How to Weaken an Economy

by Victor Davis Hanson

It is not easy to ruin the American economy; doing nothing usually means it repairs itself and soon is healthier than before a recession.

But don’t despair: there are plenty of ways to slow down even an inherently strong economy. History offers plenty of examples. But as more contemporary models, take your pick of successfully ruined economies — the Venezuelan, the Cuban, the North Korean, the Greek, the Italian, the Portuguese, or pretty much any from Mediterranean Africa to the Cape of Good Hope. There are certain commonalities about why and how they fail. Let’s review some of them.

Government

The state can never be too big. Ensure that it is unaccountable and intrusive, in constant need of more money and more targets to regulate. The more government, the more people are shielded from the capital-creating, free-market system. Think the DMV or TSA, not Apple. The point is for an employee to spend each labor hour with less oversight, while regulating or hampering profit-making, rather than competing with like kind to create material wealth. Regulatory bodies are a two-fer: the more federal, union employees, the more regulations to hamper the private sector. The more federal mandates, like new health-care requirements and financial reporting, the less employers profit and the fewer employees they can hire. Washington should be a growth city, absolutely immune from the downturn elsewhere, a sort of huge and growing octopus head with decaying tentacles. State jobs should be redefined as something partisan — whose expansion is noble and helps the helpless, and whose contraction is evil and the design of a bitter and aging white private-sector class.

On the other end of the equation, ensuring 50 million on food stamps, putting over 80,000 a month on Social Security disability insurance, and extending unemployment insurance to tens of millions all remind the jobless that life is not too bad (thanks to the government), and certainly a lot better than working at a “low-paid” job that equates to giving up federal support. To paraphrase Paul Krugman, the more and the longer the jobless receive, the less likely they are to take chances looking for a job. That too might be again a good thing if you wish to slow down the economy. In general, even Arnold Toynbee, a man of the Left, acknowledged that the greedy drive of the scrambling private sector was not as pernicious to civilizations as the collective ennui produced by vast cadres of lethargic and unaccountable public “servants” doing supposedly noble work.

The Law

To ensure capriciousness and unpredictability for both suspect employers and investors, make the law malleable, even unpredictable from day to day, in the style of an Argentina or Venezuela. Redefine the law as what is deemed socially useful. For federally subsidized bankrupt auto companies, creditors should be paid back on the basis not of contractual law, but of nobility — why borrow to give a rich man a return on his superfluous investment, when a retired auto worker might have to pay a higher health care premium? Boeing wants to open a non-union plant in South Carolina? Have the NLRB try to stop it (and illegally staff the NLRB with recess appointments). Illegal aliens? They are neither illegal nor aliens, as federal immigration law is itself a capricious construct. Does the Senate really have to present a budget? Do presidents need to meet budget deadlines? Who said there is a Defense of Marriage Act?

What law says that gays cannot serve overtly in the military or women cannot fight at the front — some reactionary construct? The point is to restore a simulacrum of popular sovereignty: the law is what 51% of the people are perceived by technocrats to want on any given day. I would hammer away at legal fictions like the very idea of borrowing and paying back loans and debts. Soon the popular culture would respond in kind, and run ads constantly on radio, TV, and the Internet in a way rare just a generation ago: how to renegotiate IRS debt, how to renegotiate mortgages, how to renegotiate credit card debt, and how to renegotiate student loan debt.

The man who owes $50,000 has been taken advantage of; the man who is owed $50,000 already has enough without being paid back. The aim is to create a general climate where when one borrows, one does not necessarily have to the pay back the full sum for a variety of legitimate considerations. The more bubbles — housing, student loan, credit card — the more avenues for government intervention and relief. Do all that and perhaps lending itself might slow down, again not a bad thing for our purposes. The debtor, not the lender, is the true American success, as our collective debt underscores.

Cynicism

Don’t forget the value of cynicism in weakening an economy. It is a critical tool in sowing distrust and fatalism, as in “Why try, when it doesn’t matter anyway?” or “Why should I follow the rules, when they don’t?” Greece, for example, is a cynical country to the core and one can see where such endemic distrust got them: a successfully ruined economy.

