Indiana Governor Mitch Daniels has announced that he won’t be running for President.
This is good news, as far as I’m concerned. As I wrote last October, I see no evidence that Gov. Daniels would shrink the burden of government. Indeed, I think he would have moved policy in the wrong direction. The three things that worried me most were:
-
1. He was Budget Director for President Bush, which should be a disqualifying factor for any libertarian or small-government conservative.
2. Has has expressed support for a value-added tax, which would be akin to unfurling the white flag in the battle against big government.
3. He tried to raise Indiana’s top income tax rate when he first become Governor, showing a disturbing weakness on tax policy.
Some libertarian-leaning people are inexplicably drawn to Daniels because he called for a “truce” on social issues, but that doesn’t mean anything. Indeed, if all I know about a political contest is that one candidate is a social conservative and one is not, I don’t hesitate in choosing the social conservative.
Simply stated, the odds are fairly good that a social conservative will also be an economic conservative. Jim DeMint is a typical example. Very few non-social conservatives, however, can be called economic conservatives. Instead, you get people like Arlen Specter
I’m also not impressed that Mitch Daniels sometimes claims to be libertarian and has Rise and Decline of Nations and The Future and Its Enemies on his list of favorite books. Ilya Somin thought that was a very good indicator that Daniels would be an acceptable candidate. Ilya is a solid guy and I like 99 percent of what he writes, but I think he erred by focusing on that list of books and not paying enough attention to what Daniels actually would do if he ever got power.
[…] It is very disappointing (but perhaps not entirely surprising) that former Indiana Governor Mitch Daniels signed the CRFB letter. And it also is disappointing […]
[…] It is very disappointing (but perhaps not entirely surprising) that former Indiana Governor Mitch Daniels signed the CRFB letter. And it also is disappointing […]
[…] a poster boy for libertarianism. At one point, he flirted with the notion of a value-added tax, so I was happy when he decided against a presidential race. He also presided over irresponsible spending increases […]
[…] I was never a fan of former Indiana Governor Mitch Daniels, but he deserves lasting applause for seeking to protect children from the anti-western, […]
If Ron Paul is the best candidate that libertarianism can offer then that is really sad. Ron Paul would probably cause a deep recession if he is elected, throwing libertarianism out of power.
Ron Paul is one of the biggest supporters of the austrian interest rate theory and that theory is even more damaging than Keynes interest rate theory, precisely Keynes became mainstream during Great Depression because austrian interest rate theory was a very bad theory that recommended more of the tight money that triggered the disaster.
Sadly Hayek predicted the 1929 crisis, but for the wrong reasons, like some austrians in the 2008 crisis: TIGHT MONEY caused the 1929 crisis, but Hayek, with his deep misunderstanding of money, blamed LOOSE money and recommended even more catastrophic TIGHT MONEY (more government spending and huge increases in taxes and regulations plus some features of the banking system transformed the 1929 recession into the Great Depression)
Austrians have a very deep misunderstanding of how credit works: They base their reasoning on “loanable funds” and treat “loanable funds” as savings while savings is all that was invested and still is worth something
A farmer that buys a farm, tractors, etc and has not a cent in “loanable funds” in the bank in fact has enormous savings: His farm, tractor, etc, are his savings even tough he has not a cent in “loanable funds”
But austrians base their reasoning on “loanable funds” . When that farmer puts his farm as collateral the bank may create money. But the bank is not creating savings because the savings are already there: The farm.
That is the central error of austrian interest rate theory. From there they reach an amazing set of false conclusions.
Austrian theory is ANTI SUPPLY SIDE: Austrians say that in order to produce MORE of a product someone must produce LESS of another product. That is clearly FALSE: In a tax cutting environment that incentives investment the aforementioned farmer may choose to put his farm as collateral to start a new business; other people may do the same and the additional output from those new businesses would help the sales of the aforementioned farmer new business -and the sales of other new businesses- creating a virtuous circle described by Adam Smith.
In a tax increasing environment or in an environment where the Central Bank is sharply curbing credit the farmer will just sit down in his farm, without asking for credit. No increase in investment, no increase in output
Sharply impeding / curbing the process of creating credit finally brings a collapse in investment, and the result is called a recession: It is crystal clear that there was a sharp drop in investment in EVERY recession. And it is crystal clear that there was a SHARP curb in credit by the Central Bank system before every recession (that I have looked at). In 2008 the Federal Reserve brought credit to a stop and that triggered the acute part of the crisis. It is Robert Mundell that said that and not a nobody like me. TIGHT MONEY often shows in interest rates: When SHORT TERM interest rates are almost as high -or higher- than long term interest rates (inverted yield curve) then probably there is TIGHT MONEY. Just take a look at the exorbitant high 2007 short term interest rates to be convinced. The people from finance, the people that bet millions on their theories, use the inverted yield curve as a recession predictor.
Austrians predicted Great Depression II after the 2000 stock market bubble. But it never happened because their theory is downright wrong. Monetarism too is wrong, but it is not as damaging as austrian theory since Friedman understands that low long term interest rates may mean tight money and Hayek was clearly unable to understand that.
Dan,
I basically agree with your post. And, oh, by the way, Ron Paul is pro-life.
While it is true that many Republicans, whether socially conservative or not, are not fiscally conservative enough, I can think of no leading Democrats that are fiscally conservative.
Thanks for your blog,
Steve
So Daniel Mitchell doesn’t care for Mitchell Daniels, huh? Being a social conservative doesn’t correlate with being a fiscal conservative. For every Jim DeMint there’s a Mike Huckabee. I don’t know much about Mitch Daniels and Dan Mitchell’s opinion carries a lot of weight for me. I guess that now he’s announced he’s not running I need not look too carefully into his record. So Dan, what do you think of the real libertarians running, Gary Johnson and Ron Paul?