TCS Daily


The Austrian's Economics

By Dominic Basulto - September 3, 2004 12:00 AM

Prior to California governor Arnold Schwarzenegger's Tuesday night primetime address to the Republican national convention, more than a few political strategists were probably holding their collective breaths. After all, it was no secret in the days leading up to the convention that the California governor and President Bush have had sharp divergences of opinion on issues ranging from abortion rights to the environment. Some even questioned why moderates like Schwarzenegger and Giuliani were tapped to address the party faithful. Schwarzenegger handled these doubters, though, in the same way that he handled the "bad guys" in his Hollywood blockbusters -- with gusto. His twenty-minute speech was a rousing tribute to the American dream and a stirring reminder that the GOP's economic policies are on the right path to building a more hopeful America.

Schwarzenegger's appearance at the convention was about more than just showcasing the party's more moderate, centrist candidates or winning over undecided voters with mega-wattage star power. There was another, more important, reason it made sense to give a political neophyte like Schwarzenegger a major role at the GOP convention: with his Hollywood cachet and can-do American-style optimism, Schwarzenegger was there to pump you up. By explaining to the world what it means to be a Republican, Schwarzenegger delivered a political message that will resonate with voters in both parties.

With his vow to dispatch with "economic girlie men," for instance, Schwarzenegger made clear that a vote for the Republican Party was a vote for the economic future of America. The ability to fulfill the American Dream hinges on government's embrace of free enterprise, lower taxes and a rational regulatory climate. After all, Schwarzenegger's "rags-to-riches" story as an immigrant newly arrived in the USA who made it big can be directly attributed to the success of pro-business, pro-growth strategies that encourage entrepreneurs, spark innovation and reward hard work. When government champions lower taxes, the creation of new businesses and the reduction of regulatory red tape, opportunities arise for millions of Americans.

In California, Schwarzenegger has followed through on this message of free market principles. When Schwarzenegger became governor of California, he set out to change the playing field for business in the state. He pledged to cut taxes, reduce the regulatory barriers to doing business, reform workers' compensation, and refinance the state budget. In early August, Schwarzenegger kicked off a nationwide marketing campaign ("Arnold Says: California wants your business") to highlight the advantages of doing business in California. As part of this campaign, he traveled to Las Vegas, arriving at the press conference in an 18-wheeler moving van, vowing to help businesses pack up and move to California.

In much the same way, President Bush's economic team needs to explore new ways to convince businesses to pack up and move to the USA -- or at least, to stop the outflow of economic opportunities to places like India and China. As Schwarzenegger reminded the Republican Party, now is not the time for pessimism about U.S. economic might -- now is the time for action.

The USA needs to tap the innovation and entrepreneurial know-how that resides within its borders in order to head off the economic threat from Asia. For example, Schwarzenegger recently unveiled a 10-year, $1 billion effort to install one million solar energy systems in California homes and make California the world leader in solar energy. While many Republicans flinch at the notion of alternative energy solutions, it is important to keep an eye on the big picture: government support of emerging new technologies can spark innovation and private-sector solutions to seemingly intractable problems. Whether it is in areas like nanotech or space exploration, the government can open up the economic floodgates for technology entrepreneurs hoping to fulfill the American Dream.

It would be a stretch to say that Schwarzenegger will have a role in remaking the Republican platform or in "reinventing the GOP." However, Schwarzenegger has shown that a proactive, take-charge approach to governing that includes tax cuts, aggressive job stimulation and unvarnished optimism is a recipe for success. It's a lesson that George Bush should keep in mind as the campaign enters the final home stretch. If Republicans continue to call for ways to "fulfill America's promise," then politicians like Schwarzenegger will no doubt be in the vanguard, providing a message of hope for the future. As Schwarzenegger reminded Republican delegates in New York -- "The U.S. is the great idea that inspires the world."

The author is a TCS columnist.


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