Global Crisis/Innovation Blog

 Could the Tea Party Possibly Be… Right?

By Shlomo Maital

 John Tenniel’s ‘take’ on Alice’s Tea Party     

 Perish the thought, but – could those extreme 87 United States Congresspersons, who call themselves the Tea Party, be right?   They’re regarded by most people, even by Republicans, as extreme fanatics who want to slim government at all cost, even if means cutting Medicare, Social Security and other key social benefits.  They’re the ones who brought the U.S. to the brink of defaulting on its bonds and rattled capital markets all over the world. 

      I always urge my students to think different(ly).  Think contrarian.  So, could the Tea Party actually – be right?

     In a recent piece in the Singapore Business Times,  R. Sinvanthy recalls an episode in history worth remembering.  In 1981 Margaret Thatcher, British PM, brought in a draconian budget that slashed government spending, raised taxes, narrowed the budget deficit, closed coal mines and in general radically reduced the role of government in Britain.  In response, 364 economists wrote a letter to Thatcher, saying that her budget was disastrous and would deepen Britain’s economic crisis (the 1980-81 recession).  Among the signatories were top academics, incuding a Nobel Prize winner and two would go on to win the Nobel Prize in economics, along with Mervyn King, current Governor of the Bank of England. 

    And boy, were those guys wrong!  Within two years, Britain’s inflation rate fell from 18 per cent to 5 per cent.  (See Phillip Booth, Were 364 Economists All Wrong?   Institute of Economic Affairs, 2006).  Britain’s economy began to grow.  Thatcher was right. The geniuses were wrong.

    The Tea Party is extreme, but often to make a point you need to express it in an overly extreme fashion, just so people will take notice. As I understand it, the basic point they make is a correct one.  America is a business, like any country.  The business of America is being run badly by its political leaders.  Get your act together. Shape up.  Run America like America’s managers and entrepreneurs run their businesses.  President Obama, it’s not enough to appoint Jeff Imelt (GE CEO) to head a committee.  You have to BECOME him!  Run America like Jeff runs GE.  Deleverage. Reduce the debt. Slash waste. Do all the hard things America needs to become strong and stable again.  And do it quickly, using the principle:  All the bad news at once, good news a little at a time.  If this is what the Tea Party crazies are saying – well, I think I support them.    

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