Jewish World Review July 25, 2001 / 5 Menachem-Av, 5761

Jack Kemp

Jack Kemp
JWR's Pundits
World Editorial
Cartoon Showcase

Mallard Fillmore

Michael Barone
Mona Charen
Linda Chavez
Ann Coulter
Greg Crosby
Larry Elder
Don Feder
Suzanne Fields
Paul Greenberg
Bob Greene
Betsy Hart
Nat Hentoff
David Horowitz
Marianne Jennings
Michael Kelly
Mort Kondracke
Ch. Krauthammer
Lawrence Kudlow
Dr. Laura
John Leo
David Limbaugh
Michelle Malkin
Chris Matthews
Michael Medved
Kathleen Parker
Wes Pruden
Sam Schulman
Amity Shlaes
Tony Snow
Thomas Sowell
Cal Thomas
Jonathan S. Tobin
Ben Wattenberg
George Will
Bruce Williams
Walter Williams
Mort Zuckerman

Consumer Reports

Fiddling while the world economy freezes --
AS I write this column, leaders of the major industrial countries, the so-called G-8 nations, are fiddling in Genoa, Italy, while the world economy goes into a deep freeze. Global trade is shrinking. A deflating dollar is squeezing international economic activity and putting currencies around the world at risk. The IMF continues to force poisonous tax increases and austerity measures down the throats of floundering economies like Argentina.

European bureaucrats are out of control, throwing sand in the gears of private enterprise in the name of antitrust regulation. And all the G-8 politicians can find to talk about are ways to squeeze more revenues out of their citizens by eliminating tax competition and hypothetical and improbable risks like global warming and the hazards of biotechnology?

Can you believe with 40,000 demonstrators rioting in the streets outside their meeting, injuring more than 120 and killing at least one person, the political leaders of the world had absolutely no new proposals forincreasing global economic growth? Reports from inside the G-8 meeting indicate that the leaders are reassuring each other and the media that the U.S. economy will soon rebound and pull the rest of the world to prosperity along with it. Canada's Prime Minister Jean Chretien said, "Yes,we are in a slowdown, but everybody thinks there is a turnaround. We're not going into recession."

They are deluding themselves, misleading the public and threatening the prospects for democratization in Eastern Europe, Russia and China, not to mention the effect on the Third World and Africa.

In the United States, more than 1 million jobs have been lost already this year, the manufacturing sector remains in recession and technology is in a depression. Federal Reserve Board Chairman Alan Greenspan told Congress last week that the U.S. economy continues to face a "litany of risks" and that "uncertainties surrounding the current economic situation are considerable, and ... the risks would seem to remain mostly tilted toward weakness in the economy." Hey folks, that's Greenspanese for "the U.S. economic outlook ain't so hot." What a mess!

According to Bear Stearns economist David Malpass, world GDP will probably shrink 1.1 percent in 2001, making the worldwide slump even worse than the one touched off by the 1997-98 meltdown in Asia, Russia and Brazil. Industrial production in the 12 countries of Euro-Land fell again for the third month in a row in June. Germany, the largest economy in Europe, may grow as little as 1 percent this year. Japan, trapped in severe monetary deflation of its own making, is heading for its worst recession since 1974 and could well drag the rest of Asia down with it. Singapore already is in recession, and economic weakness is creeping across Asia.

The one bright spot, ironically, is Russia, where, thanks to President Vladimir Putin, the IMF's advice was ignored and the economy is growing and revenues are flowing into Moscow because income tax rates were cut to 13 percent. Maybe Putin can pull Japan's prime minister aside before he leaves Genoa and explain how to cut tax rates and raise revenues at the same time. In light of this downward economic spiral, one would think the political leaders of the world would be discussing matters such as the havoc being wreaked by U.S. deflation and the ever-strengthening dollar, which has increased more than a third in the last few years. Rather than waiting for another round of currency meltdowns caused by floating fiat currencies, one would think they would be seriously considering how to create a stable monetary anchor for the world.

