Davos speech made American leadership look Soviet by comparison
In late January, when Russian Prime Minister Vladimir Putin spoke during the opening proceedings at the World Economic Forum in Davos, Switzerland, he passed on an opportunity to really take it to the United States for its role in the creation of the global economic crisis, pulling punches where he could have easily landed a few knockout blows. That’s not to say, of course, that he did not touch upon what has happened here, and how the previous administration simply put on a happy face.
“In the last few months, virtually every speech on this subject started with criticism of the United States. But I will do nothing of the kind,” Putin said. “I just want to remind you that, just a year ago, American delegates speaking from this rostrum emphasized the US economy’s fundamental stability and its cloudless prospects. Today, investment banks, the pride of Wall Street, have virtually ceased to exist. In just 12 months, they have posted losses exceeding the profits they made in the last 25 years. This example alone reflects the real situation better than any criticism.”
Now that we’ve had the past three weeks to put Putin’s comments into context, it wasn’t the stark assessment of the problem that was most startling, as it doesn’t take a genius to understand just how much trouble we’re in. Instead, what surprised me most were the things Putin stated his nation would not do to confront the troublesome economy, the specific measures that the prime minister ruled out as either knee-jerk, unwise, or both. Here are a few excerpts from his speech:
Esteemed colleagues, one is sorely tempted to make simple and popular decisions in times of crisis. However, we could face far greater complications if we merely treat the symptoms of the disease.
Naturally, all national governments and business leaders must take resolute actions. Nevertheless, it is important to avoid making decisions, even in such force majeure circumstances, that we will regret in the future.
I think it’s fair to say that the disease here in America, at least when the economy is concerned, is that we’ve lost all touch with reality with regard to any sort of fiscal restraint and responsibility. It’s a disease, too, that has ravaged us on each and every level, from the single mother on a tight budget who decides that an extra three hundred dollars would be better spent on a Coach handbag than placed out of sight and mind in that online savings account, to the small business owner who gets just a little more truck than he really needs to even though he hasn’t been in on a good project in weeks, to the pinstriped executives around the boardroom table who rationalize the purchase of a $50 million corporate jet, to the spendthrift congressmen and senators who see no problem whatsoever voting “yea” on a 1,073-page, $787 billion spending bill without even reading it first.
We are borrowing money that we cannot pay back, printing money out of thin air, all to fund pet projects by self-serving, big-government politicians bitter about playing second-fiddle for the past 14 years. Forget the inevitable inflationary ramifications, they say. The U.S. Dollar is going to be just fine. To hell with the consequences.
Putin, in his Davos speech, warned against exactly what was just done by our congressional Democrats. On one hand, the Russian prime minister says that “it is important to avoid making decisions, even in such force majeure circumstances, that we will regret in the future.” On the other hand, however, American White House Chief of Staff Rahm Emanuel took a page out of Saul Alinsky’s Rules for Radicals and said that we should “never allow a crisis to go to waste.”
Putin, as a Russian, knows a little about how this sort of thing turns out. That being said, on our side of the famed “Red Phone,” what else could we expect from a Democratic Party with a national political platform which could have been written by Karl Marx and Friedrich Engels?
We must not revert to isolationism and unrestrained economic egotism. The leaders of the world’s largest economies agreed during the November 2008 G20 summit not to create barriers hindering global trade and capital flows. Russia shares these principles.
Although additional protectionism will prove inevitable during the crisis, all of us must display a sense of proportion.
Nothing says “economic egotism” or “protectionism” quite as well as the so-called “Buy American” provision inserted by Democrats, behind closed doors, into the bloated American Recovery and Reinvestment Manifesto.
It’s a feel-good provision, a clause meant to evoke images of flag-filled parades and the lunch-pail crowd at the local widget factory, sweating and gritting their way through long shifts on the assembly line. And don’t get me wrong — buying American products is a good thing. In college, I worked the third shift at a Briggs & Stratton plant, setting the governor on lawnmower engines at the heart of the assembly line. I think we all should purchase American-made products wherever and whenever possible, but by no means should the American federal government force us to do so.
What message does such a clause send to those around the world who engage in trade with the United States, who rely on our exports as we rely upon theirs? Putin overtly stated that Russia would honor agreements to avoid the creation of “barriers hindering global trade and capital flows” — on our side of the pond, it looks as though the Democrats have been hard at work erecting one.
Excessive intervention in economic activity and blind faith in the state’s omnipotence is another possible mistake.
True, the state’s increased role in times of crisis is a natural reaction to market setbacks. Instead of streamlining market mechanisms, some are tempted to expand state economic intervention to the greatest possible extent.
Throughout the 1990s, the American federal government forced lending institutions to relax lending standards out of the perception that homeownership was a fundamental right. Understand that? The government forced banks to issue loans to people who had no prayer of paying that money back. Furthermore, just three days ago, President Barack Obama unveiled a plan which would commit up to another $275 billion in taxpayer money in an attempt to solve, with augmented government control and intervention, a crisis caused by augmented government control and intervention.
Now that’s “excessive intervention in economic activity” that we can believe in!
