At the GOP convention last night, California Gov. Arnold Schwarzenegger engaged in the silly, but destructive nationalism that is standard at such events:
The U.S. economy remains the envy of the world. We have the highest economic growth of any of the world’s major industrialized nations. Don’t you remember the pessimism of 20 years ago when the critics said Japan and Germany were overtaking the U.S.? Ridiculous! Now they say India and China are overtaking us. Don’t you believe it! We may hit a few bumps—but America always moves ahead! That’s what Americans do!
Schwarzenegger’s message is that Japan and Germany couldn’t “overtake” (whatever that would mean) America because the Japanese and Germans can’t measure up to the American people. And the same is true, he suggests, for the Indians and Chinese.
Nationalist interpretations of economic affairs are not only ugly; they also damage the cause of classical liberalism and the free society. The reason the Japanese and Germans have not done as well as the Americans has nothing to do with blood and soil. It’s that Japan and Germany are mired in welfare-state mixed economies to a far greater extent than the United States has been. With real laissez-faire capitalism, there is no reason why Japan and Germany couldn’t be economic dynamos—and even “overtake” America if we remain on our current statist path with its accompanying cultural decline. The same is true for India and Japan. The controlling factors are freedom—property rights—and a culture of self-responsibility, not nationality.
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Today on NPR’s Morning Edition they played clips from the Schwarzenegger speech. Silly and destructive, as you say. Highlights include “termininating the terrorists” and dismissing as “girlie men” those who question Bush economic plans.
Bill Bonner writes a lot in his daily column about what he calls “American Exceptionalism”, the idea that we are the exception to any kind of principles that govern the rest of humanity. We live the way we do, at the standard of living that we have, because of who we are and it will always be thus. Other people who spend beyond their means will go broke, other countries that print money will have inflation, other countries that tax too highly will drive productive activity away, but not us: we are the exception to the principles of cause and effect.
I can agree that parts of his speech (Link)was kind of silly particularly when he brushed off critics of Bush and Greenspan with “Don´t be economic girlie men”. But he did actually associate America´s economic success with its relatively high degree of economic freedom by mentioning “belief in free enterprise” in the same sentence as “faith in the U.S. economy”.
The correct link to the transcript of his speech.
So monetary inflation is “faith in enterprise”? Where’s the faith in free enterprise in medicine? Where’s the faith in free enterprise in the management of Iraq?
Just to clarify Robert Blumen’s comment, Bill Bonner’s idea (www.dailyreckoning.com) about American Exceptionalism is that it’s America’s national hubris. Bill DOESN’T believe Americans are the exception to the rule; instead Bill has been writing about how foolish such ideas are…how they lead to ruin…
Here’s what Bill wrote, exactly:
“We are traveling around the U.S. trying to gauge the temper of the place. What we find is a decent people caught up in an indecent conceit – an unshakeable belief in American Exceptionalism. Things that would be wrong – or imbecilic – in any other race are regarded as perfectly normal when applied to Americans. A pre-emptive attack, for example. Were any other people to try it, it would be unforgivable. But in America, it is public policy. If foreigners tried to get rich by buying each others’ houses, it would be regarded as a silly fantasy. But Americans see no reason why they can’t do it. Nor do they find anything unbecoming about living beyond their means, year after year, and counting on savers in poor countries to make up the difference. Yet, they’d think it was preposterous for anyone else to try it…’Things are getting better all the time, and if they’re not, we’ll fix it,’ wrote Michael A. Ledeen, a leading proponent of American Exceptionalism. Somehow, investors expect someone to ‘fix it’ so that stocks never go down and debt never needs to be repaid. Dream on.”
- Bill Bonner, “National Debt Stupidity Jackpot,” August 9, 2004
From what I gather from my Japanese friends, and my Canadian friends living in Japan, that country surpassed the US (economically speaking) long ago. Every citizen has $100,000 in the bank and there are 11 jobs for every 10 workers. Take that, Schwarzenegger.
One of the fundamental problems with a claim like Arnie’s is that it fails to explain what “surpass” means. If he’s referring to total GDP, that isn’t too mysterious. Japan has only approximately half the population of the US and Germany has approximately one-third, so even if their per capita GDP was 50% higher than the US’s, they would still have smaller overall economies. On the other hand if he means standard of living, India has approximately three times the population of the US and China has approximately four times the population, so they can both someday (say 20 to 50 years) have substantially larger economies than the US, even while the majority of their populations have incomes/standards of living that would be considered well below the poverty line in the industrialized nations.
Hmmmm. Before the recall election, Schwarzenegger expressed an alleged admiration for Adam Smith.
I recently heard that Chevron lobbyists had played a major role in drafting his energy policies.
Apparently, he wasn’t just pandering: he really IS a fan of Adam Smith. He read Smith’s famous warning that members of the same trade never meet without conspiring to rob the public, and took it to heart!
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