Instead, the G-8 leaders are putting out press statements praising Argentina's coerced austerity actions: "We commend these efforts (by Argentina) and encourage the continued implementation of their reform programs in close collaboration with the IMF and other relevant international financial institutions." Another spoonful of austerity toxins down Argentina's gullet. By the way, if you want to know where the next riots will occur in the world, just follow the IMF around. In light of the stifling effect government regulation is producing (especially antitrust regulation) and the rising protectionist sentiments it is producing,

wouldn't you think the world's political leaders would be weighing proposals to loosen the regulatory noose and halt protectionism in its tracks?

Instead, they are conniving to create new bureaucratic schemes of carbon trading to limit carbon dioxide output in a chicken-little response to speculative "science" about how man's activities might be altering the climate.

The more these fellows get together to discuss economics, the worse things get. It's time for a vacation from economic summits for a while, a long while. President George W. Bush would be better advised to spend his time explaining to Greenspan how to get monetary policy right, telling Congress to cut the capital gains tax rate and reform the tax code, and making sure his Social Security Commission comes up with a plan for creating personal retirement accounts. If the United States moves unilaterally to adopt these three critical reforms, there won't be a need to get together in another G-8 economic confab. The United States will be leading by example, and the rest of the world will follow.

Jack Kemp is co-director of Empower America and Distinguished Fellow of the Competitive Enterprise Institute. Comment by clicking here.


07/19/01: Schundler should be New Jersey's next governor
07/12/01: Second wind for the global economy
07/06/01: An interest-rate target with no bull's-eye
06/28/01: Tax harmonization --- American-style
06/21/01: Warming diplomacy --- at what price?
06/13/01: A party that stands for nothing deserves to lose
06/07/01: No peace in the Middle East
05/30/01: Jeffords' palace coup
05/24/01: A supply-side energy plan
05/16/01: Getting Lincoln right
05/10/01: A good reason to borrow
05/01/01: Supreme Court makes racial profiling the law of the land
04/26/01: Campaign finance reform: silencing the lambs
04/17/01: Right wanted might in China case
04/12/01: How minority entrepreneurs can save the tax cut
04/04/01: Whose privacy is it?
03/29/01: A letter from Seoul
03/20/01: Ignore the double talk and double the tax cuts
03/13/01: Don't give up the bully pulpit on Social Security, Mr. President
03/06/01: Another attack on the economy
02/28/01: It's time to end deflation
02/21/01: Building blocks of humanity
02/15/01: Trumping the propaganda
02/06/01: The Gipper at 90
01/30/01: Kicking off a season of economic growth
01/24/01: The Bush tax agenda
01/17/01: Debating the Clinton legacy
01/10/01: No need for another Social Security commission
01/03/01: Truly a Golden Age, if we can keep it
12/27/00: The Grinch who turned off the holiday lights
12/20/00: Forging ahead
12/13/00: A new tax system for the 21st Century
12/07/00: Global government in retreat
11/30/00: An open letter to Fed Chairman Alan Greenspan
11/21/00: Don't forget the guy in charge
11/15/00: Civic virtue, civic vice
11/08/00: Memo to the president-elect
10/31/00: Scare tactics won't work
10/24/00: Prosperity in the balance
10/11/00: Al Gore's economics of fear
10/03/00: Al Gore IS debatable
09/27/00: Government should protect our online privacy
09/13/00: The most important issue
09/05/00: Defeating the Gore blitz
08/29/00: Workers of the world, rejoice
08/22/00: Just the facts, Mr. President
08/08/00: Reclaiming Lincoln's legacy
06/23/00: A renaissance for urban America?
06/16/00: Capital access can bridge 'digital divide'
06/08/00: Some friendly advice for Rick Lazio
05/26/00: Is the economy being saved or destroyed?
05/22/00: Immigration and the promise that is America
05/12/00: Stock market roulette or snobbery?
05/04/00: Is Rule of Law whatever we say it is?
05/01/00: Myths happen

© 2000, Copley News Service