While other Tea Party insurgents have taken to dreamily insisting
they can see Ronald Reagan’s city upon a hill shining in the
distance just beyond November 2, 2010, Peter Schiff looks at those
same distant glints and sees instead something akin to a state
Leviathan economic death ray.
“Oh no, 2008 was the overture,” Schiff answers with a
rueful smile when asked if the worst of the past two years’
tribulations are behind us. “We haven’t even heard the opera yet
let alone the fat lady.”
This is not a prognostication to take lightly. With his
2007 book
Crash Proof Schiff proved himself a more authentic
clairvoyant than Alan Greenspan, Art Laffer, or Nostradamus,
correctly predicting not only the shortly-thereafter ensuing
sudden economic collapse in uncanny detail, but also the
ham-handed, meddlesome Big Government response that would
exacerbate the crisis.
In
CEO of the Sofa, P.J. O’Rourke wrote that he read
Hillary Clinton’s
It Takes a Village because he recognized “Neville
Chamberlain made a famous mistake by not bringing a copy of
Mein Kampf with him on the plane ride to Munich.”
Similarly, Crash Proof is the book you wish Ben Bernanke
had taken in the car
en route to testify before the Senate Banking Committee in
2007.
So dire is the situation, Schiff has decided to add to his
busy schedule of writing financial bestsellers and guiding his
Euro Pacific Capital fund a
run for the Republican U.S. Senate nomination in Connecticut, a
race in which, bizarrely, the man whose YouTube greatest hits
includes the remarkable video “Peter
Schiff Was Right” is considered an underdog against former
World Wrestling Entertainment CEO Linda McMahon,
a woman now perhaps as well known for her
willingness to spend $50 million of her own money to become a
senator as she is for her ability
to take a piledriver and nonchalance about shin
to groin combat.
“I’m going there to fix the problem, not to be a senator,”
Schiff says, laying out his planned approach to membership in
what state power fetishists and senators (but I repeat myself?)
insist on calling the world’s greatest deliberative body. “The
Senate is a means to an end. And the end is to reverse the damage
government has done. I’m going to Washington to dismantle it.” He
pauses for a moment as if to reconsider, then adds, “Not
completely, just the lion’s share.”
“The financial crisis does not result from a lack of
regulation, but an
excess of regulation,” he continues. “We need to stop
distorting price signals, stop distorting resource allocations.
We need to allow these decisions to be made collectively through
the marketplace, not by government bureaucrats centrally planning
our economy based on what they think should happen, because
they’re almost always wrong. That path has been tried time and
time again, and it has never succeeded. Obama will not succeed
where Castro failed. It’s just not going to happen.”
For those unfamiliar with Schiff and inclined to presume
this is the same sort of Road to Obamascus moment profligate
Republicans of the majority Bush years seem to be having left and
right while mired in the minority, rest assured Schiff has never
been a water-carrier for statism, and he has the scars to prove
it.
“For years, I was going on financial television
shows…arguing with all the conservatives,” Schiff — who is no
shrinking violet with media
liberals, either, incidentally — says, chuckling softly.
“They thought we had a genuine prosperity because of the Bush tax
cuts. I would argue with these free market guys and they would
compare me to Michael Moore. They figured I was this bleeding
heart liberal because I was being so critical. They did not
understand the phony nature of our economy…
“Blindly defending Bush set the stage for Obama. You give
capitalism a bad name by labeling Bush a capitalist when he’s
not. He was not a free market guy. The left was critical for the
wrong reasons, but they’re the ones who got credit for saying,
‘Hey, we warned you!’”
Schiff’s electioneering roots as a financial advisor on Ron
Paul’s 2008 presidential campaign are not difficult to divine
from the unadulterated,
Austrian-school-saturated agenda on his campaign website: End
all bailouts, a “hard cap” on the national debt, “fight against
backdoor regulations on global warming,” eliminate the Department
of Education, “allow interstate health care competition,” “a
policy of national defense, not national offense,” end weak
dollar policies, and “Personal preferences aside, U.S. Senators
must not interfere with a state’s rights to self-govern.”