I would lecture about the evils of federal bailouts to Wall Street fat cats who then take million-dollar bonuses for mediocre performance — and then appoint a Treasury secretary who did just that. I would trash offshore accounts as something amoral and unpatriotic — and then appoint a Treasury secretary who did just that. I would lecture about paying your fair share and hiking taxes — and then appoint a Treasury secretary who avoided paying the income taxes he owed. I would sermonize on the evils of the revolving door — and then appoint as my top financial officials those who for a lifetime have gone into the White House, out to Wall Street, and back into the White House. Again, if “they” do that, why then do “we” need to pay our taxes or follow ethical behavior? The cynical mindset is a valuable tool in recreating a Greece or Italy. Indeed, almost any cynicism is a good thing: so why not praise federal financing of campaigns and then be the first to refuse it, or campaign on the evils of the Bush anti-terrorism protocol and then embrace or expand almost all of it?

Top Down, Not Bottom Up

Leveling must go in one direction, not two. To ensure equality, the public schools should lower standards so that all are the same. The more who need remediation upon entering college, the more likely the curriculum will have to adjust to level the playing field, and the less skilled will emerge the average graduate. The more that those with “Cadillac” insurance plans can have procedures rationed, the more others will see their own options expanded.

The world is a finite system, a pie with only so many slices. There is no middle class, just rich and poor. For each F student, an A student stole the former’s resources. I would invest not in honor students, but in remedial ones. Grades and test scores should count little for college admission; life “experiences” and community service far better would ensure the presence of mediocre students. The aim again is not to turn out graduates with expertise or knowledge who build a strong economy, but to graduate students, brand them with degrees, and ensure they are invested in a similar ideology of redistribution. If California — of Caltech and Stanford repute — can dumb down its public schools to rank 48^th or 49^th in the nation in math or English testing, then there is hope for the country at large.

The War of Words

Prosperity is always relative, never absolute. A car, a house, or a job is not to be judged on its own merits, but in comparison to someone else who has one better. If today’s Kias are better than a Mercedes of 20 years ago, it matters little: they are not as nice as someone else’s Mercedes of today. Britain in the postwar 1940s discovered the power of envy and what it can do to slow down ill-won prosperity.

From Plato to Marx to Tocqueville, philosophical minds, for both good and bad reasons, have always appreciated that human nature is attracted to the idea of enforced equality, to such a degree that most would rather be poor and the same, than better off with some far better off. Let’s give them that chance!

I would try to redefine the entire capitalist notion of profit, getting ahead, and being rich or successful as something arbitrary. Better yet, it should be analogous to cheating, proof of unfairness, or incurring general shame. The point is to make profit-making synonymous with failure; and poverty something inherently noble. Compensation should be seen as capricious, never based on logical requisites like education, knowledge, experience, level of responsibility, hard work, personal comportment, or even the less predictable such as health, luck, fate, and chance. Redefine rich and poor to emphasize the fact that one making $20,000 a year and another $200,000 is unfair, period — and to be corrected by a fair, all-knowing, and compassionate government. I would talk always of poverty and hunger, never of the epidemic of obesity or the nation’s collective youth glued to iPhones.

Sometimes, sloppy language is critical: jumble together “millionaires” with those worth 1,000 times more, and you earn the force-multiplying evil “millionaires and billionaires.” The word “fair” is critical: as in “pay your fair share.” But “patriotic” is even better, as in “unpatriotic” past presidents who run up debt, and “patriotic” present egalitarians who borrow in four years what used to take eight.

I would also redefine entire professions in negative terms: bankers are “fat cats”; the rich “junket” to Las Vegas; CEOs are “corporate jet owners”; doctors lop off limbs and yank out tonsils to pile up profits. Material wealth alone defines us. Mitt Romney is a man with lots of money, a big house with an elevator, a wife with horses. Who cares what he did with the Olympics or as governor?

