Daniel Henninger is editor of the Wall Street Journal's editorial page, and for many years before was an editorial page writer. He recently (11.3.10) wrote a WSJ editorial offering what he views as the most important thing the new congress could do to help the economy move more quickly toward recovery.
Reducing entitlement costs would be nice, he allows, but the congress has no appetite for reducing the level of social programs society actually relies on, nor for meaningfully reforming them. And rather than give even a word to the notion of tax increases, he placed all his emphasis on unwinding some or all of the healthcare and financial reform legislation recently passed. This should be done, we are to understand, in the interest of business--the empty, anachronistic WSJ and Republican threat-argument that only by reducing the regulatory burden on the nation's businesses can they be freed up to be about the nation's business. Mr. Berringer:
It is conventional wisdom that what voters, tea partiers and talkers want the Republican Party to do is cut the spending. Yes, but . . . Republicans—into whose waiting laps control of Congress has fallen—are mistaken if they think the federal budget is what drove this historic upheaval...It's a good idea. But that alone won't revive the economy...
This is a crucial aspect of the tea party complaint, maybe its central insight. What voters are looking for is a party—and the GOP has the chance now to be that party—to reorder its relationship with the country in a way different than the 50-year-old Washington status quo. Not just a reversion to the norm... The simplest way for the Republican Party to free itself and the economy from this unending Beltway hell is by reviving a core belief of one of the country's most successful presidents: If the government will get out of the way, Ronald Reagan argued, there's no limit to what the American people can achieve...
You cannot understand the way any business functions and then pass a 2,000-page law to regulate the health economy and then a 2,000 page law to re-regulate the entire financial economy. You cannot—in one year—load 4,000 pages of limitless uncertainty on the back of the economy and expect it to grow without Washington life support.
Rather than wait for Barack Obama or Ben Bernanke to figure this out, Congress's new Republicans should look to do whatever they can to unlock and liberate the American economy. If this means tossing over some cherished provision in the famously titled "Dodd-Frank bill," such as the Consumer Financial Protection Bureau, so be it. Whatever is causing the uncertainty crisis, get rid of it. One of Ronald Reagan's lasting insights (in truth it began under Jimmy Carter) is that federal regulatory intrusion can kill the economy...
This will be spun as "going back to the dangerous deregulatory era of the Bush years." [And that's what it is. GH] In reply, Mr. McConnell should ask his rookie senator from Wisconsin, Ron Johnson, the Senate's only genuine manufacturer (how far we've come from the first Congress), to give his maiden speech explaining to faraway Washington the real world of the private economy.
I understand the appeal of the simple, old-time laissez faire religion of the WSJ editorial page, largely unchanged since the middle of the 20th century. They are the superannuated views of the wide-open, frontier market of a young, growing America with nothing but open spaces, endless resources, and opportunities for anyone with the health, some ability, and the ambition to claim them. I read and applauded that stuff daily for 25 years.
But it is only a simplistic restatement, an inadequate treatment, of one aspect of the realities and obligations of corporate big business in a 21st century society and market economy. That modern society and market economy is now more clearly, more necessarily, responsible to all people in an environment where the best spaces are now claimed, the resources too, and often poorly managed by poorly regulated, unaccountable business interests. And individual opportunities are now much less for most working and professional people (although there is always opportunity for the very best, brightest and most ambitious). We are now a more mature society--yes, more and more facing the same realities of the mature societies and markets of Europe.
Daniel Henninger is a clear and effective writer. But he is a professional editorial writer--or more accurately, a presenter of a partisan publication's position (and if he were to veer materially from the established dogma of the WSJ, he wouldn't have a job offering up those recycled editorials any more). He has no background or work experience as an economist or manager of a large, sophisticated and socially accountable business in 21st-century American. He is, in effect, a WSJ-co-opted, conservative apologist for early- and mid-20th-century American markets, Wall Street, and a poorly regulated corporate America.
Meanwhile, American society and economics, along with the passage of time, have moved onward to more complex social, cultural and economic realities and responsibilities. The WSJ had nothing new to say about all that in the 25 years I read it, and apparently has not in the ten years since. Of course, they're just serving their market. But that's why I quit reading it, and why it still has too little to offer in understanding today's more complex social and economic realities, and the greater accountability that government and business have to all of society. Trickle-down economics--and that is precisely what is behind this simplistic thinking--still unabashedly argues that if we will just give business carte blanche in the marketplace and not let it's accountability to society and people get in the way, then all will be all right. But it will only be all right for business--not for society as a whole.
