David Stockman: Trump's War on Capitalism and Freedom
Jan 31, 2024
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David Stockman, former budget director under Ronald Reagan, discusses his political journey, critiques Donald Trump's policies, and expresses hope for Robert F. Kennedy Jr.'s impact on the 2024 election. They explore Reagan's defense budget increase, Trump's policies favoring Wall Street, flaws in Milton Friedman's views on central banking, problems with the war on drugs, impact of regulations and spending on the underground economy, and capitalism's role in material improvement.
Donald Trump's policies during his presidency did not align with the core mission of the GOP, which is to stand up for free markets, fiscal rectitude, sound money, personal liberty, and small government.
The Federal Reserve's pro-inflation policies since the 1970s have led to a decline in US competitiveness, loss of industries and jobs to foreign countries, and the creation of financial bubbles and excessive speculation.
A clean break is needed in the Republican Party to bring about real change, promoting small government, fiscal responsibility, and non-intervention abroad, and addressing the root causes of economic challenges.
Deep dives
Reagan's Budget Director and the Failures of the Reagan Revolution
Ronald Reagan's budget director, David Stockman, discusses his memoir on the failures of the Reagan Revolution, focusing on how libertarian principles were sacrificed for political expedience. He highlights the sharp increase in defense spending under Reagan, which undermined domestic cuts and reform efforts. Stockman criticizes Donald Trump's policies, arguing that he was not an economic conservative and did not support small government or free markets. He urges for a clean break in the Republican Party and a return to principles of fiscal rectitude, sound money, and personal liberty.
The Federal Reserve and the Economic Decline
Stockman emphasizes the role of the Federal Reserve in the economic decline of the United States. He criticizes the pro-inflation policies of the Fed since the 1970s, which led to a loss of competitiveness in labor and exports. He argues that the Fed's massive money printing and monetary manipulation hindered the adjustment mechanism of the free market in exchange rates. This, in turn, resulted in the loss of industries and jobs to foreign countries. Stockman also blames the Fed for creating financial bubbles and excessive speculation, diverting capital from productive investments.
The Need for a Break from the Uni-Party and Trump's Policies
Stockman calls for a break from the current state of the Republican Party, which he sees as a uni-party consisting of career politicians and cultural right-wingers. He criticizes Trump's policies, stating that he was not an outsider but rather part of the establishment. Stockman argues that Trump's focus on immigration and trade policies was misguided and failed to address the root causes of economic challenges. He advocates for a government party that promotes small government, fiscal responsibility, and non-intervention abroad, and a clean break in the Republican Party to bring about real change for the benefit of the economy and society.
Milton Friedman's view on central banking was naive
Milton Friedman's perspective on central banking and the Federal Reserve was flawed according to the podcast. While he believed that the central bankers would be prudent and rule-based in their decisions, the reality is that they often prioritize the interests of politicians and Wall Street. This results in economic instability and unpredictable monetary policy. The podcast argues that Friedman's expectation of a uniform approach among central bankers was unrealistic and highlights the need for a more critical analysis of central banking policies.
The impact of immigration policies on economic growth
The podcast examines the connection between immigration policies and economic growth. It emphasizes the importance of a rational economic-based immigration system, highlighting the need for both low-skilled and high-skilled workers. The current system, which focuses on family unification and limited high-skilled categories, hinders economic progress. The podcast suggests that implementing a guest worker program and providing pathways for legal immigration would address the decline in the native-born workforce and stimulate economic productivity. By reforming the immigration system, the podcast argues, the United States can help revive growth and address the labor supply shortage.
As Ronald Reagan's first budget director, former Michigan congressman David Stockman led the charge to cut the size, scope, and spending of the federal government in the early 1980s. He made enemies among Democrats by pushing hard for cuts to welfare programs—and he ultimately made enemies among his fellow Republicans by pushing equally hard to slash defense spending. His memoir of the era, The Triumph of Politics: Why the Reagan Revolution Failed, is a legendary account of how libertarian principles got sacrificed on the altar of political expediency.
Stockman's new book is Trump's War on Capitalism, and it takes a blowtorch to the former president's time in office. "When it comes to what the GOP's core mission should be…standing up for the free markets, fiscal rectitude, sound money, personal liberty, and small government at home and non-intervention abroad," he writes, "Donald Trump has overwhelmingly come down on the wrong side of the issues."
At a Reason Speakeasy event in New York City, I talked with Stockman about his political journey from being a member of Students for a Democratic Society who protested the Vietnam War to being one of Reagan's main advisers to his denunciation of Donald Trump and his hope that Robert F. Kennedy Jr.'s candidacy helps throw the 2024 election into the House of Representatives.
Stockman also explains how Trump led the disastrous charge on COVID-19 lockdowns, got rolled by Wall Street and the Federal Reserve, and why his nativist views on immigration are inimical both to freedom and economic growth.
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The Reason Speakeasy. The Reason Speakeasy is a monthly, unscripted conversation in New York City with outspoken defenders of free thinking and heterodoxy. Go here for an online archive and go here to sign up for information about upcoming events.
