It appears that greater hopes have given way to what we’ve all secretly known was inevitable: Mitt Romney will be the Republican Party’s 2012 presidential nominee. In earlier installments of this series, Silver Monthly has taken a look at the economic platforms of contenders Herman Cain, Ron Paul, Newt Gingrich, and Rick Santorum. Now, with the nomination process essentially over, it’s time to look at what a Mitt Romney presidency might look like from an economic perspective.
Mitt Romney was born into the political class. His father was a liberal Republican and the governor of Michigan. Young Mitt attended an exclusive private school in his middle- and high-school years, carefully insulated from the economic realities faced by working people and members of the productive class. Even as the Vietnam War was raging, Mitt had no fear of being drafted—he avoided that fate by doing Mormon missionary work. This would be considerably more noble had he not protested in favor of sending poor and working-class people his age into the deadly war, against their will.
Romney earned degrees in business and law, and went on to be a star at the management-consulting firm Baine & Company. Ultimately, he became a co-founder of the spun-off Baine Capital, a private equity firm, where he had tremendous success. As head of the new company, Romney oversaw numerous leveraged buyouts (LBOs) that critics claim led to job losses. The reality is that Romney had an eye for finding inefficient businesses that still had value, stripping them down to their valuable parts, and casting the rest aside. In doing so, the net effect Baine Capital had on the nation’s economy was indisputably positive.
The problem, of course, is that Romney was not content to remain in the productive sector. Instead, he had to revisit his roots in the parasitic political class. He ran for the U.S. Senate in Massachusetts, and tried to run to the left of arch-liberal Senator Ted Kennedy on issues like gay rights and abortion. These are two of the issues on which Romney has infamously “flip-flopped.” Later, as governor of the liberal state of Massachusetts, Romney hiked taxes and introduced what critics called “RomneyCare”—a socialist/fascist health-care “reform” package that became the prototype for “ObamaCare,” individual mandate and all. It wasn’t until he was running for the GOP’s 2008 presidential nomination that Romney decided he was a conservative.
Romney is a notorious flip-flopper. He flip-flopped on abortion; he flip-flopped on gay rights; and he flip-flopped (sort of) on socialized medicine. People do change their views over time—what critics find suspicious about Romney is the timing of his supposed changes of heart. Nevertheless, the real problem with Romney’s flip-flopping is that he has been known to do it mid-sentence. See the video below where Romney at first declares his willingness to “take action” against Iran, and then quickly back-peddles.
Opponent of Free Trade
Romney also flip-flops within the same section of his Web site—many times. For example, on his Trade page, he begins with the following:
Open markets have helped make America powerful and prosperous. Indeed, they have been one of the keys to our economic success since the country was founded. Approximately 95 percent of the world’s consumers live beyond our borders, and selling our world-class products and services to them is the next great frontier for economic growth. The fewer the barriers to cross-border commerce, the more economic growth we enjoy and the greater the number of American jobs brought into being.
“The fewer the barriers to cross-border commerce, the more economic growth we enjoy and the greater the number of American jobs brought into being.” Truth. Adam Smith understood this 200+ years ago. David Ricardo made it all the more obvious when he embellished Smith’s concept of absolute advantage to the broader comparative advantage, which demonstrates that barriers to trade—even one-way barriers—always lead to less prosperity for the people of the government imposing the barriers. You would think from his opening paragraph that Romney understands this. But he doesn’t.
Of course, opening markets must be a two-way street. For America truly to benefit in global commerce, we need to ensure that our entrepreneurs can sell their high-quality products and services around the world. This means that agreements must create a level playing field for competition.
I don’t want to say there’s not a single economist in the world that would agree with that, but I will guarantee that the vast, vast majority of them would say it is hogwash. The one thing that Austrians, monetarists, Keynesians, and even Marxists agree on is that barriers to trade create poverty—even one-way barriers. So here, Romney reveals his economic ignorance, or equally likely, his willingness to dishonestly cater to the general economic ignorance of government-school-“educated” American voters.
But it gets worse.
In the next section of the Trade page, entitled Obama’s Failure, Romney claims that the current president hasn’t been restrictive enough on trade! Thus, Romney is actually promising to be less market-oriented than Obama! Romney’s “plan” includes aggrandizing himself with new trade powers as president, and “confronting” China. Can he really be this ignorant? By now it’s more likely he’s catering to the general public’s stupidity. After all, how can anyone with any semblance of intellect not see the glaring contradiction of “The fewer the barriers to cross-border commerce, the more economic growth we enjoy,” with the entire rest of the page, which is about imposing new barriers to cross-border commerce?
Fiat-Money Loving Big Spender
Mitt Romney is alone among the remaining Republican contenders in his opposition to auditing the Federal Reserve. This is not surprising considering his pedigree: neither Rick Santorum nor Newt Gingrich were born into the political class. Ron Paul, of course, is an ardent opponent of the Fed, so he need not be included in this discussion. Romney, by contrast, was born with a red spoon in his mouth. The Federal Reserve’s fiat-money central banking and fractional-reserve lending redistributes wealth from the productive class to the political—and Romney has been a lifelong beneficiary of this form of reverse welfare. This is how he’s made his wealth. He undeniably has talent as a businessman, but he did what he did with healthy doses of stolen purchasing power via fiat-money financing. He is a Fed lover to the core, and thus a menace to productive society.
Romney claims he would cut overall government spending—but he wants to boost the military budget. He does not want to meaningfully reduce Social Security of Medicare benefits to his core group of supporters—people too old to care about the fiscal state of the nation. And, of course, he has no interest in defaulting on the federal government’s mountainous debt—his people are the beneficiaries of this debt. These three areas: “defense” spending, Social Security and Medicare, and interest on the national debt; constitute more total spending than the entire budget of the year 2000. Thus, the allegedly “severely conservative” Romney, at best, wants to take us back to 2000. Hooray. And of course, that would be only if he cut literally all other federal government spending.
From a purely academic standpoint, a debate as to who would be worse for the economy, Romney or Obama, might be interesting. But the fact remains that the differences between the two men are minimal, and Americans can be certain of economic insanity reigning for another four years, no matter who is elected president. Mitt Romney is a flip-flopper on many issues, but the one issue on which he’s never changed positions is his belief that the government can never be too big—so long as he’s in charge.