Economy:
What Works?
Working is at the heart of the economy. The government spending money is not the answer. The government printing money is not the answer. The government increasing taxes is not the answer.
The confidence of citizens that results in consumer spending, investing, and going about their lives without fear that they will lose their jobs, lose their life savings, lose their homes is the answer. Confidence of entrepreneurs and investors that now is a good time to move forward, take a chance, put in the effort to produce a product or improve a service is the answer. In short, dreaming the American dream and feeling free to achieve that dream is the answer.
The "economy" is an illusive creature. There are complex computer models and infinite "experts" on how it works or how to force it to behave. We're reminded of Harry Truman's comment: "Give me a one-handed economist! They say, 'On the one hand. . . on the other hand.'"
Given the complexity of the economy, is it any wonder that the stock market, jobless rates, housing prices, consumer price index, and all the other indicators seem to have a mind of their own? If anyone could predict what was really going to happen or how to cause things to happen, he/she would be wealthy beyond imagination. How many really wealthy economists are there?
The question before us is what role government should play in this complex subject. How are jobs created? Certainly, the government can hire additional government employees; however, without an increase in the general economy so that taxes are collected to pay for those jobs, the deficit and debt increase, causing higher taxes, fewer private sector jobs, and a depressed economy. If government buys goods and services to "stimulate" the economy, the same problems appear, in addition to competing with private sources of money for the same or similar goods and services. If government "wins" that competition, they may have just reduced the taxes that would have been collected, effectively shooting themselves (us) in the foot.
We believe in free markets, as free as they can be given that fraud and corruption and monopoistic practices can do harm. The complexity of capitalism requires that the government stand back because the smallest ripple can become a tidal wave of unintended consequences. Short term decisions result in long term disasters. A corrupt government attempting to buy votes with taxpayer dollars through special programs for a few must be replaced. "Negotiating" behind closed doors with special interests, rather than looking out for the interests of all citizens is corrupt. Such a government cannot stand.
Current events have unfolded to reveal the damage that government can do, even if we assign good intentions to the origins. Laws are created to force loans to be granted to those who cannot repay them; housing prices get overblown because demand increases faster than supply; borrowers default on loans; housing prices drop because foreclosures flood the market; revenue from property taxes, as well as income taxes and sales taxes, plummets; government debt increases because of excessive spending on unnecessary programs that politicians "owe" to consituents; the economy sinks lower. Government's answer is to spend more money it doesn't have. It doesn't take a genius to figure out that is not a solution.
We believe that government has far overstepped its rightful role. It has chosen, based on behind-the-doors decision-making, to "bail out" some companies and to let others fail. For what purpose? Through what Constitutional authority? Through what arbitrary and misguided sense of "fairness"?
People are willing to work hard, as long as the American Dream is within their reach. When government's mistakes move that American Dream so far into the future that it's beyond any reasonable horizon, citizens have a right to blame that government and do something about it.
