Big Government Economics Is Dead (Again)
By Austin Hill
Does the government confiscation of private wealth stifle economic growth, or does government manage our money to better ends and produce greater economic results than private individuals?
This is the question that has been weighing in the balance, as the President and the Congress haggle over taxation rates for next year. And there’s only one correct answer to this question – if it is our collective American goal to “grow the economy” and “stimulate job creation” then we absolutely must arrive at the correct answer – and yet the President and much of the Congress seem to want it both ways.
The collective answer to this question was delivered from the American people via the U.S. Senate last weekend. President Obama’s plan to target “rich people” and raise their taxes while keeping taxation rates the same for other Americans went to a vote, and the Senate, controlled by the President’s own Democrat party, rejected the plan.
In response to this rejection, President Obama lambasted Republicans last Tuesday (despite the fact that HIS party delivered the “no” vote), calling them “hostage takers,” and struggling to make the case that all us middleclass Americans are being harmed because “rich people” aren’t getting sufficiently gouged by the IRS. It was a sad picture of a sitting U.S. President grappling with the dismissal of his agenda, and a painful example of what happens when rigid, left-wing ideology takes priority over rational, sound economics.
Put in proper context, it is understandable why a left-wing ideologue is our President right now, and why the last presidential election turned out the way it did. Think of all that was happening in the Fall of 2008. During the final weeks of the Obama versus McCain battle, multiple longstanding American financial institutions failed, mostly because of their overexposure to risky subprime mortgage loans.
This in turn touched off the failure of several banks in Europe, while the prices of stocks and commodities began to decline worldwide. And as this was happening, several countries temporarily closed down their respective stock markets to try and stop massive stock sell-offs, while the entire country of Iceland nearly slipped in to bankruptcy. Americans lost trillions of dollars in personal wealth, and the world seemed headed for collapse.
Those were dark and frightening days, to be sure. Beginning on October 6 of that year, the Dow Jones industrial average closed lower for five out of next five successive trading days, amid record breaking levels of trading volume. And although it was noted at the time that the daily stock market drops were not as severe as those of the 1987 stock market crash, the economic crisis that was unfolding before our eyes was nonetheless something very unique, and very scary.
Given these and other considerations, it’s not difficult to understand why Americans voted for “change” – and threw out the reigning party in exchange for something different. But now, nearly two years into this “something different,” even President Obama’s most ardent supporters are beginning to doubt that we have the right “something.”
President Obama has, in two short years, put in to place a system of tremendous governmental control over the otherwise private economy. On his watch, the President himself has become a de-facto C.E.O. over huge chunks of the economy, with the power to hire and fire executives, establish compensation limits for executive management, and to determine what products and services are produced.
Early on in this process of expansive governmental control, many Americans seemed fine with the President’s plans. Private business executives (so the reasoning went) had proven themselves to be unable or unwilling to “do the right thing” in their positions of leadership, yet President Obama could be trusted implicitly to “do the right thing” (so the reasoning went) if only he obtained enough power.
Yet now that he has the power, President Obama seems to have lost the trust. And the less-than-two-year-old Obama presidency serves as a grim reminder of a basic truth of economics: when it comes to the handling of material resources, everyone – even Barack Obama – operates with their own self-interest. And if there are insufficient checks-and-balances on one’s self interest, the individual can do harm to others.
After the 2008 financial system crisis, it was easy to look with disdain at bankers and executives who ran their enterprises into bankruptcy while still earning fat salaries. But do we examine our politicians with the same type of scrutiny, and do we see their selfishness being acted-out at our collective expense?
If we were so scrutinizing, we’d see a President and Congress that were determined to “pass a healthcare bill” whether we wanted it or not, and went to unthinkable lengths (holding secret legislative meetings, and exempting their political allies from the law) to accomplish their objective.
We’d see a President who is so intent on fulfilling his “environmental” agenda of hybrid car manufacturing, that he is spending our tax dollars to artificially bolster the sales figures of the Chevrolet Volt vehicle (because private individuals are not buying the car in any large measure).
We’d see a President who has dramatically expanded federal payrolls – presumably because government workers frequently make good reliable Democrat voters – all the while our nation suffers the consequences of staggering national debt and excessive government spending.
Indeed, the self interest of our President and his party are raging out of control at the moment. And this very type of self interest is always at the epicenter of the failure of big government economics.