Pollack: Donald Trump Corrects George W. Bush’s Greatest Economic Mistake
23 Mar 2020
President Donald Trump did something difficult and remarkable during the White House press briefing on Sunday: he stood up for the free market in a moment of crisis, when at least half the country is pushing him to abandon it.
A reporter asked the president why he was not using the Defense Production Act to nationalize industries to take control of companies and force them to produce needed health care equipment for treating coronavirus patients.
Trump’s answer was that the United States does not believe in nationalization, and does not need it, either:
Q: Mr. President, when it comes to the Defense Production Act. We know that governments across the country all day today were pleading with you to utilize. the DPA, to us it —
Trump: Well, it depends which governments you’re talking about.
Q: — specifically for that allocation piece that you mentioned, Mr. [Peter] Navarro. Why not use it now, if that would answer their pleas for help?
Trump: Well, we are using it now. The fact that I signed it, it’s in effect. But you know, we’re a country not based on nationalizing our business. Call a person over in Venezuela. Ask them: how did nationalization of their businesses work out? Not too well. The concept of nationalizing our business is not a good concept.
The president continued by explaining that the private sector knew better than the government how to produce needed commodities — and which companies should produce them:
Trump: Here’s the beauty of it. If we go out and we want, let’s say, masks, we don’t know who to call. But Hanes, who makes things of cotton, various elements, lots of things, it’s a great company. They called us, and they said, “We’re going to make millions of masks.” We got a call today from 3M…
The president went on to explain that sometimes a company that government might think was best to produce a needed commodity might not actually be able to do it:
Trump: If you go the national route, nationalization route. We’re gonna tell a company to make a ventilator? They don’t even know what a ventilator is! In the case of one company, they used to make them, years ago, and they know how to make them. You know, it’s a very complex piece of equipment, frankly.
The president added that while nationalization was useful as a threat, it could also be damaging as a threat, because of negative signals it sent about the economy — and he reiterated that companies were stepping forward without the threat even being necessary:
Trump: We have the threat of doing it if we need it. We may have to use of somewhere along the supply chain in a minor way. But we have millions of masks being done. We have respirators, we have ventilators…
When this was announced, it sent tremors through our business community, and through our country, because basically what are you doing? You’re talking about — you’re going to nationalize an industry, or you’re going to nationalize? You’re going to take away companies? You’re going to tell companies what to do? The truth is most people — nobody would know where to start. There are companies out there that you wouldn’t think of that have called us …
It is impossible to overstate the courage of this stance.
During the 2008 financial crisis, the Bush administration rushed to bail out Wall Street — thereby destroying the incentives of the market, creating new moral hazards. Companies that had made risky bets were insulated from the actual consequences of those bets. Wall Street recovered; Main Street did not — at least, not until much later.
Bush gave an address in November 2008, after Congress had passed the bailouts, and Barack Obama had won the election. “I’m a market-oriented guy, but not when I’m faced with the prospect of a global meltdown,” Bush said.
He added: “[T]he long-term solution to today’s problems is sustained economic growth. And the surest path to that growth is free markets and free people.”
But it was far too late for that.
Bush threw free market principles overboard to bail out Wall Street. Trump, in contrast, is sticking to free market principles while coming to the aid of Main Street.
https://www.breitbart.com/politics/2020/03/23/pollak-donald-trump-corrects-george-w-bushs-greatest-economic-mistake/