The Big Gamble

This commonsense conservative is thinking…Perhaps we should start with the basics this week in order to understand what is happening to our economy.
There have been in the past two main theories of economic thought. One is Keynesian, which argues that the best way to stimulate the economy is by putting money in the pockets of citizens, who then take that money and go out and buy goods and services which stimulates the economy. Also, to use deficit spending to “invest” in the economy through selective vehicles (HOPES?) that may look promising for the future.
The other theory is supply side economics which argues that if you target the job creators through a variety of tax incentives and lower taxes on profits, they will take their capital and invest it in the economy creating more jobs and wealth across the entire country.
President Obama has been a strong supporter of the Keynesian theory and based his policies for our economy on it… He took the big gamble. But let us consider the effects. When you are broke and in debt, when you get a few extra dollars are you more likely to pay down your debt, or go out and buy new things?
In the “cash for clunkers” program, were people who were laid off from work, driving smog spewing clunkers inspired to trade in their vehicles? Of course not, who wants a car payment when they do not have a job? So all “cash for clunkers” really did was inspire folks who were already inclined to buy a new car to buy it a little earlier, the same thing that happened when it was tried in Europe! It worked only to cannibalize future sales, drive up the cost of used cars, and did nothing for air pollution!
The stimulus program primarily aimed at keeping state government workers employed in the hopes that their spending would “inspire” economic activity by the job creators. But again, all it really did was keep bloated state governments from making the cuts they needed to make in order to become more efficient. Now that the stimulus money has been spent, states face tough choices of either laying off the employees they should have at the beginning of the bad economy, raising taxes and driving business to other states, or running huge deficits.
Another problem with the Keynesian model of economics is that if John Doe gets a few extra bucks in his pocket and goes to his local store and buys products, there is no way to guarantee those products are made in the USA. So how much of the President’s tax break dollars were spent stimulating China’s economy through citizen’s purchases of their products? For that matter, how much of the Government’s “Green Investments” went for foreign produced items like Chinese windmills!
The “investments” in green technology ended up not being self supporting. Rather than spurring growth, they began to die the minute their government subsidies and capital ended. It just proves once again that government is not good at picking winners and losers in the business world. The lack of responsibility for a profit motive leaves these efforts inefficient and therefore not competitive.
Add to all these tax cuts, increases in watchdog agencies budgets of 50 – 100%. These agencies, while founded with the best of intentions, often raise the cost of doing business in direct proportion to the number of “enforcements” they can undertake. As I have found out before, it can be expensive to be innocent! A healthcare bill projected to cost an additional trillion dollars (much of it paid by business) just as the IMF was advising Spain to get out of the healthcare business, it was breaking their budget! As I have asked you often, if you had a million dollars would YOU start a business?

So in summary on the Keynesian economic model, the tax breaks to citizens went to pay down their personal debt which was good for their personal finances but not stimulating factories by buying products that need to be replaced. The state tax breaks only put off the day of reckoning brought about by the bloat of government. And the ‘Investments” in new technology were largely a bust.
Compare this economic model to “Supply Side” economics. Under this theory, government provides a wide range of incentives for job creators to build factories, invest in new technology and take any other actions that would have a stimulative effect on the economy. In return, for a short period of time they are allowed additional tax breaks to motivate them to act. The short period of time is designed to encourage them to act quickly in order to help the economy recover quickly. New investment creates new jobs. And real honest to God investors with (gasp) “experience” would be the ones deciding which new technologies would work. It’s really about that simple!
BUT in politics how many people want to really look this closely at this boring stuff? How easy is it for someone to pop up and declare, “Oh those Supply Siders only want to give more money to the rich”… Ever heard that? Is it an accurate reflection of the ideas behind supply side economics? On the other hand, is “giving a tax break to the middle class” that does nothing to help them find a job really count as “help”? Wouldn’t a job be a lot more help than a few bucks that are gone the day you get them?
The thing we all need to remember is that poor people are not poor because rich people are rich! If you think about the folks you know that are most in need, isn’t it really more lifestyle choices than lack of opportunity?( taking out automatically the truly disadvantaged, physically and mentally.) It could have been a disadvantaged home environment, yet most times one of two of the kids in each generation make it out. Where is the public’s responsibility to support those members that made literally poor choices? And how comfortable can we afford to make their lives without creating a dependent class that has no real motivation to try harder? Are their bad choices somehow the responsibility of American businesses and American workers?
Think about it – the rallying cry has been to have a “balanced” approach to solving the budget crisis President Obama created. In other words, he wants to raise taxes on the “rich” in order to help the “poor” through government redistribution. Implicit in this idea is that all these problems are not the result of government, and government doesn’t need to be cut. As a matter of fact, we need MORE government “help” to accomplish our goals… More “investments” like the ones covered above!
Of course, we must pay government workers to collect these taxes, and count them, and write rules about them, and on and on. So at the end of the day, we grow government by the thousands to help poor people by the hundreds. Wouldn’t it be better for government to get out of the way and let poor people get a job and help themselves? But that does not empower politicians and government! See how it works? They work on our envy of the rich to gain more power for themselves!
And they talk about us in terms of “class”. In America, we never used to use these terms – that kind of thinking was left in Europe. But it has become useful for dividing Americans into various factions, the better to take advantage of them. If you don’t believe in “divide and conquer”, witness all the names that have been hurled at the Tea Party. They threaten the power of government over the people. And so they have been called every name in the book simply for asking government to stop spending money it does not have, and to go by the constitution it agreed to when our government began.
So I ask you, do you support spending money we don’t have on things we don’t need? Do you want to keep increasing the power of government while decreasing the control you have over your own life? I would like to tell you that voting Republican would cure the problem but that would not be true. Unfortunately, we have many Republicans that are not conservative. And they vote against our rights and best interests just as much as Democrats.
The best thing our country has going for it is us – the well educated voter. If we do our job, we can take it back. If we don’t, this “experiment in democracy” may be lost not only to us, but for generations to come. Our economy is fragile and so is our nation. Now is the time for us to all get on the phone and the computer and let our voices be heard!
The decrease in our credit rating is truly a crisis that must not go to waste. It is just possible that we now have the catalyst to rework the tax code and make a flatter and fairer system for all. The beaurocracy in Washington doesn’t need a scalpel, it needs a chainsaw. The Department of Education, a state responsibility, should be abolished. The Department of Energy is a joke. Fold the mineral rights division back into the Department of Interior and save the money! And on and on. The average man on the street could come with billions of dollars of waste without having to call in the eggheads. It appears to me the graduates of Harvard and Yale, the best educated minds our President could find, have produced the first credit downgrade in our history. Pardon me, but I am not terribly impressed with the care of our government being entrusted to these educated idiots. This administration has the lowest percentage of department head with actual business experience in modern history…And it shows.
All Standard and Poor did was impartially rate the direction our country has been taking under the new administration… And predictably, they see trouble ahead. No one can ask for a more honest assessment of where we are headed and the Tea Party’s warnings than this. And predictably, already Democrats are threatening “investigations” of the Standard and Poor! How about investigation into some of those political supporter business investments made with government money?
This commonsense conservative has had enough. It is time to have a tea party! Let’s see how many government bums we can throw out!

