Where's the Bottom? Jude Wanniski April 2, 1997

Because there is now a total absence of leadership at the top of the Spaceship Earth, we are now on automatic pilot, going wherever the winds blow. It is especially nerve-wracking with Washington, DC vacant during this Easter recess and Fed Chairman Alan Greenspan by now in his April 6 matrimonial mode. I spent two days in DC this week and found the metaphysical vacancy matched the physical vacancy. When there is such a vacuum, people scare each other to death with worst-case scenarios. A case can be made that there now will be no cut in the capital gains tax until sometime in 2001. There are widespread assurances that when Greenspan returns from his honeymoon (will it be Andrea Greenspan or Alan Mitchell?), he will definitely raise interest rates two more times, maybe three, just for the fun of it. When there is nobody at home to ridicule rampant speculation, it spirals into never-never land.

We have no idea who leads the Democratic Party, given the speculation that President Clinton may soon be buried under charges that the Chinese Commies financed his re-election. The China bashers are in full swing, openly arguing for open trade war via a withdrawal of Most Favored Nation treatment. Minority Leader Richard Gephardt, who can’t wait to be President, is eagerly promoting trade war on the same grounds that produced the Great Depression and World War II. Free-traders are in a panic because the Republican Protestant Right has signed on to the China bashing, on the grounds that China promotes abortion -- although there are more abortions in the United States than in China. The Republican Catholic Right is bashing because China does not recognize the jurisdiction of the Vatican over Chinese Catholic bishops -- although the Vatican refuses to recognize China. The driving force in all this is the Military-Industrial Complex, which is led not by the defense industries but by security fanatics. They warn that because China will be strong enough to win a war against us in 2020 if it grows at 8 percent a year and the U.S. stands still, that we should nuke them now and get it over with. We have three months, until July 1 when Hong Kong passes into mainland sovereignty. We should expect the craziest stories between now and then, as American crazies in particular seek to influence the handoff from London to Beijing. The craziest to watch are, on the left, The New Republic, which has no problem allowing Weekly Standard contributing editor Robert Kagan use its pages to China-bash, and on the right, Beltway Bill Kristol of The Weekly Standard, who publicly advocates hostilities with China no matter what concessions they make, just to show them who is boss.

Who runs the Republican Party? For a few months, it was Senate Majority Leader Trent Lott, and while he was doing well, the financial markets held together. Since he allowed Newt to run away with his gavel, Lott has disappeared into the void. We can’t really say Newt is running the party -- promising recession at home and war with China -- even though he has the gavel. This is because we don’t know if he will still be around by month’s end, given the calls for his resignation from horrified backbenchers and Bill Kristol (because Newt has not been tough enough on China). Jack Kemp, the nominal party leader, continues to write elegant economic tutorials for The Wall Street Journal from the ski slopes of Vail, but nobody reads them. A one-sentence call for Newt’s resignation and the public thrashing of Alan Greenspan Mitchell is what it takes, but that might disturb old friendships. The Wall Street Journal’s editorial page, which once, long ago, provided leadership, now fusses at length about Scientology and the work habits of soprano Cecilia Bartoli. If it ran two successive lead editorials entitled: “Greenspan Must Go” and “Gingrich Must Go,” we would forecast a bottom on Wall Street. But that would upset old friendships too. When do we hit bottom? When someone shows up at the controls of this meandering spaceship.