Whether you are watching the stock market, the headlines, or merely your 401K account balance, there is not much that is positive to draw from the economic collapse that is just getting underway in the United States. With each new negative earnings report, bankruptcy, and ominous unemployment report, it gets a little harder to see the silver lining around this enormous black cloud. Some have argued that the collapse of the present system will provide an opportunity to remake America as a free country again. They may be right, but that is a bet with long odds that wouldn’t pay for years, possibly decades. However, there is one positive consequence of the economic debacle that we can point to right now. The Bill Clinton Myth has finally been debunked.
Most people are familiar with the Bill Clinton Myth, but are unaware that it is not historically accurate. It’s a wonderful story, if you are a Democrat or even just a government-worshipper in general. For those who practice that religion, the Bill Clinton years serve as a Golden Age to talk about, to write about, and even to pray about, hoping for its return. However, this myth does not even offer the benefits of its more interesting ancient predecessors. In fact, while the ancient myths of gods and monsters contained spiritual and philosophical truth underneath their obviously fictional plotlines, the Bill Clinton Myth contains no truth at all. Perhaps “myth” is the wrong word, because it gives good myths a bad name.
The Bill Clinton Myth goes something like this. After “mismanagement” of the economy by President George H.W. Bush, which resulted in the recession that coincided with the 1992 election, Clinton took office and “managed the economy” wisely during his eight year presidency. Clinton’s “centrist policies” were just what the economy needed at a time of technological revolution, and his wise stewardship resulted in not only unprecedented growth and low unemployment for the economy, but balanced budgets and even surpluses for the federal government. By the time Clinton left office, the United States was more powerful economically than it had been at any time in its history.
Like the Populist Myth of the 19th Century, this one is a great story. Also like the Populist Myth of the 19th Century, none of it is true. While even some Republicans begrudgingly credit Clinton with the mythical budget surpluses or the equally mythical prosperity in the 1990’s, they do themselves a disservice in regard to their quest to discredit every Democrat who ever (or will ever) lived. As we have now learned, the facts are that there were no federal government surpluses, the lion’s share of the prosperity was no more than a Federal Reserve-created bubble (the dot com bubble), and what real economic growth there was occurred despite Clinton’s policies, not because of them.
It might be necessary to go back and read that last sentence again. It is heresy, as surely as Galileo’s heliocentrism was to the Roman Inquisition. However, it is also just as undeniable as heliocentrism, regardless of the fact that it may shatter the world view of the government-worship cult (including, but not limited to, the Democratic sub-cult). Let us look at these “heresies” one at a time.
First, there were no federal surpluses. As this writer clearly explains, the appearance of a surplus was merely the result of the increased tax revenue from the dot com bubble allowing the Clinton administration to borrow more money from Social Security. Thus, while the public debt went down in the last four years of the Clinton presidency, the intergovernmental debt (mostly to Social Security) went up by an even greater amount, resulting in an increase in the overall national debt in each of those years. While the writer of this article could be quite correctly accused of a conservative bias, his argument here is based upon easily verifiable facts out of the published federal government budgets for those years. In other words, whatever else he might think about Democrats, he is stating facts here that are not in dispute. Only spin and distraction keeps the great majority of people from simply looking up the budgets from 1997- 2001 and seeing the deficits for themselves.
Second, there is the technological revolution and its resulting prosperity. Certainly, there were astounding developments in technology in the late 1980’s and throughout the 1990’s. One could look at this decade as a mild version of the technological revolution that occurred at the turn of the 20th century, although the breakthroughs, mostly in computing, were not as paradigm-shifting as the invention of the steam engine or the automobile, much less the telephone or the computer itself. However, there were vast increases in productivity due to the “new economy,” and a whole industry that did not before exist was born that employs people in higher paying jobs and has revolutionized communication, commerce, and efficiencies.
All of this happened during Bill Clinton’s presidency (although its roots go back at least as far as the Reagan years, possibly even Carter), but what, SPECIFICALLY, did he do to cause it? Nothing. Microsoft, Oracle, Apple, and the rest of the REAL new companies that emerged during this technological revolution were children of the free market. Gates, Ellison, Jobs and the rest were all creative entrepreneurs who took enormous risks based on their superior vision of where breakthroughs in technology could take commerce. Anyone old enough to remember knows that government had very little understanding of the tech sector, and frequently complained that it had not yet come up with regulations that would address the new types of products or methods of conducting business that the tech sector presented. In other words, much of the reason for the explosive growth was the ABSENCE OF GOVERNMENT INVOLVEMENT, despite government’s wishes to the contrary. For a short time, until the lumbering machinations of government caught up, a free market in technology existed that allowed for spectacular innovation and growth.
