Wednesday, September 08, 2010

"Economic Malpractice"

Our current malaise is a great example of the price we pay for putting agenda-driven economic amateurs in charge.


"How did they get it so wrong? It is because they have an economic theory, which did not and does not work in practice. If Team Obama had known American economic history, it would have known there was no case where a big increase in government spending — correctly measured as a percentage of gross domestic product — led to both higher private consumption and significant job growth (including World War II, when private consumption by necessity was severely restricted).

....To fund the stimulus spending, Team Obama is forced to sell an extra trillion dollars or so in government bonds. To whom does the government sell these bonds? The buyers are U.S. businesses and individuals (often through funds), and foreigners. When businesses and individuals buy these government bonds, they have less money for productive investment (government bonds primarily fund transfer payments, not productive investment) or private consumption. Less productive investment and/or private consumption means fewer private-sector jobs. Government can create government-sector jobs at the expense of private-sector jobs, but not at a higher real wage — which is one reason why a growing welfare state and/or a socialist economy always fail. Team Obama seems to have missed these basic historical lessons.....

....Team Obama persists in passing and implementing legislation and regulations that are obvious job-killers, yet it seems to be surprised when other countries that are not engaged in self-flagellation and economic malpractice are growing more rapidly and creating many new jobs."

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