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Advancing Austrian Economics, Liberty, and Peace

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Making Economic Sense
by Murray Rothbard
(Contents by Publication Date)


Chapter 29
Bush And Dukakis: Ideologically Inseparable

George Wallace's famous adage that "there ain't a dime's worth of difference between the two parties" was never more true than in election year 1988.

This maxim is particularly true if we concentrate, as we should, on the actual and proposed policies of the candidates rather than the rhetoric or their media imagery. Both Bush and Dukakis are centrists ("mainstreamers") devoted to the preservation and furtherance of the establishment status quo. Set aside the cut- and-thrust of negative campaigning, and both men meet on that broad, fuzzy, and cozy ground where "moderate conservative" meets "moderate liberal."

Lew Rockwell has demonstrated in The Free Market that Bush's and Dukakis's leading economic advisors are old buddies, and students of one another, who agree on virtually everything. (How different, indeed, can a "moderate conservative Keynesian" be from a "moderate liberal Keynesian"?) Neither candidate will do a single thing to cut government spending; neither one will cut the enormous deficit that both parties and all centrists have now come to accept as a fundamental part of the American way of life.

Both candidates will, if elected, sharply increase our taxes. Both will search for creative semantics in deciding how to label a tax hike. Dukakis has promised a drastic escalation of enforcement as the first step in a tax program, and Bush will not be far behind (What is this but a tax increase?), although Bush, following the lead of the Reagan Administration, may be expected to be more innovative in fancy linguistic substitutes. (The last eight years have already brought us: "increasing fees, . . . . revenue enhancement, . . . . plugging the loopholes," and "tax reform" in the name of "fairness.")

Both Bush and Dukakis, as dedicated Keynesians, propose to solve the deficit problem by the fatuous suggestion that the economy will "grow out of it." "Growth," indeed, will be a keyword for both prospective presidents, and "growth," it should never be forgotten, is simply a code term for "inflation."

As Keynesians, both candidates may be expected to expand the money supply mightily, and then strive, by fine-tuning and coercive policies, to try to control the resulting price inflation through manipulations by the Federal Reserve. Indeed, the Greenspan Fed has emulated its predecessors in monetary expansion; this year, the money supply (e.g. governmental counterfeiting) has been increasing at a rapid rate of 7 % per year. Greenspan's inflationism, coupled with cautious dampening when things threaten to get out of hand, has delighted the Democrats in Congress, who report that they, and a Democratic president, would be delighted to work with a Greenspan Fed. (And, I am sure, vice versa.)

Either Bush or Dukakis can be relied upon to continue the expansion of government power and domination over the individual and the private sector. Thus, when "wild spender" Jimmy Carter became president, he found a federal government that was spending 28% of the private national product. After four years of Carter's wild spending, federal government spending was about the same: 28.3% of private product. Eight years of Ronald Reagan's "anti-government" and "get government off our back" policy has resulted in the federal government spending 29.9% of private product. We can certainly expect Bush and Dukakis to do no less.

Neither is "deregulation" an issue when we realize that the major deregulatory reforms of the last ten years (CAB, ICC) were installed by the Carter administration, and when we understand that the Reagan administration has greatly added to the weight of regulation--particularly when we focus on the savage attack that it has conducted on the non-crime of "insider trading."

Neither can we conjure up "protectionist" Democrats versus "free-trade" Republicans; the Reagan Administration has been the most protectionist in American history, imposing "voluntary" as well as outright compulsory import quotas, and organizing a giant govern-ment-business computer chip cartel to battle the efficient Japanese.

The farm program has become truly monstrous, as government intervention doubles and redoubles upon itself; whatever happens, whatever the climatic conditions--whether the crops are good and therefore there is a "glut" or whether there is a drought--ever more billions of taxpayer money are ladled out to the farmers so that they may produce less for the consumer.

Bush will certainly do no less; and, furthermore, he promises to intensify federal government spending on "education" (i.e. the swollen and inefficient Department of Education that he and Reagan promised to abolish), and on "cleaning up the environment," which means further cost-raising regulations on American business.

In short, we are seeing, more than ever before, a bipartisan Keynesian consensus, an economic policy to match bipartisan policies in all other spheres of politics. But the single most dangerous aspect of the economics of the next four years has gone unnoticed.

Since he replaced Donald Regan as Secretary of the Treasury, James R. Baker (a close friend of Bush and slated to be Secretary of State in a Republican administration) has been unfortunately effective in pushing the Keynesian agenda on the international economic front: that is, worldwide fiat money inflation coordinated by the world's central banks, ending in the old Keynesian goal; a world paper currency unit (whether named the "bancor" [Keynes], the "unita" [Harry Dexter White], or the "phoenix" [the Economist]) printed by a World Central Bank.

The World Central Bank would then be able to inflate the phoenix, and pump in reserves to all countries, so that the national central banks could pyramid their liabilities on top of the World Bank. In that way, the entire world could experience an inflation controlled and coordinated by the World Central Bank, so that no one country would suffer from its inflationary policies by losing gold (as under a gold standard), losing dollars (as under Bretton Woods), or suffering from a drop in its exchange rate (as under Friedmanite monetarism). There would be no remaining checks on any country's inflation except the wisdom and the will of the World Central Bank.

What this amounts to, of course, is economic world government, which, because of the necessity of coordination, would bring a virtual political world government in its wake. Because of his powerful international financial connections, Baker has been able to move rapidly toward this coordination, to bring European and even Japanese central bankers into line, and to help bring, a new European currency unit and central bank, which would be an important prelude to a world paper currency. 

Whoever Dukakis would appoint to his Cabinet would not have the powerful financial connections, or the track record of the last four years, and so the only real difference I can see in a Dukakis victory is that it would significantly slow down, and perhaps totally derail, the menacing drive toward Keynesian economic world government.

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