Mitt Romney's Ads Are a Problem For...Mitt Romney

One of the myriad negative results of the Republicans' modern lurch toward dollar cheapening, bank bailout, big government conservatism has been that Virginia, once a red state, is now rather purple. Once a sure thing for the GOP, Obama took Virginia in 2008, and it's surely in play for 2012.

What this means for residents of Washington, D.C. is that they now must suffer the nauseatingly obtuse ads produced by the presidential campaigns. Innocently scanning the NFL scores on Sunday, this writer had to experience the torture of a Mitt Romney ad in which he claims that his economic policies will create 12 million jobs.

About the above claim, it's certainly possible. Jobs are a function of investment and population growth, and assuming barriers to productivity and profits are removed by our federal minders, jobs will be plentiful. The problem with Romney's ads is that they reveal a candidate who, though he'll win thanks to the even worse economic policies of his opponent, doesn't quite get economic growth.

First up is China. Romney claims that the path to 12 million new opportunities includes him "cracking down on China." Here it should first be said that despite the naïve assertions made by those who do and do not support free trade, free trade neither adds nor subtracts jobs in any real sense.

Instead, and this is important, free trade boosts the quality of jobs. To paraphrase the great Henry Hazlitt, economic growth is all about the destruction of work so that limited human capital can move up the proverbial work food chain. Free trade allows just that because it speaks to a growing worldwide division of labor that means we can increasingly specialize what we do.

China is a very poor country, though one filled with individuals who don't like being poor. As a result, the Chinese, in their emergence from the hell of communism continue to engage in low value work of the low-paying manufacturing variety, and their willingness to work for next to nothing means that Americans are increasingly free to enter into higher paying employment of the service variety.

Assuming Romney "cracks down" on China, he won't destroy American jobs as much as he'll reduce the quality of work stateside, along with the level of pay. If we're allowed the freedom to exchange the fruits of our labor for that of the Chinese, some of what they produce for us at microscopic wages will possibly be made here, thus restraining our emergence from low value work.

It's a terrible deal for Americans of all stripes ever eager to advance, and to advance while seeing their standard of living increase. Advancing economies are magnets for investment, while stationary and backwards economies repel it, so in return for Romney "cracking down" on China, Americans will suffer reduced living standards, a less varied and less advanced jobs picture, and lower pay.

After that, it can't be stressed enough that China-bashing is code for dollar cheapening. If elected, the dollar will be Romney's, and efforts to restrict our trade with China will be seen by the markets as a signal that Romney wants the value of the dollar to decline. This decidedly will restrain job creation given the simple truth that investment is what authors it. Investors don't appreciate seeing their hoped-for returns devalued, so if the markets fulfill Romney's cheap dollar wishes, investors will on the margin go into hiding.

Considering Romney's assertion in his ads that he'll make us "energy independent", the very presumption speaks to policies made on a national level. That alone should scare free marketeers who well understand that thriving economies only need the government's help insofar as the government gets out of the way.

If so, it's easy to join Romney if he solely wants to remove governmental barriers to production. Nothing wrong with that, though it can't be stressed enough that oil is only expensive now insofar as the dollar is cheap. Absent the weak dollar policies of Presidents Bush and Obama, energy wouldn't even be an issue in this campaign, but the economy-wrecking weak dollar sadly creates the illusion of scarce energy; one belied by global realities that include a world awash in oil.

After that, and assuming Romney wants to do more than simply remove barriers to exploration, his policies could actually restrain job creation. That is so given the empirical truth that profit margins in the energy sector aren't very large.

In fact, they rank 112th among U.S. industries, so assuming Romney actually creates subsidies and tax credits meant to spur domestic energy production, he'll be artificially steering limited human and financial capital toward a sector that isn't terribly profitable. Backwards economies once again repel investment, investment is what leads to job creation, so if Romney subsidizes the energy sector, he'll be subsidizing a move backwards that will scare away investors.

Lastly, on taxes, in his ads Romney solely talks about tax cuts for the middle class. Here he's not only bending the truth (in truth he proposes 20% income tax cuts across the board), but he's hiding the one stimulative policy in his economic platform: removing the tax penalty on the vital few (yes, the rich) whose economic exploits lead to company creation, and whose investments similarly do.

Romney should talk across the board tax cuts up in his ads, asserting proudly that "I don't view Americans as classes or incomes, rather I view them as individuals who deserve a break from the burden of government no matter how much they earn. We don't have a revenue problem in this country, instead we have a spending problem. I'll cut spending while simultaneously reducing the federal government's share of your wallet. It's not just the economically right thing to do, it's also morally right to let Americans of all incomes keep more of what they earn." One can fantasize.

Needless to say, Romney's signature ads promoting his economic vision hardly inspire. Because they don't, what should be a landslide for Romney may well be a nail biter. The good news is there's time for him to change his economic message to one in which he proposes to remove the tax, regulatory, trade and monetary barriers that hold our economy down at the moment. One can at least hope.