Mitt Romney is an Unelectable Kook
With the GOP 2012 primary on the horizon, it is time to get serious about the nomination process. Bachmann, Perry and Cain have all risen in the polls, only to be exposed as unelectable for a variety of reasons. Newt Gingrich was recently hit by a devastating Ron Paul ad that, by all rights, should sink his campaign. What about the other unelectable kook? No, not Ron Paul, Jon Huntsman or Rick Santorum. I mean Mitt Romney.
Let's take unelectable first. The primary reason why Mitt Romney is unelectable is because he has no credibility with the general population. His reputation as a flip-flopper has convinced many that he is a Republican John Kerry. His support for the bailouts neutralizes the issue which initially energized the Tea Party. His steadfast support for Romneycare is a giant mill-stone, yet Romney refuses to jettison it.
Romneycare
Romney's defenders have attempted to justify Romneycare, but they cannot explain the key questions because there are no explanations. Romneycare is an attempt to expand healthcare coverage to all Massachussetts residents via government managed exchanges. Regardless of how it was subsequently managed by Massachussetts Democrats, the plan is bad on its face. The need for federal subsidies to prop up the system should have alerted anyone with free-market leanings to the structural problems that Romneycare faced out of the gate.
Forcing up demand artificially through a mandate was certain to drive up prices. Giving Bay State politicians a new toy in the form of health exchanges was practically begging for mismanagement and over-regulation. One of the obvious truths of politics is that any power you grant to politicians will, at some point, be wielded by your ideological opponents. If Mitt Romney was hoping that subsequent administrations would use proper discretion in managing liberal Massachussets' healthcare, then this would indicate a complete lack of common sense and foresight.
If anyone is betting on Romney to step up during the general election, that seems less likely every day. His latest appearance on Fox News was widely panned, as he came across as awkward and disingenuous. In the debates, he has failed to distinguish himself from a mediocre crowd. When he has stood apart from the pack, it is usually because he is annoyed at the manners of his fellow debaters. Good luck running as C-3PO's evil twin.
So, if the GOP nominates Romney, they can kiss their top two issues goodbye. If the Republican Party can't differentiate itself from the current administration on today's key issues, then GOP voters won't turn out. Maybe Romney can limp to a squeaker of a victory over Barack Obama and a slightly more depressed Democrat base. Really, though, who cares? If Romney can't explain why he is different than Obama on the key issues, then we should not expect markedly different results should Romney be elected.
Bailouts vs. Laissez Faire
After the failure of the Obama administration, anybody who would want to carry his failed ideas over should be derided as a kook. Unfortunately, Mitt Romney is just that kook -- a ticking time bomb posing as a vanilla Republican. Look at his economic ideas. He believes that our economy would have collapsed without the bailouts. He has not mentioned and will likely not fight for the roll back of Keynesian stimulus spending. Most disturbingly, he believes that China is manipulating their currency and that they are engaged in a "subterranean trade war" with the United States.
If you look at recessions in the post-war era, one thing you will notice is that recessions tend to be V-shaped. The faster the spike in unemployment, the faster unemployment drops during the recovery. Following shallow recessions, we tend to see shallow recoveries in unemployment. This was true in 1958 and 1961 (very shallow recessions), 1975 and 1982 (very sharp recessions), and 1991 (sharper than 1958 and 1961, but milder than 1975 and 1982).
The exceptions were 2001, when we purposefully debased the currency in order to inflate a new bubble to replace the old bubble and 1970, just a few years into the misguided Great Society. Of course, the Great Depression followed the same pattern. What all of these recesssions is that they were accompanies by massive government intervention into the economy. To sum up, we have 9 minor postwar data points. In the four recessions where government stepped in to stop the bleeding, the recession was much more painful. In the recessions where government stayed the course, the economy recovered quickly.
The Stimulus that Never Ends
Of course, the Republican party is already branded as the party of free markets. We shouldn't have to convince our candidate of the value of laissez-faire capitalism. Similarly, massive and immediate cuts in spending should be a given. In 2007, the year before the market crash, federal spending stood at $2.7 trillion. 2011 spending is estimated at $3.6 trillion to $3.8 trillion. In other words, we have increased spending by a trillion dollars in just a few years with now discernible explanation. Simply rolling back spending to pre-stimulus levels -- which is theoretically what should happen after an alleged one-time stimulus -- should be a no-brainer. Poor Romney, though, a $500 billion reduction in spending is all he can muster. This puts Romney far outside the mainstream of the American politics.
China Conspiracy Mongering
Most Republicans are aware of Romney's weakness on healthcare, spending and bailouts. What is less well known, largely because he seems to be talking to himself on the issue, is his unreasonable paranoia regarding China. On Fox News, Mitt Romney accused China of stealing our jobs and engaging in a "subterranean trade war" with the United States via currency manipulation and other dastardly tricks. This puts Romney far out of the mainstream of economic thought. Such conspiracy theories are the stock and trade of economics deniers like Pat Buchanan.
Such an idea is a repudiation of capitalism itself. If free markets can be undercut by dirty tricks involving currency manipulation, then the logical course for the United States to follow would be to manipulate its own currency. In a sense, that is precisely what America did over the last decade when we intentionally devalued our currency in a vain attempt to "rebalance" the world economy. If he means that China is holding its currency below the market value, Gresham's law and the history of regimes from East Germany to Venezuela -- both of which tried such schemes and saw black markets thwart their efforts -- should put such nonsense to rest. Of course, economies don't need central planners to be balanced. Market forces determine prices whether planners like it or not.
As far as America buying more goods than it sells, common sense tells us that such a "trade deficit" must be financed somehow. Either we borrow the money, or we bring in money through investment or some other means. Of course, the United States has one other trick up its sleeve. Being the world reserve currency, we are able to print money. This debases our currency, but it also panics central banks in other countries, which then buy up American dollars in order to shore up their own currencies. Thus, America exports inflation and imports goods.
None of this can be pinned on Chinese malfeasance. If Chinese wants to invest in American companies, that helps America to acquire more productive capital and improves our economic prospects. If America wants to stop borrowing so much money, we need to stop holding interest rates artificially low and issuing so many treasury bonds. If we want to stop exporting inflation, we need to rein in the Federal Reserve and their endless rounds of "Quantitative Easing," or whatever they choose to call it.
As a former business man, Romney should be familiar with the concept of a balance sheet. He should be able to reason through what I just explained above. Unfortunately, he has taken a detour into a strange and terrible philosophical landscape. This divorces him from the free-market capitalism which has rightly come to define the Republican party.
If Romney is able to win the nomination and manages to infect the party with his strange (not quite economic) ideas, the damage will cost America years that it doesn't have to right the economy. The delay will likely cost America its status as the world reserve currency and may well put us on the path to a much more serious decline.
Everything that Romney allegedly has going for him is simply a mirage. He is not sensible. He is not electable. He has no clue how to fix the economy. He won't put America on a better economic course. Perhaps his brittle, top-down approach worked in his Wall Street firm or at the Salt Lake Olympics. Unfortunately, it won't work for America.