This election has been Romney's to lose—given the very poor performance of the economy over the past four years—and tonight he demonstrated that he will not lose easily. In fact, he turned in a masterful performance that exceeded most supporters' expectations. The key for me was that Romney displayed a command of the facts and an understanding of how the economy works that left Obama mumbling, searching for talking points he could string together to mount a defense. It was at times almost pitiful.
As readers of this blog know, I have been consistent in my belief that the economy would exceed the miserable expectations of investors. I have defended the economy every time the bears have called for an imminent recession. I have argued that the economy would continue to grow, albeit slowly, despite all of the faux stimulus that has been applied by the Fed and the federal government. And indeed that has been the case. Those that bet on the economy have been rewarded for the past three and a half years, whereas those who predicted disaster have lost. The rewards have gone to those who have believed in the inherent dynamism of the U.S. economy, and in its ability to overcome adversity. And there has been plenty of adversity, from massive income redistribution to the demonization of the successful, and the relentless increase in the size and burden of government and its regulations. In addition, we have suffered the fears of a Eurozone meltdown, an unprecedented housing meltdown, a rekindling of Middle East tensions, and repeated attacks on big business and the rich. Yet the economy has continued to recover.
Romney was on the right side of this debate from the start, since he clearly believes in the power of the private sector to fix things. Obama is on the wrong side, since government has never demonstrated the ability to manage the economy better than the private sector can. It's very easy for the government to mess things up (think housing market bubble inflated by government mandates to Fannie and Freddie to buy absurd mortgages). And it's very hard for the government to fix things (think of all the unintended consequences of Obamacare that have already surfaced, such as taking $700 billion from Medicare and placing a new tax on medical devices in order to give the appearance of budget neutrality). The best line of the night was Romney's disparagement of "trickle-down government." It just doesn't work. Socialism doesn't work, because there is no way on earth that bureaucrats can manage things better than millions of private sector workers who have their best interests at heart.
The November elections present the best possible choice to the electorate: Do you believe in government, or do you believe in the people?
And for those who hate it when I take a political position, I promise to keep analyzing the economy and the market from a dispassionate and objective viewpoint. That's why I have been rewarded these past several years, even though both monetary and fiscal policy have gone the wrong way from what I would have liked to have seen.