Business Cycle/Political Cycle

By Dick Morris on December 21, 2016

How do we make sense of the alternation in power of our two parties and their ideologies? Now that Trump seems intent on repealing ObamaCare and Obama’s executive orders on the environment, we are given to wonder if we are not simply trapped between two forces alternately embracing and erasing their legacies.

But we need to grasp the essentially cyclical nature of our progress. It is not a pendulum erasing with each swing from left to right and back again of all that happened before. It is an upward spiral — not a downward screw — in which each shift of the dominant political ideology sifts through the wreckage left by its defeated predecessor, embracing the policies that have proven themselves and discarding the rest.

Its a lot like the business cycle — from boom to bust — where what Schumpeter called “creative destruction” destroys the unsound businesses, the overblown profits, the useless jobs, and the crazy investments that have accumulated and leaves standing, instead, the sound businesses and a business expansion based on meeting the real needs of the market.

Because human nature — with its innate propensity for excess — rules politics as well as economics, the political cycle that paces our democracy parallels that which dominates our economy. The political cycle is less widely noticed, but is just as fundamental.

When a political party or ideology takes over, it implements needed reforms to correct abuses that have multiplied under its predecessor. Where the ancient regime was too liberal, the new people cut spending and slash regulations. Where there had been higher taxes, they introduce lower rates. For a while things turn around. Jobs abound. Companies — liberated from taxes and regulation — start to hire again. Investors return to the market place. But inevitably, the political boom will overreach just as business prosperity always does. Important regulations are repealed. Free from scrutiny, businesses pollute, discriminate, and shortchange consumers.

Where the left rules, corruption — its habitual failing — sets in. When the right takes power, greed — its constant defect — always gets out of control and fuels voter disgust.

And then the pendulum swings back again.

But, in the meantime, real progress is made. Not all of the measures that were passed under the right or the left are repealed. The good ones stay and fuel our upward progress as a people.

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