In October, under former President George W. Bush, the American federal government handed financial institutions a blank check for $350 billion. No oversight. No perceptible direction. Now, even though we still cannot completely determine where or how exactly that taxpayer money was spent–though we do know that some was spent on executive retreats, and some on naming rights to baseball stadiums–and even though we have yet to see any perceptible results, we’re preparing to hand over the second $350 billion installment. This time, it comes with strings, conditions such as caps on executive compensation sure to guarantee that the best talent is anywhere but in control of the institutions which need it most.
Now, in implementing the so-called “stimulus” plan signed into law last week by the American president, the federal government is looking to expand its scope and peddle its influence in the several states. Meanwhile, any courageous chief executives at the state level hesitant or unwilling to accept the classic carrot-and-stick approach to expanded federal-level economic intervention are being labeled as racists, ideologues, or simply self-serving political types who let principles and common sense get in the way of hope and change and economic justice.
Vladimir Putin looks at “the state’s increased role in times of crisis,” at “excessive intervention in economic activity,” and at “blind faith in the state’s omnipotence” as easily-made mistakes. Yet nobody on this side of the Atlantic seems to be listening.
On February 9, at his very first press conference as president of the United States, Barack Obama himself stated that “the federal government is the only entity left with the resources to jolt our economy back into life,” that “only government . . . can break the vicious cycle where lost jobs lead to people spending less money which leads to even more layoffs.” Even in his inaugural address, delivered more than a week before Putin’s speech at Davos, Obama said much of the same: “[O]nly government can provide the short-term boost necessary to lift us from a recession this deep and severe,” he said. “Only government can break the vicious cycles that are crippling our economy.”
Open up your eyes, America. Wake up and smell the socialism. Look to Russia’s past, look to the fruits of and warnings from Putin’s first-hand perspective, and see our future.
Nor should we turn a blind eye to the fact that the spirit of free enterprise, including the principle of personal responsibility of businesspeople, investors and shareholders for their decisions, is being eroded in the last few months. There is no reason to believe that we can achieve better results by shifting responsibility onto the state.
[A]nti-crisis measures should not escalate into financial populism and a refusal to implement responsible macroeconomic policies. The unjustified swelling of the budgetary deficit and the accumulation of public debts are just as destructive as adventurous stock-jobbing.
Throughout the months leading up to the 2008 presidential election and indeed over the preceding eight years, Barack Obama and the Democrats have decried the “reckless” spending presided over by former President George W. Bush and the Republicans. Indeed, they were right — saying that Bush and his GOP lost touch with the tenets of fiscal conservatism would be understatement of the year.
However, despite such public outcry by the Democrats, they have taken a $1.3 trillion budget deficit and added more than a trillion dollars in pork-barrel, non-stimulative spending out of the idea that we can somehow spend ourselves out of an economic crisis fueled by bad debt and fiscal irresponsibility. Even worse, they’ve admitted that all of this has been just “a good start.”
It’s not just the federal government, either. From state governments all the way down to town councils and indeed to individual American families paying utility bills at their kitchen table, everybody needs to redefine our priorities and take responsibility for our own financial well-being. Everybody. As much as I like to point fingers at Barney Frank and Christopher Dodd and others in Congress, there was no single, solitary cause to this economic downturn — and, consequently, there will be no single, simple solution.
The concentration of surplus assets in the hands of the state is a negative aspect of anti-crisis measures in virtually every nation.
In the 20th century, the Soviet Union made the state’s role absolute. In the long run, this made the Soviet economy totally uncompetitive. This lesson cost us dearly. I am sure nobody wants to see it repeated.
Without true capitalism, without a truly free market, there is no incentive for success. Our healthcare system, for example, is the envy of the world because there is profitability in new, previously unthinkable technologies and life-saving pharmaceuticals. Ingenuity leads to prosperity. Hard work leads to success. By God, we put a man on the moon because we were in a race. Without that incentive, without the natural motivation brought about by the free market, there is no ingenuity, there is no success.
More and more with each passing day, however, I’m not so sure that Putin got it right when he stated that “nobody wants to see” the mistakes of the former Soviet Union repeated. Sure, it must have seemed to him to be common sense — the Russians made mistakes, the Russians learned from them, and surely others must have done the same or at least be willing to do so. The problem with regard to the United States, however, is that the Democratic Party does ideology, not common sense.
If the Democrats in Washington “did” common sense, after all, they would have learned from the mistakes of the late 1930s in America and the 1990s in Japan and realized that the Keynesian theory of economics simply does not work, that it falls victim to the same sort of problem that former British Prime Minister Margaret Thatcher found with socialism as a whole — eventually, she said, you just run out of other people’s money.
What Putin failed to take into account is that American Democrats simply have no patience for common sense, for lessons learned, or even for specific warnings. Democrats want “economic justice,” even if it comes at the expense of prosperity, and because of that they glorify and reward those who open their palm for a handout while simultaneously vilifying and punishing those who roll up their sleeves and work.
For the past few months here at America’s Right, I’ve been wondering out loud when and how this bailout mentality would come to fruition. I’ve all but grown numb to government malfeasance, to corruption, to the emerging pattern of self-loathing and self-destruction coming out of our nation’s capital. Still, for all of the thought and the careful consideration I’ve put in, I was nonetheless completely taken aback by Putin’s comments to the World Economic Forum. After all, who would have thought, given all of these years and all we’ve done and all we’ve sacrificed in America, that in January 2009 the Russian prime minister would be the capitalist pig, while the American president seemed well en route to becoming a socialist thug?