Friday, April 5, 2013

Throttlebottom Obama Economy

Here we go with another sluggish employment report.  Yes, the unemployment is down to 7.6 percent, but the nasty is in the Household Survey employment numbers: Labor force down 496,000.  Employment down 206,000.

Not good.  You don't want to get the unemployment rate down by shrinking the labor force more than the shrinkage in the number of jobs.  Not nohow.

And how now about that Keynesian policy mix of deficits and cheap money?  Liberals should have learned from Ronald Reagan, who did the opposite, with tight money and domestic spending cuts, and started a 20 year boom.

This isn't rocket science, liberals.  It certainly isn't climate science.

Look.  Keynesian economics has its point.  When the economy is truly contracting, then it's a good idea to keep government spending going and loosen the credit strings.  But as soon as the credit system turns the corner and the economy starts to improve then it is time to cut government spending.  Because all government spending is waste.

Yes, I know.  There are some wonderful things that government does.  But in the end it all comes down to distributing free stuff to your political supporters.

Supply-sider economist Alan Reynolds has a good piece on the difference between the PIIGGS countries (Portugal, Ireland, Italy, Greece, Great Britain, Spain), the BRIC countries (Brazil, Russia, India, China), and the MIST countries (Malaysia, Indonesia, South Korea, Thailand).
All PIIGGS have two things in common. First of all, government spending grew dramatically — from an average of 43.2% of GDP in 2007 to 52.6% by 2010... [Second,] The highest income tax rate was recently increased in every one of the troubled PIIGGS except Italy[.]
 What about the other nations, the BRICs and the MISTs?
Government spending is frugal in these countries, averaging 32.1% of GDP in the BRICs and 27.4% for the MIST group...  Rather than raising top tax rates, all but one of the BRIC and MIST countries slashed their highest individual income tax rates in half; sometimes lower.
In the PIIGGS countries, governments are struggling with sluggish growth; in the BRIC and MIST countries growth is good.

So what's the lesson, according to Reynolds?
 What works, these successful economies discovered, is (1) to prevent government spending from growing faster than the private economy that supports it, and (2) to reduce rather than increase the highest, most damaging tax rates. 
Really, you wonder.  What is so hard about this?

I will tell you want is so hard.  It's no secret.  Governments all over the world, since the dawn of time, have operated like pirates and plunderers, looting the fisc to pay off their supporters with free stuff.  From time to time this looting gets out of hand, taking more from the economy than the economy can stand.

So you get a government standing around wringing its hands about greedy bankers and the rich paying their fair share.  Because all politicians know is taking money from the moneybags to give to their supporters.

When we look back at the Obama administration we can only hope that this was the moment that liberals, after suffering devastating losses in 2014 and 2016, finally abandoned their pedal-to-the-metal faith in the wonders of stimulus, cheap money, and government "investments."

If there is any divine justice in this world then liberals should be kept out of power for a generation.

Because the people that suffer from this monstrous policy are, of course, not the greedy bankers and insurance companies and Big Oil, but the rank-and-file Democratic voter that puts their faith in the charismatic leader promising free stuff.

But don't hold your breath.

No comments:

Post a Comment