Gingrich's Fall, Obama & Romney Speeches Set Stage for Battle over the Soul of American Capitalism

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This Seven Days between Tuesday January 24 and Tuesday January 31, mark a pivotal point in the 2012 Presidential Election Cycle.  First, if recent polls from Quinnipiac and the Miami Herald are accurate, it appears that Speaker Gingrich is falling and can't get up.  In Hollywood you expect the villain to come back to life after the first attempt.  But make no mistake, after Mitt Romney's second series of knockout punches (first in Iowa and now outspending Gingrich in Florida $15 million to $4 Million), it is clear that Speaker Gingrich's presidential aspirations are down for the count.  Governor Romney is finally sealing the deal, even if by eliminating the opponents from a less-than-stellar field, and this looks like the two-man race that most experts predicted 12 months ago.  If tomorrow's Florida primary goes as advertised, Romney wins by at least double-digits, and the run for Tampa becomes a mere formality.

More importantly, within the past week both President Obama and Governor Romney have begun to cement their core economic messages.  President Obama's message will stress Fairness and Capitalism with Rules.  Romney's message is to call Obama a socialist, and demand unrestrained Capitalism.  If both campaigns stick to these messages, we can look to four more years of Obama, because Obama's message is backed by solid evidence, and Romney's message is not.

On Tuesday, President Obama's State of the Union Address presented a clear vision of the future of American Capitalism and the role of Government in Capitalism.

President Obama:

“To reduce barriers to growth and investment, I've ordered a review of government regulations. When we find rules that put an unnecessary burden on businesses, we will fix them. But I will not hesitate to create or enforce common-sense safeguards to protect the American people. That's what we've done in this country for more than a century. It's why our food is safe to eat, our water is safe to drink, and our air is safe to breathe. It's why we have speed limits and child labor laws. It's why last year, we put in place consumer protections against hidden fees and penalties by credit card companies and new rules to prevent another financial crisis.  And it's why we passed reform that finally prevents the health insurance industry from exploiting patients.”

Thursday night's GOP Presidential debate, the 19th in this election cycle's non-stop Debate-o-Rama since this Presidential election season began, saw Mitt Romney find his groove.  In taking the fight to Newt Gingrich, his resumed his front runner status.  He also restated his major economic theme:

Mitt Romney's closing debate answer:

“This is a time where we're going to decide whether America will remain the great hope of the 21st century, whether this will be an American century, or, instead, whether we'll continue to go down a path to become more and more like Europe, a social welfare state. That's where we're headed.

Our economy is becoming weaker. The foundation of our future economy is being eroded. Government has become too large. We're headed in a very dangerous direction.

I believe to get America back on track, we're going to have to have dramatic, fundamental, extraordinary change in Washington to be able to allow our private sector to once again reemerge competitively, to scale back the size of government and to maintain our strength abroad in our military capacities.”

These two economic themes, along with the release of Romney's taxes, have presented a clearer view of what Election 2012 will have in store – This election will be about defining the future of American Capitalism.

On the right, Romney is asserting that Obama's policies will amount to the American adoption of European Socialism.  On the Left, Obama is asserting that Romney is seeking to return America to the failed policies of unregulated Capitalism that brought us the Great Recession and the Great Depression.

If Romney makes this into a fight of “Capitalism versus Socialism” he wins as Americans, according to recent polling from the Pew Research Center, highly favor Capitalism, with independents having a net +20% favorable view of Capitalism.  

If Obama, however, makes this fight into a question of what kind of Capitalism we want – a heartless, soulless, brainless Capitalism, or a thoughtful, studied,  intelligent Capitalism, then he wins because the same Pew poll found an increasing ability of Americans to see the flaws of Capitalism, even while still prefering it to Socialism.President Obama can, and must, win this argument.  And he will because Romney's message is factually challenged about President Obama's policies, and is historically inaccurate by failing to recognize the weaknesses of unregulated Capitalism, or the need for Capitalism with Rules.

But in order for President Obama to win, he must make clear that he and the Democratic Party are not abandoning Capitalism, rather they are about perfecting it and strengthening it.  President Obama must be the Champion for “traditional American Capitalism” that sees the inherent weaknesses in Capitalism for what they are – easily overcome by the simplest of oversight.  Indeed, there is a reason why there has been no second Great Depression: Government regulations have prevented it and allowed the strengths of Capitalism to prevail over its known weaknesses.

Under Capitalism with Rules, everybody is able to succeed as long as they play by the rules.  In contrast, Romney's view of Capitalism without rules, a view that is almost universal within today's GOP, seek a type of unrestrained, known as Laissez Faire Capitalism among economists, that historically is bound to fail.  Quite simply, Americans today recognize that the Great Recession that Obama inherited was caused by the Bush Administration.  Obama should not just point the finger; he must use the proper names.  The failure of the Bush Administration was the adoption of too many Laissez Faire policies.  

Historically, the policies Romney is pushing, Laissez Faire Capitalism without rules, is historically destined to fail.  It is as much a warn-out relic on the trash heap of economic history as Communism.  In contrast, Modern Capitalism, or Capitalism with Rules, understands that Capitalism requires competition; that competition within free markets is the means that Capitalism provides goods and services that people want and need, at a price that allows profits, and minimizes waste; and, that such competition only occurs with government regulation.  Capitalism without Rules has shown to provide less competition, produce less products, which are priced higher.  In Capitalism without rules, the rich and powerful get special treatment, and the middle class gets the shaft.

Rules-based Capitalism avoids market collapse by learning from past mistakes.  Have you ever wondered why there has not been and second “Great Depression?”  That is because FDR and a Democratic Congress provided rules to prevent banking collapses in the future and to prevent stock market manipulation in the Securities and Exchange Commission.  It was the repeal of these laws, and their circumvention by non-regulated investment banks that caused the Great Recession.

America still understands that Obama did not cause the Great Recession.  Make no mistake, if Romney is allowed to usurp the title of the only real Capitalist in the race for the White House, he will win.  And the result will be Capitalism without rules, and more instability in our free market system.

If Obama takes away the ability of Romney to be the only Capitalist in the room, by taking on the mantle of the Capitalist with a brain, then make no mistake, he will win.

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