This past week it seems that the idiots in the field of economics have been particularly vocal.
Namely Nobel Laureate Paul Krugman demonstrated that winning a Nobel Prize basically shows that you are either well connected or duly shilling the appropriate political message. Paul gleefully announces that unless we engage in more wasteful government spending (aka “stimulus spending”) we are heading for a terrible depression. He uses the specious argument that it is spending that will prevent us from falling into a horrible abyss never to return for years and it is the government who is the right entity to do that spending.
President Obama in his weekly address announced how $2 billion dollars will be siphoned from the pockets of each and every tax payer into the coffers of two profit making companies so that they will grace us with their business. Does this mean I will get some solar panels in return for my and my children’s investment in this? Will I get some free electricity from that power plant? Probably not and it begs the question “Why won’t the companies come and create these plants here on their own? Is it because the fact is what they are doing actually isn’t profitable and thus we just spent $2 billion on businesses that will shut down after that money runs out?"
Paul Krugman and President Obama both know that we need economic activity but are sorely misguided on how to make it happen. It seems they believe it is the governments job to create that economic activity and the way to do that is to spend.
Well lets take a look at our economy and the argument of “spend vs. don’t spend”. We are being told that someone needs to be spending and since private citizens won’t do it then the government will borrow on our behalf and use force of law to make us spend. The government spending will put money into the economy and voila – economic recovery. Right?!? Our government of about 500 bureaucrats are very highly educated and they know what the “industries of the future” are so they will spend this money well. But don’t even worry about that – it doesn’t really matter what the money is spent on – just spend it.
Wrong. Spending on things that do not add value to the economy will result in inflation and oxygen depleting tax burdens on the true engine of our economy. That kind of spending will cause the economy to sputter and lose power and that is exactly the kind of spending that is most likely to occur when the government does the spending.
Does anybody think that a group of about 500 people will correctly use hundreds of billions of dollars to add the necessary value to an economy of 300 million people? That these 500 people won’t waste the money or spend it on stupid things to help out their buddies? They won’t bicker among each other trying to get money for their own special interests which will, in and of itself, waste not only money but time? They won’t make mistakes and spend a couple billion on things that look good through academic glasses from Washington but in reality are useless?
What we need is spending on things that add value to the economy. How do we do that? Who is to judge what “adds value”? If you are an Eskimo what would add value for you? Perhaps more portable and cheaper sources of heat and a sauce that makes arctic eel taste like ambrosia. If you live Florida you want better air conditioning and a new sauce that makes gator taste like ambrosia. In other words each and every individual makes those decisions and value is relative so 500 people will never ever be able to get it right for a population of 300 million people. Sorry Barack and Paul.
So what should the government do? Cut their own spending and “grant giving” to the point that we can eliminate both corporate and individual income tax and get rid of our sovereign debt. Then stop making excuses that there isn’t enough regulation while not even doing the job of enforcing the regulation that does exist. The economy needs stable rule of law and not a shifting landscape. Remove those regulations that give advantages to certain interests and simply enforce an honest business climate.
It’s not hard and it’s not complicated. In the end we the people are responsible for this mess because we do not hold our politicians accountable and we have been complacent. But it is never too late.
