President George W. Bush came out fighting for free markets with a strong and stirring defense of American capitalism on the eve of the G-20 World Economic Conference. Stocks soared 550 points Thursday, as Bush’s luncheon speech was played live on all the major cable networks. It was as though Bush was trying to leave an economic primer to his successor-elect Barack Obama. Markets cheered because it’s the best thing they’ve heard in many weeks.
Here’s one of several great passages from Bush: "At its most basic level, capitalism offers people the freedom to choose where they work and what they do … the dignity that comes with profiting from their talent and hard work. … The free-market system also provides the incentives that lead to prosperity — the incentive to work, to innovate, to save and invest wisely, and to create jobs for others."
In other words, free-market capitalism is the best path to prosperity.
During a gloomy period of financial crisis, recession, big-government rescues, and ailing banks and industrial companies, Bush has provided a strong visionary dose of big-picture economic prosperity and optimism that can lead the United States and the rest of the world out of their economic doldrums.
Here’s another uplifting passage from Bush: "Free-market capitalism is far more than an economic theory. It is the engine of social mobility — the highway to the American dream. And it is what transformed America from a rugged frontier to the greatest economic power in history — a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod."
Capping all this off, Bush said: "The triumph of free-market capitalism has been proven across time, geography, culture and faith. And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success."
That reference to 60 years harkens back to the original post-World War II economic-rebuilding conference held in Bretton Woods, N.H., in July 1944. At that historic meeting, the United States and Britain led 170 delegates from around the world into a new era of free markets, free trade and stable currencies. It was a conference of global coordination that broke down the isolationist and protectionist sentiments that upset the world order so badly during the prior 15 years.
Ultimately, the free-market system forged at Bretton Woods, which was in no small way predicated on economic prosperity, led to a triumph of Western values over Soviet state socialism. And it was President Reagan — along with his friend, British Prime Minister Margaret Thatcher — who applied the final blow to the now-defunct Soviet system with his rejuvenation of free-market capitalism.
So what George W. Bush seems to be saying is this: Do not discard that triumphal system just because we’ve had a rough year in the financial markets and the economy.
In a few weeks, Barack Obama will inherit the mantle of the capitalist system. What will he do with this responsibility? That’s the question being asked everywhere.
Since the election, and up until President Bush’s important G-20 speech, stock markets sold off nearly 15 percent. Investors want to know if economic rewards will be encouraged or penalized. Will trade remain open and free? Will we maintain competitive businesses that can compete worldwide? Or will we resort to the protection of ailing or failed businesses?
Will the United States lurch toward the semi-socialism of Old Europe? Or will we stay with free-market capitalism? Will we expand the nanny-state economy? Or will we keep the door wide open to entrepreneurial spirit and gales of creative destruction?
Investors want to know which way President-elect Obama is going to go. Might he reach back to the Democratic pro-growth supply-side policies of John F. Kennedy’s tax cuts, free trade and strong dollar? Will he opt for Bill Clinton’s free-trade and strong-dollar policies or even his capital-gains tax cut? Or will he fall back to the hopeless government tinkering of Jimmy Carter or the welfare-statism of Lyndon Johnson?
I’m keeping an open mind on Obama during this post-election honeymoon period. After all, he stole the tax-cut issue from Sen. McCain during the election. And surely he knows the conservative red states that joined his campaign for change didn’t vote for a leftward lurch to socialism lite.
Obama has a huge opportunity and an outsized responsibility to mend and revive the economy. It may be too much to ask, but perhaps he will give President Bush’s marvelous speech a close read. There is much wisdom there. And there is no iron-clad reason why a Democrat can’t adopt the economic-growth model that has worked so well and so long for this country.