Economics?

I keep reading about the Clinton years as the high point in our economic history. Of course, this is always contrasted with the dreaded Bush years, where apparently (all statistics aside) we're screwed. I'm NOT an economist. I'm just a guy with a memory, and my memory gives me problems when I hear politicians in particular, but also "economists" (usually with political leanings) talking.

Here's the thing that bugs me when the current economy is being run down by this or that politician or pundit: In the 1990's an extraordinary thing happened--something that is incredibly rare. An entire industry was born. From zero, the personal computer, and particularly the Internet, exploded onto the scene. Suddenly the cute boxes that some of us had purchased for word processing and spreadsheets, or that we were increasingly using at work, became MUST HAVE items for the home because, VIOLA', there was this incredibly cool thing called "The World Wide Web". Creativity abounded! Some people started pumping out hardware, but the real key to riches was creating ways to make money on "The Web." Thus, we had "the Internet bubble." Incredible amounts of jobs were created, investment capital poured in, and the future looked robust. This was an incredible boon to the economy. Also involved with this was the "tech bubble" which was related, but not necessarily identical.

All of this in the mid to late '90s. The "go-go '90s" as they're often called. What did Clinton have to do with all this? Well, he didn't totally screw it up, but for the most part he just REALLY benefitted by it. He looked great, as presidents do, because the economy was cookin'! The other thing to keep in mind is that it was during this "go-go '90s" period that companies like Enron and Worldcom were living high.

Then, 2000 came and the bubbles were about to burst. Oddly, then candidate Bush warned that a recession was coming. The bubbles did burst. Clinton/Gore had looked great because they just happened to be in office when a whole industry was born, and they got out just as the real players got separated from the pretenders (remember the Internet stocks where the business plans never showed how they were going to make a profit, yet their IPOs were HUGE?). Shortly after that process began, the other high fliers like Enron and Worldcom started crashing down. Then, speaking of crashing down, 9/11 happened. Then the real dishonesty (99% of which took place while Clinton was president) of Enron and others got exposed for what it was. All of this before Bush was in the White House for a full year.

So now we are in a good economy. Perhaps not to judge by the whimsical musings of Democrat politicians and left leaning pundits, who ignore the root causes of the growth in the '90s (the creation of an entire industry almost overnight, and, some have argued, the Reagan tax cuts), the inevitability of it's bubble-like bursting when the markets corrected themselves and companies discovered, lo and behold, you can't make money just because you have a cool web site. They also ignore the fact that Enron and Worldcom did most of their shady dealings prior to George Bush being sworn in as president. And, they don't seem to remember the catastrophe that 9/11 was for our economy (in addition to the loss of life and property).

It seems to me that the fact that we recovered from all of that is little short of a miracle. It is certainly a testimony to the tenacity and creativity of the American entrepreneur, worker, and investor, and it is also a testimony to the the effectiveness of the Bush tax cuts.

Can you imagine what would've happened if, instead of having President Bush saying, "Let's get money back in the pockets of Americans to spend and invest and to create with, because we know the people will make this work!" we had, say, a Jimmy Carter, who simply told us things were bad and our best days were behind us and we were going to have to muddle through?

It's important that we have memories. There were reasons for the "go-go '90s" and they had little to do with Clinton's actions. It was great that a whole new industry, a new technology that changed all of our lives was born in that time, and he didn't screw it up. But, the end WAS inevitable. A correction WAS going to happen. Now, what we have seems more real. It's more rooted in reality, where that new industry and technology has matured. And, statistically (unemployment, GDP, etc.), that more mature economy is very good.

Oh... one more thing... Why do people keep saying we HAD a surplus? Like it was money in the bank? I hear the same politicians and pundits that seem to forget the unreality of much of the "tech bubble" and "Internet bubble" talk about the "surplus" like it was cash on hand. And, now it's gone. My recollection is that it was a projected number that would've come into being IF one could project all that was happening in "the go-go '90s" into the future (some 5 years or so). Well... you CAN'T project that time period into the future, because that future projection didn't take into account the bursting of the bubbles, which was inevitable given the overexhuberance that created the bubbles, and, hence, that created the projection. Is that not obvious on it's face? That projection also didn't take into account that 8 months after Bush took office (get that? a mere 8 MONTHS... the friggin' STAFF wasn't even all in place) we'd suffer a terror attack the likes of which the world had never imagined, and that pretty much shut us down for a while, and damaged us deeply. These people still think that there should've, would've, could've been a surplus? That's just so far from reality that it is almost too bizzarre to comment on. Yet, there are people who want to ignore everything real and remind us that at one time in our recent history there was (a projection that there would be) a surplus. Basically the statement when talking about the so-called surplus should have been, "If reality doesn't intrude at all, and nothing negative happens, we COULD have a surplus." Well, we don't. Reality intervened. Sorry.

Africa... Good Luck Geldof and Bono

Several years ago I got a chance to spend a month in Africa... Kenya, Uganda, Rwanda and Burundi. It was extremely instructive. Here's what I saw: Government corruption, from cops that looked like 16 year old kids with assault rifles shaking you down for a few shillings before letting you pass in your car, to officials providing visas requiring a bribe in addition to the fee. The governments are on the take. (Pretty much everyone knows that now).

Second, the infrastructure is terrible. In Uganda, for example, food is grown in abundance, but, there are no good roads to get it from where it is grown, to areas that are not farming areas. On a side note, you should see the shores of Lake Victoria. Weather like Hawaii, beautiful landscape, and a huge, beautiful lake. There is only one reason that it's not a tourist hotbed... no infrastructure! Unfortunately, the worst people in the world at building infrastructure are socialists and dictators, because, rather than responding to the demands of the marketplace, they have to plan... and then there's the corruption. Capitalism is the key, but no investor in their right mind is going to invest in a place where even the government can't be relied on not to be thieves. If I could rely on the government and the workers not to rob me blind, I'd be gathering investors for hotels and golf courses along part of the shore of Lake Victoria as I write this... it's GORGEOUS.

Another big problem, brought into sharp relief by the devestation in Rwanda, is that there is an incredible amount of prejudice in Africa. Not white on black or black on white... tribal. And it's uglier than any racism I've seen in the US. They absolutely don't trust people of different tribes, and working together is extremely difficult for them.

Here's the hard part to swallow: One of the big problems I witnessed in Africa is that the people have become reliant on "charity." They're literally "children of charity" waiting for someone to come along and help, rather than helping themselves. I don't want to make this into an anti-UN screed, but the UN in particular, but also other charity organizations, have created a very destructive culture. People are starving while waiting for whatever charity money gets past the governments to trickle down to them. More charity = more of that destructive culture.

From what I read at Power Line, Bob Geldof is aware of the problem with governments and is working to have funds provided with strings attached that require government reform.
We (all non-Africans) can't provide the leadership and will that is required to fix the problems, because political leadership and the will of the people must come from within the afflicted country. And, throwing more money in there is actually providing a means to continue the problems. What we can do, I think, is encourage and support leaders who truly do stand for the good of the people, and we can try to design programs where the people who are willing to stand up and work for their own benefit can start building momentum toward a successful capitalist society. The answer isn't charity or re-distribution of wealth from the G-8 to Africa, it's in helping the Africans learn to create their own wealth. A rising tide lifts all boats!