Sunday, February 22, 2009

Senate Reform, Pt 2

There's a movement afoot to draft Peter Schiff to run against Chris Dodd in the 2010 race for U.S. Senator from Connecticut. On the whole I support this. Schiff is famous as the guy who "predicted" the Crash of '08 and the subsequent cascade of failing financial institutions. Schiff did not do this from a perch in the Ivy League, but did so publicly and loudly on TV appearances on assorted cable shows. His prescriptions are right on 

1. Increase savings and production. People need to start saving and paying down credit card debt, and the US needs to become a net producer and manufacturer of goods once again.

2. Vote no on all bailouts. Instead, the government should begin eradicating grotesque budget deficits and national debt by reigning in profligate spending.

3. Allow the recession to run its course and rebuild quickly from a fresh start. “Let it collapse today so it can prosper tomorrow.” To use a crude analogy, wildfires are devastating in the short term, but they are extremely beneficial in the long run for the entire ecology. Currently, the trillions of dollars of new government spending is akin to pouring gasoline on the fire. It will only serve to exacerbate the problem and delay meaningful recovery.

4. Let the free market operate without inefficient, ineffective, and cumbersome government involvement. The government should enforce the integrity of free markets, not manipulate them.

5. Drastically cut federal spending. It’s time to quit over spending and over borrowing and start living within our means.

6. Cut corporate and personal income taxes to spur savings, job growth, and real industrial production.

7. Minimize corporate regulation. If you allow the free market to operate, businesses and banks which accrue massive debt will fail. More efficient and fiscally responsible banks and institutions will prevail and restore prosperity to the economy.

8. Restore the value of the US dollar. Since 2002, the US dollar has been devalued by nearly 30%. Put a stop to the Federal Reserve setting artificial interest rates and printing trillions of dollars out of thin air. Instead, get the Fed out of the markets and bring back balanced budgets, low taxes, and robust production.

Schiff also has the advantage of having a charismatic personality with oddly mesmerizing liquid-blue eyes. These would contract favorably with the bloated, corrupt Dodd. However, Schiff also has some things that work against him:

1. his father: Irwin Schiff is one of the nation's leading tax resisters and is presently serving a stretch in federal prison. The tax resistance movement is filled with oddballs and cranks, and I suspect Schiff rallies would feature a sizable contingent of these

2. his politics: Schiff is, at essence, a libertarian. He was linked to Ron Paul's presidential campaign for the GOP nomination. It is hard to imagine a majority of Connecticut voters pulling the lever for a Republican. While libertarianism is a legitimate movement, it is also filled with oddballs and cranks. Paul, for one, found himself linked tangentially to assorted white supremacists and neo-confederates. Schiff would probably have to run as an independent. 

3. his investors: while Schiff was "right" about the crash, he was wrong about what to do about it. He told his investors to get out of US stocks and any other dollar-based investments, because the dollar would suffer a catastrophic collapse. He was a big proponent of decoupling and urged a move into international stocks and gold. So far, this has caused Schiff's investors to do worse than the people who have stayed in US equities. The dollar has strengthened. Decoupling has not happened; instead, the dollar has become the ultimate safe haven. International stocks have fallen farther than those of the US. One can imagine the attack ad featuring the tearful old lady who "lost everything" because she "listened to Peter Schiff."

Still, the proposed Schiff Senate campaign is just the sort of thing that needs to be happening nationwide. There are a lot of smart, innovative thinkers in the US, but they are effectively shut out of the conversation in DC because they are not part of the political class. The likes of Chris Dodd will not go quietly. The likes of Peter Schiff should be encouraged to take a run at clearing out the dysfunctional elements of our government. 

No comments:

Post a Comment