.

And what with modern divorce, a woman can’t get too far away from the job market. The problem is that houses are so expensive in Britain that it is hard for a middle-class family to afford both a house and a baby.

In the United States, an interesting trend is developing. Although divorce is dropping a little, it is much lower than normal among college-educated women. Their divorce rate is 25 percent. That makes it much easier to afford children. There’s nothing like divorce to take that last child out of a woman’s life.

Is there something happening here, fellow trend-spotters? Should we be advising up-and-coming young men that babies is the coming thing?

By the way, a word to Minette Marrin. The best thing for you Brits to do about the baby problem is to forget “what everyone knows:” that there is no space left in Britain to build houses. Anyone who has sat in a Boeing 747 early in the morning looking blearily down at England’s green and pleasant land as the airplane circled in a holding pattern waiting to land at Heathrow will know that Britain has plenty of open space for houses.

Those new houses would get the price down, and then those middle-class women could fill the houses with babies. Beautiful bouncing babies.

Supply Side Economics Drives Brazilians into Formal Sector

A big problem in emerging economies is the informal employment sector, the people camping out in the city working as peddlers and running illegal roadside stalls that don’t pay taxes. In Brazil, according to William W. Lewis in The Power of Productivity, the huge informal sector has severely damaged the economy.

To understand how bad things have been in Brazil, get this. Taxes have been so high on the formal sector that large, efficient supermarkets couldn’t compete on price with informal food vendors and corner stores.

In the 1990s formal employment actually declined by almost 15 percent.

But there is good news, according to the Wall Street Journal’s Mary Anastasia O’Grady. In recent years the Brazilian government has

significantly reduced federal payroll taxes and the overall tax burden for small and medium sized companies and simplified the tax system.

The result? Formal employment in Brazil is up 28 percent in the last seven years, and up 13 percent in the last two years alone.

This is supply-side economics at work and it is huge. It is pure economic hygiene, cleaning up the business environment and tax system so that ordinary people can come into the formal system and thrive.

The costs of doing business in the informal sector are pretty significant. You don’t have access to credit, you don’t have the protection of the legal system, and you are probably paying protection money to criminal gangs and bribes to government officials to look the other way.

So you have to screw up pretty bad to get yourself an informal sector like Brazil’s that amounts to about 50 percent of the labor force.

But when the economy is set up so that the costs of doing business in the formal sector are less than the benefits of doing so, then everyone wins.

And that is what is happening in Brazil.

Is This Iraq's Tipping Point?

Let us assume, for a moment, that the bombing of the Shiite shrine in Samarra was the work of terrorist leader Zarqawi. Let us assume that the purpose of the attack was to ignite a general civil/religious war between Sunni and Shiite.

That is the US line, as reported by The Washington Post.

The U.S. ambassador to Iraq, Zalmay Khalizad, speaking at a news conference held on the telephone because of the driving ban, said it was "a moment of danger, but it is also a moment of opportunity" in Iraq. "In crises such as the one caused by this attack, there is an opportunity to bring people together and defeat goals of those who want to promote civil war in this country."

We are at a crucial tipping point. For the question is, does the government recently elected have the “soft” power, and do the security forces trained up by the United States have the “hard” power to hold the nascent Iraqi polity, the fragile modern government of laws, together. Or will they fail and surrender Iraq from civilized government (using the word in its strict sense of citified)
to the pre-civilized rule of local warlords and their militias.

You can complain all you like about the mistakes of the Bush administration, but that is the bottom line. The Bush policy has always been to erect in Iraq some sort of political structure based on the rule of law, which we know is the way, the good way, the only way yet known to mankind, that people get to live and prosper in the city.

Naturally, into the power vacuum created by the deposition of Saddam Hussein stepped the forces of pre-civilized culture, the culture we experienced in Europe as feudalism, the bygone era in which the barons of the land were more powerful than the merchant princes of the city.

So our policy was to build up a new political and power structure that would have a chance of introducing civilized governance into Iraq.

As some point the forces of pre-civilized power would make their supreme effort to defeat the forces of civilized power.

We will doubtless find out, in the next few days, whether the new power structure will hold. Let us pray, for the sake of the Iraqi people, that it does.