Just what is voodoo economics?
Since George Bush first uttered the phrase in 1980, many people have sought an acceptable definition. It is still new enough that it has not been included in the authoritative Palgrave Dictionary of Economics, just out in four weighty volumes.
But you don`t need a precise definition of voodoo economics to know what it is. The image it conjures up tells all, from witch doctors offering an instant cure to spellbound adherents seeking one. The supply of naivete creates its own demand. The cure itself is flawed, but no matter: A positive- sounding message beats a sound one any day.
To campaigner Bush in 1980, voodoo economics was Ronald Reagan`s untested, unproven and unwise incantation that tax cuts and domestic spending reductions would yield a balanced budget and an era of unprecedented domestic prosperity and higher productivity.
Go to Kenosha and tell unemployed auto workers that. Tell that to the struggling 45-year-old workers thrown out of work by a strong dollar and high interest rates that constituted Reagan`s de facto economic policy for several years. Tell that to communities devastated by hostile takeovers.
Despite all the evidence of its failure, voodoo economics is still with us. It lives in both the Democratic and Republican parties, and especially in Bush`s high-rolling campaign. Bush learned a lesson in 1980. Voodoo economics wins elections.
The modern version of it is more pernicious. It rests on a more naive foundation-the belief that there is an American program for economic revival that a President can propose and a Congress can pass. It is just that, a belief.
Workers and businesses in Chicago and Illinois know this in their gut. They know that they are part of the world economy now, and that they cannot hope to look to Washington for a solution. They know the solution rests with the skilled application of their brains and their hands. They know that investment and technology are the keys to their future.
They know that it does not depend, as George Bush insists that it does, on cutting the capital gains tax, passing a line-item veto or enacting a constitutional amendment to balance the budget.
Voodoo economics comprises the kind of vague ”industrial policy” ideas that flow from the issues people in both parties. The belief that Washington can somehow make Chicago more competitive is beyond arrogance, especially in a world of global products and global markets, linked by a highly efficient private global financial system.
Just what can Bush do about the fact that America has the capacity to make more cars than Americans are willing to buy and that domestic automobile producers are slow to go after the export market? Bush has not even laid out a coherent dollar policy that would give Americans some assurance that it would not once again be overvalued or unstable.
The Midwest is in desperate need of a stable dollar policy. If the U.S. currency is permitted to bob by significant amounts, jobs and investment will not come to this area.
The dollar appears to be at a level that will ultimately bring back some semblance of manufacturing strength. People here understand this issue better than the candidates do. They have to live with it every day.
It`s amusing to see the vice president make his grand entrance into Illinois for the primary here by promising an urban rehabilitation program, a concept that has not previously penetrated his mind during his seven comfortable years in Washington.
The Reagan administration`s idea of urban policy is another subsidy for the D.C. subway system so that yuppie government workers wearing tennis shoes can get to work on time. This system has gotten special treatment under the Reagan administration, while mass transit here and elsewhere flounders for lack of government funds.
People here know that there no longer is a budget bonbon in Washington for every local need. They know that government policy must focus on scaling back of government expenditures and boosting revenues.
They want to hear the candidates tell them how this can be accomplished equitably and efficiently, with the least amount of pain for citizens and with the least damage to the economy.
For Bush to rule out higher taxes at this early date is voodoo economics of the grossest sort. The campaign debate should be not about whether revenues should be increased, but how.
That`s what people want to hear because they know that this is the reality. There are taxes and there are taxes. An energy tax, or some kind of modest consumption tax, seems preferable to an increase in income taxes.
The economic debate should be concentrated on what Washington can and cannot do in the new global economy. What would Bush or Democrat Michael Dukakis do, for example, to regulate Chicago`s futures markets, the lifeblood of much of the economy here? If they are regulated more, will the business go to Japan, or not? They have been noticeably quiet on this subject.
Campaigns are supposed to sharpen issues and give Americans a sense of world economic realities. So far, this one has not served these purposes. What we`ve seen so far can best be described as voodoo economics.
