Cowboy Capitalism: Is the U.S. economy doing too well?

by J. Christoph Amberger

Just about 15 years ago, the last Republican era petered out with almost the same lack of fanfare as the current Bush administration. On top of the general ennui with 16 years of successive Republican administrations, the Democratic challengers of George H. W. Bush were able to leverage the macro-cyclical downturn in the economy with the slogan "It's the economy, stupid."

Sure, we're still a good year away from the hot phase of the 2008 campaign. But what's been noticeable so far by its glaring absence in the preening and posing of the presidential contenders of the Class of ‘08 is any mention of the economy… apart, of course, from the perennial clattering of the liberal prayer mills, with "taxing the rich" as the recurrent theme.

In fact, the only guy who initially warmed up the slightly used class struggle theme of "Two Americas" was the multimillionaire ambulance chaser with the $400 haircuts who lives in a 28,000 sq. ft. mansion valued at over $6 million -- the largest in Orange County, North Carolina, where over 11% of the population lived below the federal poverty level in 2003 and per capita income is estimated at under $25,000.

I interpret the embarrassed silence that followed as an indication of just how far removed this particular presidential hopeful is from reality.

The avoidance of the economy as a campaign issue is quite unsurprising for the Dem squad. Seen the stock market recently, with both the Dow and the S&P 500 at new records?

But the Republican candidates have been keeping mum on it as well. Striving to establish wholesome personas that combine the well-worn coziness of Mr. Rogers’ favorite cardigan with the backwoods religious posing of snake handlers, they've been flip-flopping on state vs. individual rights issues, well, like Democrats.

And in their effort to distance themselves from the president and Iraq, they eagerly avoid to mention that the Bush supply-side policy of taxing capital less than under the Clinton administration unlocked new investment and unleashed record liquidity just in the nick of time, before recession could deepen into depression. Even despite the money-tightening actions by the Federal Reserve.

In the past years, this supply-side boom has weathered a stock market crash, 9/11, a six-year war, a hurricane knocking out a major U.S. city and commercial center, as well as a historic rise in energy and resource prices -- all that without causing the runaway inflation we remember from the last round of record oil prices.

And despite the current downturn, let's not forget the record runs in the real estate market, which constitutes a large share of U.S. household net worth. In fact, liquidity fueled property appreciation proceeded at such rapid speed, it might take years of stagnation to make a dent in home prices.

That same liquidity has funded new businesses and job creation. Real wages from job creation have climbed at twice the speed during this business cycle than in the first 66 months of the previous one. Unemployment is at historic lows. As a direct result, U.S. household net worth is at an all-time high. Homeownership has increased to levels unknown in any other industrialized country.

The American model of "cowboy capitalism," with its low tax rates, deregulation, contained inflation and free trade, is at the core of the Chinese economic miracle. It has created unprecedented wealth even in the dour and run-down communist backwaters like Russia, Poland and the Czech Republic. Even Germany's straightjacketed economy appears to be on the mend as the government of Angela Merkel is draining the cesspool of decades of welfare-state socialism.

But if you've been trying to hire a U.S. college graduate recently, you wonder how young adults with such ambitious ideas regarding their worth in the marketplace have such limited grasp of how that marketplace works -- which, of course, makes them prime and predictable agents of change in the electoral process.

It may be one of life's little ironies: In France, the infectious stagnation and sloth inherent in socialism has finally triggered a probably short-lived flirt with at least the thought of a true market-based economy. The French electorate told the socialist candidate: "It's the economy, stupid"… although maybe not in so many words.

In the U.S., the historic level of prosperity and economic stability created by the Bush administration's cowboy capitalist economic and tax policy has had the opposite effect: The U.S. electorate currently appears to be so bored with the economic Chardonnay it seems downright giddy to have discovered a case of the clap in the attic among the Carter-era political knickknacks.