Avoiding Obamageddon

The following was written by Fred.  Freyguy posts it on his behalf.

We’ve all heard that the road to hell is paved with good intentions. Well, it turns out that until 2009 the path to perdition was overgrown with weeds and meandered through woods over environmentally sensitive areas. But thanks to shovel ready stimulus we can now get there far more quickly.

One of the paradoxes that economists, particularly liberal (Keynesian) economists like to point to is how behavior that is good for the individual (saving) can be bad for the economy (which needs people to spend). Frankly I consider this, how shall I put it, wrong. What is bad for the economy (and usually the individual) is sudden and dramatic change (whether or not you believe in it). Savings are good for all manner of entities.

World War II is said to have brought us out of the Great Depression, which is taken by many as proof that what we need during depressions/recessions is massive government spending. But Roosevelt went through the alphabet on government spending programs prior to WWII and the result was that we stayed mostly mired in economic woe. So what got us out of the Depression? Well, it’s seldom just one thing that causes it or ends it. But barring consistently poor leadership, depressions and recessions have been known to end all by themselves as the economy rebalances – that is the natural state of things economic.

Fast forward almost six decades and we find that huge increases in spending by the federal government have not had the desired effect of stimulating the economy. Of course you can blame headwinds and floods and the Tsunami and banks and Wall Street and energy companies (unless they produce subsidized “green” energy) and greedy Benedict Arnold business people who outsource jobs and even greedier millionaires and billionaires who won’t pay their fair share and terrorists from the disloyal opposition and the S&P rating agency and… oh, the recession was deeper than first thought. Yeah, so then the recovery should have been steeper.

Now I don’t have a problem with No Drama Obama dialing up the rhetoric. Heck, the election will be upon us before we know it and what else is he supposed to run on? With a projected one billion dollars at his disposal (and with his ability to have the public pick up campaign expenses if he claims it’s an informational bus tour) I am buying my popcorn early and grabbing a front row seat for what is sure to be the most negative campaign since… well, I don’t know. Most have been pretty ugly.

So do I blame Obama? Sure, he’s earned it. But the problem has been building for a long time. Politicians need to realize that while they can anoint winners and losers the economy is neither a mathematical construct with interchangeable parts nor a zero sum game. You never get to mourn businesses that were never born.

So what do we need? More certainty would be a good place to start, but less regulation would be even better. Passing trade deals that have been collecting dust as Democrats dither would also be nice. Allowing more immigrants to arrive and stay legally would be good for the economy, particularly those immigrants who are bright, well-educated and entrepreneurial (neither party seems to be able to grasp that one). I am uncertain whether higher taxes for millionaires and billionaires who earn more than $200,000 (is there a disconnect here?) will hurt the economy much, but closing the loopholes and simplifying the whole mess would certainly help. Basically we need a tax code that incentivizes productivity or at least doesn’t punish it. Oh, and also one that even a run-of-the-mill MBA can figure out without professional assistance.

Most of all, we need to understand that spending does not create wealth. Efficiencies create wealth. Yes, I know, efficiencies can put people out of work. Obama periodically mentions that (the difficulty of creating jobs, sigh). But the modern age has shown that there’s tremendous upside potential to not having 90% of your population engaged in agriculture…organic gardens not withstanding of course.