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4 comments for “The Big Gamble

  1. doug
    August 6, 2011 at 8:12 pm

    Brother, cash for clunkers may of not been what it was to be, i agree. but it certianly did do something for air pollution
    Now this is a bussiness man from WALMART, telling me that the money should not of been given out to the people—- unless you had a guaramtee the products bought were made in the USA???? so i guess you are telling me that buying the toyota (etc) does nothing for our economy?? I buy American— but i see hole in what you are saying…
    next…… i guess do not invest in green stuff….. if the gov had never invested in the space race (all tax monies) we would have hundreds if not thousands of things that would of failed to be “invented” — any ideal what that would of “cost ” us?
    supply side short time tax cuts????? short time like the ones that the oil industry enjoys???? ya gotta be kidding me brother
    i do not dissagree about people that make poor lifestyle choices— but your answer is what??? let the %$#@^$!! die? do not tell me about the church and charity helping them out—- that aint gonna happen and you know it.
    bama created this budget crisis?? seems to me he had help from both sides of the isle— and i fail to see how the idiots in the tea party that would of let us go into default could help—- Mr Tea Party member, do you think default was the best choice for the USA??? if you do then you do not understand the cost that would of borne on all of America—rich and poor.
    last our president— did not get this credit downgrade by himself—- he had tea party idiots take us to the brink of disaster–for their own political gain—i repeat idiots….

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  3. August 7, 2011 at 7:01 am

    taking your points one at a time.
    1. Am saying only buy American? I am saying that if you are spending government money to try to stimulate the American economy, buying products made alsewhere doesn’t get it done. The whole Keynesian theory worked much better back when 90% of the products on the shelf were American made. Besides, Toyota is now made in the USA. My only point in this regard is tax breaks to stimulate the economy given to individuals that go buy foreign made products do not stimulate our economy. No broader point intended.
    2. The government investment in the space race did not occur in the middle of huge deficits.
    3. The oil company tax breaks have been in place since the 1920’s. You and I have agreed before that if we increase the oil companies costs they will pass it on to us, the consumer. So again I ask you, how will higher gas prices help us get out of the recession? I am against ALL subsidies including the ones for oil, agriculture, sugar etc. etc. The problem with the “green technology investments” was Greece was one of the countries that tried that before us. Can we not learn from the mistakes of others?
    4. I agree that Obama did not invent the defricit by himself. But when you go from 10 trillion in deficits over 200 years to 16 trillion in only 4 years… Well you figure it out!
    5. The Tea Party “idiots” caused the credit downgrade? The Tea Party “idiots” were the ones saying if we don’t cut spending we’ll see our credit rating downgraded. The “Harvard” educated Tim Geitner is the one who insisted that wouldn’t happen. And by the way, why is it the Tea Party gets blamed for not letting the President get a “clean” extention on the debt ceiling? What might our credit rating be now if they hadn’t gotten him to agree to at least some small cuts? So it’s OK for Democrats to insist on more spending but it’s “reckless” for the Tea Party to insist on cutting back? Seems exactly backwards to me!

  4. doug
    August 8, 2011 at 2:23 pm

    i do not dissagree with a lot of the tea party…. my point was they would of stood by and watched us default….. above and beyond anything else that would have been the worse thing to happen…. accute versus chronic
    your compairision of the space race in a different will not work if you use the same logic and compare 200 years of budgets to the last one year….. got ya
    oh by the way toyota is NOT made here……. they are assembled here…. the parts come in from japan—-big difference brother…

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