I could continue, but you get the picture: the point is to slow down the capitalists by making them look over their shoulders, to hamper the grasping small businesses by prepping a psychological battlefield in which the rich deserve higher taxes and regulations to atone for their sins. If lots of those who once made $400,000 a year no longer do, is that not progress? Did they not at last realize that they had made enough money and that it was no longer the time to profit? My goal would be to convince the pizza-parlor owner that after 12 hours on the job, he was taking away money from his noble customers and had a duty to pay more in taxes and cut his profits for those more noble who could not afford his crust. But there would be one exception: fat cats can buy exemption by loudly supporting the president, serving on his jobs council, or investing in green energy. In other words, send the message that getting rich building a Solyndra is noble in a way Exxon is not. A Warren Buffett or George Soros is not a “billionaire” but a “philanthropist,” whose profits are channeled in the right direction. That’s an important message to send if one wants to warp an economy — suggesting that the rich can pay proper homage and thereby win exemption from being culpably rich.

Everywhere a War

The rich/poor dichotomy is valuable, but perhaps not enough in itself to harm the economy. Political stasis is also critical. Think the blues and greens in the hippodrome, fighting over everything from religion and civil service to class, ethnicity, and sports. And what better way to seed acrimony and to ensure constant bickering than unleashing a series of domestic wars? The camouflaged assault-weapon killers who hide behind the 2^nd Amendment are at war with millions of innocent children. Even female celebrities and lawyers are under attack by misogynists and chauvinists, who won’t pay for their birth control. Latinos are targeted by nativists. The latter even hunt them down at ice-cream parlors. Blacks are back to near slavery as racist conservatives want to put them back in chains. Greens battle nobly against the polluters, gays against the homophobes. Muslims are demonized as terrorists by racists and bigots.

The point would be to introduce so many divisive fault lines that no one can much agree on anything — other than a common enemy. Worry over unemployment, slow or nonexistent growth, and massive debt gives way to more pressing issues like gay marriage and banning semi-automatic assault weapons. Distraction is valuable: who cares that the real unemployment rate is way over 10% if the Keystone pipeline will destroy the Nebraska aquifer or Jim Crow is back on election day? A “jobless recovery” and the “misery index” can become artifacts of a distant era.

Deficits

I would borrow as much money as possible, to the point of making the word “trillion” synonymous with the old “billion,” and “billion” now not more than a mere “million.” On its coins, a fading Rome pressed bronze over a thin silver core; we have done better with the Fed. Think of all the ways in which deficits are good: they spread the wealth through greater entitlements; they eventually require higher taxes from the wealthy; they usually lead to inflation that erodes wrongly accumulated wealth. For every trillion borrowed, there is a greater likelihood that the deserving will receive more federal largess and the undeserving will have to pay for it — and the country itself will slow down and smell the roses. Is it not far preferable for the government to print money than the cumbersome private sector to create it?

Interest

Zero interest is as important as sky-high interest. Thus, 1% on passbook accounts can be as valuable in stalling the economy as 15%. If there is no gain in stored wealth, why seek to store it? If owing is better than being owed, why work to create capital? A good way to ensure inflation is to ensure zero interest. The many who have no money deserve the use of free money and the few who have it have no need to profit from it. Again, if the state employee’s pension pays out more in annual revenue than the multi-millionaire’s passbook account, is not that a distortion worth institutionalizing? The point would be to guide the retiree into real estate, precious metals, or the stock market, anywhere with real risk to beat his .5% passbook return. Or better yet, do away with the idea of the retiree altogether, as the poor fool keeps working to earn what his savings won’t — thereby providing an added benefit of keeping his would-be younger replacements jobless.

Energy

I would try to find a way to discourage private gas and oil production through more regulation and cancellation of projects like the Keystone pipeline: keep the country paying steep import fees and keep it vulnerable to Persian Gulf oil. New technologies like fracking and horizontal drilling are to be declared de facto synonymous with pollution and destroying the environment. How can energy “skyrocket” or gas reach “European levels” — that alone will ensure a cooler planet or government- and union-run mass transit — if freelancers can find hoards of natural gas on land the government can’t touch? I would also borrow billions to subsidize wind and solar power. The more costly the kilowatt, the more expensive energy might slow down human activity and finally stop the rat race.

Success is Failure

Finally, I would double down. The more higher taxes, class warfare, bigger government, borrowing, zero interest, and political stasis began to slow down the economy, the more I would demand more of them all, and declare that the economy is expanding and growing. Again, the key to fine tuning a properly moribund economy is to stay the course — and learn to redefine failure as success.