“Congress can’t handle the problems currently in front of
them,” the site fumes. “Yet, that hasn’t stopped President Obama
and the Democrats from plotting new expansions into every aspect
of our daily lives.”
It isn’t exactly sunny optimism, but Schiff allows he has
the audacity to hope that while the end is indeed nigh, it is not
quite here yet.
“The pendulum is either going to swing in the complete
opposite direction of Obama, which is what we need, or it’s going
to be stuck,” he says. “We are at a fork in the ‘road to serfdom’
Hayek wrote about…We’re either going to bite the bullet so things
can improve or we’re going to embrace this ideology and things
will never improve — they will get much, much weaker, and that
will pave the way to turn this country into a totalitarian
society, a giant banana republic. Where is the tipping point? I
don’t know. I don’t think we’re there yet, but we are moving in
that direction, and we’re moving in that direction fast.”
Typical of a seasoned investor, Schiff has diversified the
baskets in which he holds his freedom fighter eggs. In addition
to the Senate race, Schiff recently released a new book with a
less investor-centric, more generally accessible, bent,
How an Economy Grows and Why It Crashes, updating for
the present day an allegory of three island fishermen his father,
the jailed tax protester Irwin Schiff,
employed decades ago to teach his young sons about
economics.
“The best defense we have against government tyranny and
creeping socialism is to educate the public so they wake up and
understand the lie the government is selling them so they don’t
buy it,” Schiff explains.
SCHIFF’S ACCURATE PREDICTIONS and uncompromising defenses
of individual and economic liberty have gained him many fans. At
FreedomFest in Las Vegas where he sat with TAS for
this interview Schiff was approached by a fairly constant stream
of well-wishers and admirers. A young fund manager told me he
went into finance specifically because he was inspired by
Schiff’s example of integrity and the possibility that armed with
the right philosophy and foreknowledge he could help prepare
clients to survive the economic cataclysm that potentially
looms.
He also said his views on the nation’s shaky economic
trajectory made him a complete outlier among even those
colleagues who admit Schiff should have been heeded rather than
laughed at three or four years ago. The downside has apparently
not gained popularity as a conversational topic in the world of
finance, despite all the water under the barely aloft
bridge.
At the moment — and, essentially, throughout the race —
chances of a Schiff upset have seemed slim at best. “Connecticut
Republicans now have a alternative: a wrestling promoter or a
businessman and economist,” Schiff
told USA Today when he qualified for the primary
ballot. “Given the state of our economy, I think the choice is
clear.” Not quite as clear as Schiff would likely prefer. While
he
polls as well against Democratic nominee Richard Blumenthal
as Linda McMahon — both are behind — a June poll showed a
daunting
primary deficit.
Nevertheless, although the fight for name recognition has
been much tougher and slower than he’d prefer, and though he’s
disappointed his candidacy rarely comes up in media discussions
of Tea Party candidacies, Schiff likes the way his
favorable/unfavorable numbers break as voters continue to learn
about his candidacy.
“I’m behind,” he acknowledges, “but it’s not
insurmountable” — and, as we now understand perhaps too well,
people ignore Schiff’s forecasts at their own peril. A grassroots
surge in these final weeks of the campaign is explicitly not out
of the question during such a volatile time. (This is the part
where we say
Remember Scott Brown.) There will, however, be no meandering
across the finish line. Something big must break, and soon, for
Schiff to have a shot at winning the August 10 primary against
McMahon. And Schiff recognizes that is largely out of his
hands.
“It’s not just about wanting freedom — you’ve got to fight
for it,” Schiff says. “Fortunately we don’t have to risk our
lives for it. I’m not asking people to pick up a bayonet and
storm a hill. I’m just asking them to pick up the telephone and
make a few calls. And maybe write a check.”
