That’s right – Obamanomics isn’t a philosophy – it’s a bill of goods, sold to the uninformed masses to grow government and create dependency.
It’s too easy just to say people want free stuff. There is a large swath of politicians who actively preach the notion that only if we “stimulate” the economy with taxpayer money, borrowing, printing and spending – it will make the economy grow and create wealth.
That would never work for your family, your business or your personal life – and you damn sure would never teach your kids such an incredibly bad piece of philosophy – yet, somehow people in this country vote for it. Peter Ferrara at Forbes really nails the proponents of big government and how they convince everyday people that if you’re in debt, you only have to spend more – a lot more – in order to get out of it.
Obamanomics: The Final Nail In the Discredited Keynesian Coffin
Keynesian economics is the false vision of human action which says the way to promote economic recovery and renewed growth is through increased government spending, deficits and debt. If that sounds nuts, that’s because it is.
The idea is that the increased government spending and deficits will increase demand in the economy for more production, and that producers will increase supply to meet that demand, hiring more workers and reducing unemployment in the process. Keynesian economics arose in the 1930s in response to the Depression. It never worked then, as the recession of 1929 extended into the decade long Great Depression. And it never worked anywhere it’s been tried since then, in the U.S. or abroad.
By the 1970s, Keynesian policies had produced double digit unemployment, double digit inflation, and double digit interest rates, all at the same time, along with four successive worsening recessions from 1969 to 1982. Keynesian monetary policy involves running up the money supply to increase demand, with artificially lowered interest rates promoting more spending. That is where the inflation came from.
Ronald Reagan explicitly scrapped Keynesian economics for the more modern supply side economics, which holds that economic growth results from incentives meant to boost production. That results from reduced tax rates, which enable producers to keep a higher proportion of what they produce.
Steve Forbes wrote in Forbes magazine in 2008: “Between the early 1980s and 2007 we lived in an economic Golden Age. Never before have so many people advanced so far economically in so short a period of time as they have during the last 25 years. Until the credit crisis, 70 million people a year [worldwide] were joining the middle class. The U.S. kicked off this long boom with the economic reforms of Ronald Reagan, particularly his enormous income tax cuts. We burst from the economic stagnation of the 1970s into a dynamic, innovative, high tech-oriented economy. Even in recent years the much maligned U.S. did well. Between year-end 2002 and year-end 2007 U.S. growth exceeded the entire size of China’s economy.”
In other words, the growth in the U.S. economy from 2002 to 2007 was the equivalent of adding the entire economy of China to the U.S. economy.
Apparently determined to prove once more that Keynesian economics doesn’t work, Obama’s first major act in office was to pursue the unreconstructed Keynesianism of the nearly $1 trillion so-called “stimulus,” which we now know didn’t stimulate anything except government spending, deficits and debt. Keynesian economics does not work because if the government borrows a trillion dollars out of the private economy to spend a trillion dollars back into it, at best there is no gain for the economy on net. More likely, it is a net drag on the economy, because the private sector in general will spend the money more efficiently and productively than the public sector, and the greater deficits and debt imply future tax increases, which are also contractionary.
While a lot of Americans thought they were electing a progressive, forward-thinking guy, Barack Obama has been nothing but tired, backward, myopic and the most failed President of all time. How he got re-elected is simply a mystery. Or a crime.
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Rodney Lee Conover lives in California with Jack Whippet