Freedom's Fidelity

Tuesday, September 14, 2004

One of my former college professors, Rod Lemon, had an extended letter to the editor/short op-ed piece published in last week's Chicago Tribune. It's not long so I will reproduce almost all of it here.

Management consultants typically judge the job performance of a chief executive officer based on how well the CEO's company performs relative to other companies in similar market situations. Yet in this presidential election, political analysts evaluate President Bush's economic performance based simply upon whether U.S. manufacturing employment or the unemployment rate is greater today than at some prior date.

Bush is criticized because there are fewer manufacturing jobs today than 4 years ago. No mention is made that the U.S. economy was seven months into a recession when he entered office in 2000 or that Europe and Japan were in recession long before then and have remained in recession, with low economic growth and high unemployment rates.

Economies typically suffer deeper recessions after long spurts of growth such as experienced during the Reagan or Clinton years. Yet under Bush the 2000-2001 recession was quite mild. Further, the U.S. economy's gross output has increased significantly since 2002. Our recession was short-lived; this is in sharp contrast with Japan, Germany and to a lesser extent France.

Over the last 4 years, the total civilian labor force employed in the U.S. has increased by 3,185,000, while total German employment fell by 735,000 until recently. In Japan, there are 1,280,000 fewer jobs today than 4 years ago. It appears that Bush's stimulus packages of tax cuts did generate jobs and help the economy.

Structural changes -- low-cost transportation, low-cost communication, low trade barriers, high mobility of capital--have improved consumer welfare (more goods available at lower prices) while placing new demands on the blue- and white-collar labor force and all corporations. Both workers and corporations must adjust or be left behind. The need to be competitive also places limits on governments, because high taxes and costly social programs place a drag on the private sector and lessen its ability to succeed in a global economy.

The fact that workers and industries have had to adjust over the last 4 years is not the fault of the Bush administration; rather it is a reality that affects all industrial countries. When you evaluate President Bush with the German or Japanese prime ministers, the comparison becomes more valid. This latter comparison, while more complex than presented here, highlights that Bush may be one of the more successful current leaders of an industrial economy.

I've never been one to give a president much credit/blame for an economy as they simply do not have nearly the influence that the electorate gives them (politicians) credit for, especially in the short term. They can certainly not hurt it by staying out of its way though. That said, I do think that President Bush's tax cuts helped to soften the blow of the recession, especially given the shocks of corporate scandal, 9/11 attacks, and two wars. (When was the last time a recession saw plasma TVs flying off the shelves while unemployment averaged around 6% or less throughout?)

The American economy, because of low taxation and its highly competitive environment, proves itself to be much more flexible and dynamic than our European counterpart, who have also burdened themselves with large welfare states. While other countries struggle to emerge from the recession and double digit unemployment, the U.S. is now on track for growth and wealth creation. President Bush deserves at least as much credit for softening the blow of the downturn as Clinton does for standing aside and smiling as the technology boom roared past.

posted by Paul  permalink | |