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|Change Is A-Comin’|
|Commentary/Politics - Guest Commentaries|
|Written by Bradley Harrington|
|Wednesday, 26 November 2008 03:30|
Millions of Americans have voted for Barack Obama to "fix" our economy and are breathlessly awaiting his inauguration so that he can implement his plans to "get America back to work." Are those voters ever in for a surprise.
In a November 22 radio address, Obama stated that "we are facing an economic crisis of historical proportions" (true enough) and that "we must do more to put our people back to work and get our economy moving again."
How does our new president-to-be intend to achieve this result? Obama declared that "I have already directed my economic team to come up with an Economic Recovery Plan that will mean 2.5 million more jobs by January of 2011," and that "we'll put people back to work rebuilding our crumbling roads and bridges, modernizing schools that are failing our children, and building wind farms, solar panels, fuel-efficient cars, and alternative energy technologies ... "
This, I submit, is the worst kind of economic claptrap, and is easily demonstrable as such.
The fallacy, as Henry Hazlitt pointed out in Economics in One Lesson back in 1946, consists of looking at the short-term effects of government policies in regard to some areas of the economy while ignoring or evading the long-term effects in all areas. As Hazlitt states it: "The art of economics consists in looking not merely at the immediate but at the longer effects of any act or policy; it consists in tracing the consequences of that policy not merely for one group but for all groups."
For example: If the federal government decides to spend $100 billion in subsidies on "public works" projects, will this create jobs? Absolutely. Thousands of people will be employed doing work that would not have been there otherwise. That's the short-term effect on some sectors of the economy. How about the long-term effects in the wider picture? Since all government spending is rooted in taxation, Americans now have $100 billion less to spend as they would have spent otherwise, which means: a net loss of jobs in the sectors of the economy that would have been patronized by consumers had they been free to spend their money as they see fit.
Those jobs, however, are never noticed as missing: they are, after all, not there. The facts, however, are quite clear: All the jobs that are created by "publics works" funding in some areas of the economy are balanced by an equal destruction of jobs throughout the rest of the economy as a whole.
And that's just part of the problem: When investment capital is forcibly shifted from the most efficient producers to the least efficient, the rate of return drops, which means an overall loss of jobs and productivity. Thus, as in so many other cases of government intervention, the exact opposite of the stated goal is achieved, thereby making all of us that much poorer.
Given such an approach to fostering job development, you can bet your bottom dollar - If you still have one - that our economy truly is "going to get worse before it gets better"; Obama's "public works" policies will positively guarantee it. So much for his supposed concern about those "millions of Americans" lying awake in their beds at night; and so much for the claim that his administration will "spend wisely" and "focus on what works."
So what does work? When investment dollars are allowed to flow freely, they will always seek to maximize their rate of return. In this way successful, productive companies are rewarded with investment dollars - and can now expand productivity - while failing, nonproductive companies are penalized and are compelled to become productive or go bankrupt.
If Obama were truly interested in "creating jobs" - as opposed to uttering empty rhetoric geared toward the concentration of more and more federal power over our lives - he would do well to nurture that creative process, which would mean cutting taxes, cutting spending, and abolishing the incredibly stifling and intrusive mountain of regulations currently hogtying our productive capacity. Should such measures ever be adopted, we could actually watch our economy skyrocket instead of growing ever more sluggish with each passing year.
Such measures, however, have never been attractive to the Democrats, and, as the past eight years have made abundantly clear, they are not attractive to the Republicans, either.
So what to do? My recommendation: Buy gold, guns, and a farm. The time is rapidly approaching when you are going to need all three.
Bradley Harrington is a former United States Marine and a freelance writer who lives in Cheyenne, Wyoming.
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