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

Chapter 32
Clintonomics: The Prospect

Not the least irritating aspect of the ascension of Bill Clinton to the presidency is that his name ends in "n." As a result, "omics" fits neatly to the end of his name, and we are bound to be stuck with the appellation "Clintonomics" from now until the end of his term. In contrast, "Bushonomics" or "Perotnomics" wouldn't quite make it. 

The late nihilist economist Ludwig M. Lachmann liked to keep repeating that "the future is unknowable" as the key to his world-outlook. Not true. For we know with certainty that President Clinton will not, in his first set of proposals to Congress, introduce legislation to repeal the income tax or abolish the Federal Reserve. Other aspects of the Clinton presidency we do not know with quite the same degree of certainty; but we can offer credible insights into the outlines of Clintonian Democracy, based on his proposals, his advisers, and the concerns and interests they carry into office.

We know for example that a new set of hungry young Democratic sharks has descended upon Washington, scrambling and knifing each other for position, perks and influence, displacing the set of once-hungry, once-young Republican sharks that have been fattening upon the taxpayers since 1980. Those who can count themselves FOB (Friends of Bill) or, better yet, EFOB (Early Friends of Bill) can be expected to do well. Those who were friends, classmates, and fellow Rhodes Scholars at Oxford, such as left-liberal Harvard economist Robert Reich, will do very well. On the other hand, those of us who were EOB (Enemies of Bill) will not be living high off the hog in Washington.

In general, we must batten down the hatches for another one of those periodic Great Leaps Forward into statism that have afflicted us since the New Deal (actually, since the Progressive Era). The cycle works as follows: Democrats engineer a leap forward of activist government, accompanied by "progressive," "moving America forward again" rhetoric. Then, after a decade or so, the Republicans come in armed with conservative, free-market rhetoric, but in reality only slow down the rate of statist advance. After another decade or so, people become tired of the rhetoric (though not the reality) of the free market, and the time has come for another Leap Forward. The names of the players change, but the reality and the phoniness of the game remains the same, and no one seems to wake up to the shell game that is going on.

The Reagan and Bush administrations, like the Eisenhower, Nixon, and Ford administrations before them, were run by right-wing Keynesians, which is why the same people seem to pop up in all of them (Burns, Volcker, Greenspan). Right-wing Keynesians advocate high deficits, high taxes, and manipulation of the budget and of monetary policy to try to achieve full employment without inflation. The result has been permanent inflation plus periodically steep recessions.

Left-wing Keynesians, the hallmark of Democrat administrations, hold a similar macro view, except that they favor bigger inflations and higher taxes than their more conservative counterparts. The major difference comes in "micro-economic policy," where conservative Keynesians tend to favor the free market, at least in rhetoric, whereas left-Keynesians are more frankly in favor of "industrial policy, . . . . economic strategy," and an activist "partnership of government and business."

The Clinton Administration will bring the younger "activist" left-Keynesians to the fore, including the aforesaid Reich, Robert Shapiro of Washington's Progressive Policy Institute, and what might be called the "Wall Street Left," including the venerable Felix Rohatyn of Lazard Freres, Robert Rubin of Goldman, Sachs, and Roger Altman of the Blackstone Group.

We can therefore expect a raft of government measures that will further cripple and distort the market economy. From left-wing groups will come "social" affirmative action-type and environmental regulations that will impose further costs and wreck productivity, particularly of smaller business. Reich and the Wall Street Left will micro-manage the economy into further ailments and disease, while, in the macro-sphere, we can expect higher taxes on the rich in order to "reduce the deficit" while, at the same time, higher government spending will raise the deficit further.

We will receive endless assurances that the increased deficits will "only be temporary," to be eventually offset by increased production and a growing economy. There will be endless malarkey about monetary and fiscal stimulus by Clinton helping us to "grow out of our deficit." (Wanna bet?) There will be further attempts to redefine our deficit out of existence, calling government spending "investment," and insisting that we allocate most government expenses into a "capital budget" that will increase growth and productivity in the long run. All of this craftily overlooks the fact that while business investment must make a future profit, government "investment" need only receive hosannas from its paid and unpaid apologists in order to be pronounced "successful." 

There will also be a further malodorous attempt to excuse increased bureaucratic jobs and salaries, as well as more billions poured into "education," on the grounds of productive investment in "human capital" (the unfortunate concept of Nobel Laureate Gary Becker). Once again, the strictures against calling government spending "investment" apply, plus the fact that outside of the economy of slavery, it is impossible to sell your "human capital," so that it cannot be used as an economic concept with a monetary value.

Finally, we will probably see another leap forward into fully socialized medicine; already a host of people, including someone who was the head of "Republicans for Clinton," are insisting that "universal medical care is a right, not a privilege." These are ominous words indeed, because the last place that insisted on the "right" of free universal medical care was the Soviet Union, which wound up with medical care establishments without medicine and without care.

The United States, heedless of the lesson of the collapse of Communism, is falling headlong into its own pit of socialism, except we won't be calling it "socialism", but rather a "caring, compassionate society enjoying the partnership of government and business."

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