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As a general matter, bull markets in politics coincide with major wars, the expansiono government, and the politicization o large parts o the economy, oten to society’sdetriment.
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As Robert Higgs documents in
Crisis and Leviathan
, advocates o statistintervention take advantage o economic downturns, wars, and other catastrophes tointroduce reorms that may have little to do with the situation at hand, typically outlivethe crises that provoked them, and produce correspondingly dismal results.But the case should not be overstated: not every bull market ends in disaster. The Putin era,in which the state reasserted itsel over an economy looted during a period o instabilityand transition, is certainly a political bull market. For all his aults and singular dependenceon an oil windall, Putin moderated the chaos o the early post-Soviet era, to the generalacclaim o the people. The jury is still largely out on Putin, but Medici Italy, Louis XIV’sFrance, and the Gladstone-Disraeli era are other examples o bull markets in politics thatproduced some, and occasionally signicant, benets or the populace and investing classes.And, as we shall see, Europe’s vigor over the past 40 years has been, in part, the product o a narrow bull market in economic policy (though one which has ironically produced 27smaller bear markets as Brussels squashed economic nationalism).By contrast, bear markets in politics and the politicians who create them tend to be under-studied, under-analyzed, and underrated; these markets are viewed as unimportant tonational well-being. But while they may be less interesting odder or the historian, theygenerally produce more congenial results. The outstanding recent example is Adenauer-era Germany. Adenauer took politics out o the central place in German lie — or instance, by removing the suocating price controls that the Allies had carried over romNazi government, and establishing a sound, apolitical currency. The resultant German
Wirkschatswunder
(economic miracle) was in act the predictable result o providing anindustrious populace in an historically viable nation-state with a stable government andrule o law, and removing the suocating hand o regulation. Adenauer’s amous 1957election slogan,
Keine Experimente
(No Experiments), could serve as a motto or bear market politicians everywhere.Adenauer’s dedication to establishing a bear market in German politics should not beconused with inaction or lack o vision; the Chancellor was vigorous and brilliant inpursuit o his goal, at an age when most men would have long since been retired. But thebias o political scientists and historians is against political bear market politicians. Their programs seem dull and bourgeois, their slogans are rarely sexy, and their achievementslack grandiosity o vision — principally because, as these statesmen themselves admit, thesuccesses they rack up
have little to do with politics
, except insoar as the politicians havebeen shoved out o the way. This is one reason that Mao Zedong’s grand experimentsabsorb more historical ink than Deng Xiaoping’s less colorul eorts. But it was Deng’sbear market that has made China a real competitor with the West, not Mao’s paroxysmso violence and dogma.
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American politics has also produced bull and bear markets to roughly similar eects,though the American bull markets tend to produce somewhat less cataclysmic results thantheir recent European counterparts, while being somewhat longer-lived. As the US isabout to enter its rst bull market in a quarter century, an historical survey is instructive,with a ocus on the under-studied bear markets.
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So far, only one major war, the Korean War, is associated with a bear market in politics, thoughit remains to be seen whether the present war in Iraq will add to that short list.
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