Why the 2024 Election Misses the Mark on America’s Most Critical Issue

Sadly, the presidential race is unfocused on America’s most critical issue. This issue is so crucial that everything else, such as inflation, geopolitical conflicts, immigration, the decline of manufacturing, and cultural conflicts, depends on where you stand on it. I’m referring to the limits of government. Based on both candidates’ approaches, there seem to be no clear limits, except for Trump’s spasmodic criticism of excessive regulation.

The two dominant parties are off in la-la land, unaware of the colossal growth of the welfare state, the regulatory state, and the warfare state. They generally mistake the symptoms for the causes and sometimes confuse the problems with the solutions. 

The U.S. has a serious fiscal and monetary crisis at hand, including a public debt that grew from 31 percent of GDP in 1980, when the ratio bottomed out, to 122 percent today. The Fed’s balance sheet has exploded, growing from less than $900 billion in 2007 to $7.2 trillion today (it was even higher in recent years.) This crowding out of private savings and investment and the dilution of the value of money has significantly slowed the rate of growth of the productivity of the U.S. economy despite technological advances.

Net real private investment has declined from 6.7 percent of GDP in 2000 to less than 5 percent today. And, yes, the middle class has been hurting for quite a while as manufacturing jobs have flown overseas, but not because of some international conspiracy, nor exclusively because of market forces. It is because inflationary policies have consistently raised unit labor costs to the benefit of competitors—they have increased 4.5 times since 1971.

To make matters worse, the increase in the number of people reaching retirement age and the demographic impact of a record-low fertility rate make it imperative that the U.S. start bringing in immigrants through legal channels instead of messing with the dynamics of supply and demand in the labor market and fueling a border crisis that would, in large part, be diffused if politicians adapted to reality.

In their long history, both parties have gone through phases associated with small-government ideas and both have repeatedly espoused big government. 

The Democrats switched to big government, at least in the modern era, after William Jennings Bryan, perhaps encouraged by the ambition to win votes in the expanding western part of the nation, engineered an ideological shift in the party. Woodrow Wilson’s interventionism overseas, F.D. Roosevelt’s New Deal and L.B. Johnson’s Great Society and Vietnam adventure did the rest, all the way to today’s regulatory mania dictated by the wrong approach to climate change and other challenges. 

The Republican party has had a varied history when it comes to government intervention. In the 19th century, they were heavy interventionists, but in the 20th century, they went through phases of advocating for smaller government. Notably, Calvin Coolidge and Dwight D. Eisenhower were proponents of cutting taxes and spending. Eisenhower also expressed concerns about the military-industrial complex. Barry Goldwater had some good ideas but was on the wrong side of the racial issue. Ronald Reagan continued the push for liberty, but under his leadership, the defense budget grew significantly, and the party began to be influenced by neoconservatives and supply-siders, who focused on reducing taxes but overlooked fiscal discipline. Since then, the party has largely supported big government.

America urgently needs a political party to address the issues arising from decades of warfare, welfare, and regulatory chaos. Will conservatives, with their occasional interest, adopt a small-government ideology to tackle these problems? Will liberals return to their classical roots?