David Stockman rests his analysis of recent economic history upon one basic presupposition, whose modesty is expressed by an intrinsic inclination to a negative form: Radical dishonesty cannot provide a foundation for enduring financial value. This assumption suffices to expose the otherwise scarcely comprehensible rottenness of American public affairs, to organize an integral understanding of the gathering calamity, and to marginalize his work as the over-excited howl of a lonely crank.
In any society where minimal standards of civil decency were still even tenuously remembered, his ideas would be simple common sense. In the bedlamite orgy we in fact inhabit, Stockman’s thoughts appear wildly counter-intuitive, rigidly structured by uninterpretable imperatives, and suffused by an improbable aura of doom. In fact Stockman is quite clear — implicitly — that under American political conditions sanity was strictly unobtainable. The coming calamity fulfills a (bi-partisan) democratic destiny — but that is to anticipate.
Stockman’s latest compressed overview of our contemporary crisis — generated by the accelerated demolition of economic civilization over the last quarter-century — explains the “Sundown in America” — “a dystopic ‘new normal’ where historic notions of perpetual progress and robust economic growth no longer pertain.” It outlines a vision that supports a theoretical bet, or short speculation on the economic infrastructure of the Cathedral: “Now the American state — the agency which was supposed to save capitalism from its inherent flaws and imperfections — careens wildly into dysfunction and incoherence. […] Washington’s machinery of national governance is literally melting-down. It is the victim of 80 years of Keynesian error — much of it nurtured in the environs of Harvard Yard — about the nature of the business cycle and the capacity of the state — especially its central banking branch — to ameliorate the alleged imperfections of free market capitalism.” The enemy will never again have a record of effective economic performance to legitimate itself through. What it is doing — and has to do — however politically efficacious, is locked tightly into an inescapable vector that can lead nowhere except utter financial ruin. (Neoreaction should bifurcate on this point, because adaptation to an alternative possibility is something so completely different, very little of strategic substance will translate across.)
Stockman is able to draw upon his own biography to reveal where the GOP went wrong — the political necessities of democratic acceptance drove economic policy into the abyss:
… the circumstances of my own ex-communication from the supply-side church underscore the Reaganite embrace of the Keynesian gospel. The true-believers — led by Art Laffer, an economist with a Magic Napkin, and Jude Wanniski, an ex-Wall Street Journal agit-prop man who chanced to stuff said napkin into his pocket — were militantly opposed to spending cuts designed to offset the revenue loss from the Reagan tax reductions.
They called this “root canal” economics and insisted that the Republican Party could never compete with the Keynesian Democrats unless it abandoned its historic commitment to balanced budgets and fiscal rectitude, and instead, campaigned on tax cuts everywhere and always and a fiscal free lunch owing to a purported cornucopia of economic growth.
Winning elections was conditional upon fiscal barbarism, given only the quite reasonable assumption that nothing except radical dishonesty could ever be popular. Insane promises, short-termism, and whole-hearted participation in a bi-partisan conspiracy to eradicate the last vestiges of responsible government were indispensable steps towards the exercise of power.
The fiscal end game — policy paralysis and the eventual bankruptcy of the state — thus became visible. All of the beltway players –Republican, Democrats and central bankers alike — are now so hooked on the Keynesian cool-aid that they cannot imagine the Main Street economy standing on its own two feet without continuous, massive injections of state largesse. […] the stimulus bill was not a rational economic plan at all; it was a spasmodic eruption of beltway larceny that has now become our standard form of governance.
Hence the Stockman forecast:
… the Federal budget has become a doomsday machine because the processes of fiscal governance are paralyzed and broken. There will be recurrent debt ceiling and shutdown crises like the carnage scheduled for next week, as far as the eye can see.
Indeed, notwithstanding the assurances of debt deniers like professor Krugman, the honest structural deficit is $1-2 trillion annually for the next decade and then it will get far worse. In fact, when you set aside the Rosy Scenario used by CBO and its preposterous Keynesian assumption that we will reach full employment in 2017 and never fall short of potential GDP ever again for all eternity, the fiscal equation is irremediable.
Under these conditions what remains of our free enterprise economy will … buckle under the weight of taxes and crisis. Sundown in America is well-nigh unavoidable.
This is the terrain that neoreaction takes root within. It frames our problems, opportunities, and expectations. The overwhelmingly preponderant part of our intellectual energies should be targeted at the future it anticipates.