Yet, I am a strong open market and business advocate. Always have been. An open marketplace and American business are the engines and authors of America's progress, quality of life, its international commercial and financial leadership. But that is precisely why I am now so concerned about its effective regulation. The unwelcome reality, as we have recently learned, is that it takes only a few "rogue" companies or a single industry to do great harm--if they are in particular industries, are large enough and intertwined enough with the rest of the economy, if they are "to big to fail." We have learned that these large businesses, inadequately regulated, are fully capable of undermining and incapacitating open, competitive markets, the economy and themselves, and in the process, doing great harm to society.
We came much closer to disaster than most anyone wants to think about or openly contemplate. But some of our best economists and social scientists have, and the picture is deeply unsettling at the very least. And so, as intemperate as this may sound, we have been thrust face to face with the real-life fact that, when financial and other businesses, their products, methods and technologies reach the level of power and sophistication that they have--"to big to fail," and incomprehensible to 99% of the people--we live day-to-day at the mercy of those financial and business interests. I have to acknowledge that because I just lived it. And everyone else did too. If there remains a problem today, it is that finance and business regulation does not go far enough; it does not adequately protect us and the marketplace from "too-big-to-fail" businesses.
A few years ago, I would have allowed--but without great concern--that there were areas that still required stronger regulation (or re-regulation) of financial and manufaturing businesses. I had lived that, too. But I would never have antipicated that what happened could or would happen. If at that time I would have read what I now write, I would have likely considered it overstated, even alarmist. But now, sadly and soberly, I feel I know better.
And universal access to healthcare is now as much the hallmark of an advanced, civilized society as education--and for all the right reasons. Not only is it fully justified on humanitarian grounds, it is necessary for greater productivity in business and all aspects of society. The problem with the healthcare legislation is that it did not go far enough. We addressed access--although not fully or effectively--but did not address at all sufficiently the needed efficiency, cost reduction and cost containment in the system.
It will be efficient only when we have a single-payor system, when more basic, more reasonable, cost-justified coverage is established, and when the best and most efficient practices of medical service providers are established and effected. And the examplars are out there. The rest of the advanced, civilized world--both in Europe and Asia--provide that to their people at half the cost per capita of our cobbled-together, dysfunctional, and unaccountable non-market U.S. system. Ironically, the Republicans (and the healthcare business players) did everything possible to assure that the legislation failed to achieve those things--even the things they agreed with--so they would have a result they could more easily attack and destroy later.
And I'm sure you know there are better publications than the WSJ when it comes to fairly, openly representing the interests of all of society, along with the health of the economy and marketplace. But when it comes to the interests of Wall Street and business, then yes, there's lots to read there, often good stuff. So don't get me wrong, their perspective is always worth understanding--but it is half the story and half the nation's interests. And I would argue the other half--society (and the health of its marketplace)--is the half that must first be served by government and big business.
As to the economy, it is on its way back, but it is a very weak recovery with persistent high unemployment--and it is so because Wall Street and financial businesses so arrogantly, unaccountably, and with such a sense of impunity almost single-handedly destroyed the American economy. Only heroic government action and investment kept us from a depression worse than the '30's, and one that would likely have lasted longer. Most all economists--certainly the most responsible and respected ones--agree on that.
It will take time for the economy to slowly strengthen itself and move back to the vibrancy that once characterized it. Although, I don't think the Feds action to buy back all that Treasury paper, to print all that money, will help very much. Interest rates are about as low as they can go. We will just have to slowly, patiently allow society and the economy to heal at this point. But if Henninger's simple prescription may have served us in the middle of the last century--and I doubt that, too--it will do nothing to help us now. To the contrary, it will surely do more harm than good.
At this time, it is the huge, unprecedented budget deficit that threatens our economic recovery. That's what economists actually believe and advocate correcting at this time. And raising taxes--as Stockman, the budget and tax-cut guru, has clearly admonished us--is the only way to get that done. The rest of it is merely self-serving rationalization, populist demogoguery, or superannuated ideological dogma.