The most significant action undertaken by the Clinton administration regarding the REAL technological revolution was its anti-trust case against Microsoft. Here, Clinton’s true contempt for free markets and property rights came shining through. The basis for this action was rooted in the century-old (at least) antagonism toward natural monopolies, which benefit customers, as I’ve discussed here, as opposed to government-created monopolies that harm customers. This particular anti-trust case had an even more bizarre twist, as it was based upon the ludicrous assertion that Microsoft had some responsibility to build opportunity for its competitors into its own product. Thus, government tried to “ensure competition” by using its coercive power to cripple the leader, rather than protect the property rights of all. Only through the government looking glass could such preposterous reasoning be called “free markets.”
However, that is certainly not the whole story behind the 1990’s. There was another side to the tech revolution – the dot com bubble. This side of the story is not characterized by Microsoft or Apple, which are viable companies to this day. This side of the story is characterized by Pets.com, online supermarkets, and other hare-brained schemes that only got capitalized due to the reckless monetary policy pursued by the bubble-maestro himself, Alan Greenspan. To be fair, Clinton may not deserve much blame for this bubble. Most politicians demonstrate little understanding of monetary policy, beyond their belief that lower interest rates raises stock prices and higher stock prices equals votes. At one point, he actually made a speech wherein he claimed that the business cycle had been eliminated, which seems to indicate that his understanding was as limited as that of most other presidents. In any case, the dot com bubble can either be a minus for Clinton, if you attribute the activities of the Federal Reserve to the corresponding presidential administration, or merely the Fed doing what the Fed does (inflate and distort the economy), regardless of who happens to be in office.
Finally, in addition to the false credit that Clinton receives for his imaginary role in the perceived prosperity of the 1990’s, he seems to have somehow escaped all blame for his very real hand in the problems we are facing now. Remember, it was Clinton who appointed FDR II (Franklin Delano Raines) as CEO of Fannie Mae, and then pressured the GSE to significantly increase its loans to riskier sub-prime borrowers. In fact, the Clinton administration bragged about the fact that it had not only had a hand in the first black CEO of a Fortune 500 company, but also that it had made home ownership possible for millions of Americans that otherwise could not have obtained mortgages. Of course, it is poetic justice that Raines is now the subject of over 100 civil lawsuits and a huge percentage of those mortgages are defaulting. As is always the case, government’s results when interfering in markets are exactly the opposite of its intentions.
So, contrary to the Clinton Myth, the facts behind the Clinton presidency reveal that it had nothing to do with what real prosperity there was in the 1990’s, was as clueless and impotent as most other administrations in taking any action while the Federal Reserve blew up an enormous bubble on its watch, and sowed the seeds for the mortgage crisis that started the present economic cataclysm. Economically, the Clinton presidency was an unmitigated disaster, and hopefully it is clear to all but the most fervent government worshippers that his “stewardship of the economy” is a myth.
Lest this be seen as a partisan attack, let me clear the air. There have been two presidents credited with prosperity that seemed to coincide with their years in office during the past 40 years. One was Reagan, a Republican, and the other, Clinton, a Democrat. In both cases, they were falsely credited with prosperity that was mostly an illusion caused by the Federal Reserve, and their policies otherwise failed miserably. These were not so much personal failures on the part of either of these men, but rather failures of a false ideology. They both represented failures of the ideology that government has a role in the economic interactions between people beyond enforcing contracts and preventing violence or fraud. Until we cease demanding that government “do something about the economy” and recognize that government CAUSES all of our economic problems, we are going to keep getting the same results, whether a Democrat or a Republican occupies the White House.
Now that the Clinton Myth has been exposed as a fraud, it is time to reject the entire government religion as a whole. Centuries ago, most peoples of the earth ceased sacrificing animals to bring rain, better crops, or good fortune hunting. At some point, they realized that there was no cause-effect relationship between killing a goat and the end of a drought. It is time that we likewise recognize that no politician has ever had any more to do with prosperity than those unfortunate goats had to do with the weather. Once the superstition of this religion is rejected, it is clear that only free markets, individual effort, and creativity can create wealth and prosperity.
 I recall him making this ludicrous statement, but have not been able to reference it. Perhaps someone can provide the citation in a comment.
 The focus by both the Clinton administration and the media on Raines, a political hack who took over a Government Sponsored Entity, was a disservice in that it distracted attention from REAL black executives, like Kenneth Chenault, and Richard Nanula, who had risen to their positions based upon their talent and hard work.
 To be fair, Reagan’s rhetoric was admirable. He talked constantly about lower taxes, smaller government, and more personal liberty. However, he failed to implement this ideology to any significant degree, possibly because of a Democratic Congress. More importantly, he ran huge deficits due to defense spending and the growth of entitlement programs on his watch that constituted bigger government rather than smaller.
 Actually, the government religion is far more harmful than the ancient religious cults. When the ancients sacrificed a goat, they neither benefitted nor harmed anyone (other than the goat). When government tries to “create prosperity,” it harms everyone in society.