Of course the government policies implied by Narrative I and Narrative II are diametrically opposite. For a recent extreme case of the implementation of Narrative II-style policies, we can look to Venezuela. For almost two decades since the late 90s, the government has engaged in vast and expanding redistributions, accompanied by punishment of the entrepreneurial class. Nearly 20 years in, the Central Bank reported that the economy shrunk by 7% last year (almost certainly far underestimated), and annual inflation is in the multiple hundreds of percents. What is the cause of this ongoing disaster? According to Venezuelan President Maduro (in his State of the Union speech in January), destructive government policy has nothing to do with it; instead, it's the wealthy speculators:
Addressing the causes of the economic emergency afflicting the country, Maduro derided the Venezuelan private sector for having carried out “an investment strike” of national industry and refusing to cooperate with the government. He blamed private companies for participating in speculative pricing, causing mass devaluation to the country’s national currency.
Fortunately, nobody in the U.S. would be that dumb. Just kidding! The rhetoric of Bernie Sanders is more or less indistinguishable from Maduro's in the diagnosis of the causes of economic malaise, and in proposed cures. Here is Sanders on his website:
The reality is that for the past 40 years, Wall Street and the billionaire class has rigged the rules to redistribute wealth and income to the wealthiest and most powerful people of this country. This campaign is sending a message to the billionaire class: “you can’t have it all.”
And yes, in Sanders world, all that wealth was just pre-existing natural bounty that was stolen by these greedy people. So, as noted here a few days ago, since 2012 average gasoline prices in this country have declined from around $4 per gallon to well under $2. That is attributable largely, if not entirely, to the revolution in oil and and gas extraction known as "fracking." Somehow, that revolution happened so fast that President Obama and his regulatory minions were unable to stop it. But Sanders? Asked at Sunday's Democratic debate in Flint, Michigan whether he "supports fracking," Sanders answered bluntly, "No, I do not support fracking." Don't worry, when President Sanders bans fracking and the price of gas goes back to $4 (and then on to $5 and $6), it will be the fault of the "billionaire class," or perhaps of the "hoarders and speculators." (Does poor Bernie even realize that traditional oil companies like Exxon and Chevron -- and their investors and executives -- would be making a lot more money right now if fracking had not happened?)
And in case you think that a President Hillary would be significantly different in her fundamental views, she answered the same question at the same Sunday debate. The answer (reported in today's Wall Street Journal) was longer and weasely-er, but basically says that she would ban fracking to the maximum extent she could get away with:
“You know, I don’t support it [fracking] when any locality or any state is against it, number one. I don’t support it when the release of methane or contamination of water is present. I don’t support it - number three - unless we can require that anybody who fracks has to tell us exactly what chemicals they are using. So by the time we get through all of my conditions, I do not think there will be many places in America where fracking will continue to take place. And I think that’s the best approach, because right now, there are places where fracking is going on that are not sufficiently regulated.”
In Hillary's case, I think you can be sure that she realizes full well that the banning of fracking would enrich the incumbent interests in oil and gas. That's the donor class!
Meanwhile, redistributionist Narrative II-style policies have brought us places like Philadelphia, Detroit, Baltimore, Cleveland, St. Louis and Chicago. In New York, we don't have the vast vacant zones any more (after 20 years of Republican mayors), but we do have the massive public housing projects that make it such that the wealthiest county in the country (Manhattan) has a poverty rate far above the norm.
And of course, what's going on now in New York is an expansion to the commitment to subsidized housing for low income people - otherwise known as the creation of permanent poverty traps. The Wall Street Journal in its Greater New York section reports on the political back-and-forth over Mayor de Blasio's plan to re-zone a big low income neighborhood in Brooklyn in a way that would increase allowable density while also increasing requirements for "affordable" units. This being New York, the controversy is over how deeply-discounted we are going to require the "affordable" units to be. The de Blasio administration "has offered" to require developers to provide units that are "affordable" to families making "about $31,000 for a family of three." But of course "housing advocates" want even greater subsidies and deeper discounts for families of even lower incomes. We are determined to double down on the New York City Housing Authority crisis!
What is it again that we're talking about on the Republican side? Trade wars with Mexico and China?