Posts Tagged ‘Economics’

You didn’t do that! – Explaining Obama’s Understanding of Economics

Posted by Troy on 23rd July 2012 in Current Events, Political

Of course, the easiest thing to do would be to say, “He doesn’t understand the economy” or “He thinks that the government is responsible for businesses.”  I could do that, but I won’t.  I’ll be fair, and I will explain what he meant…and then I’ll tear it apart.

He isn’t saying that the entrepreneurs didn’t build their businesses.  What he is saying is that those businesses couldn’t exist if it wasn’t for the fact that roads exist which allow people to buy their goods and services and schools that teach employees and the like.  And he is right.  If we didn’t have schools and roads and things, our modern day society would be impossible.  We would probably still be agrarian.  However, he still doesn’t get it.

Governments do not build roads and schools so that businesses will flourish.  No, what really happens is that societies grow.  They start off as a mere village and progress to a town and then to a city and then to a metropolis.  At every step of the way, more people move in which creates more jobs in the area.  As the population grows, the GDP of that area increases.  As the GDP increases, the tax base increases.  As more taxes are taken in, the government can then decide how to best serve the interests of their neighborhood by spending their tax revenue on public works.  At first, it might be to improve the roads so that more businesses can move in.  It might be to improve the school system so that the quality of jobs will improve.  However, without a growing economy and population, none of these improvements would do anything nor could the improvements be afforded.  At the best of times, the government is a symbiote (a helper organism) for the citizens (and by extension, the economy).  Unfortunately, with the basic needs accounted for, the government may turn to wasting money by building statues, passing unnecessary laws, paying for government parties or spending money to “buy votes” or reward their backers.  When this occurs, the government becomes a parasite.

It is difficult to make this argument (that the businesses come first in this particular chicken or the egg debate) because there is no way to refute it.  Oh wait, there is!  Silly me.  You see, China built these massive, modern day cities.  They had just finished watching Field of Dreams and thought if they “build it, they will come.”  Well, they didn’t, and now they have these massive, expensive ghost cities.  Why?  Because they thought they could central plan growth, and you can’t.  Growth is determined by more factors than the human mind can process.  At best, we can project growth a couple of years in advance.  A city without a population is just a thing.  It’s a collection of buildings, not a society.  As such, who would ever want to move there?  So they remain dormant until the government figures out a way to force people to move where they don’t want to live (which they will eventually…I have full faith in the oppressive nature of the Chinese government).

No one has any problem with using tax dollars to pay for roads and defense and other legitimate functions of government.  Of course, a lot of the things Obama wants to use Federal funds to do should really be left up to the state and local governments to contend with.  Let’s assume though that the Federal government is the one that’s supposed to be in charge of all government spending.  He thinks that we should have the most modern infrastructure in the world.  Since China has high speed rail, we should have high speed rail.  Quick question:  Suppose you are rich, and your spouse is constantly saying, “Well, the Johns have a new car.  We need a new car that’s more expensive than theirs.  Oh, and the Smiths put in a new pool.  We need to put in one with a water slide.  Oh, and the Jacksons just upgraded their kitchen.  We have to buy a new kitchen.  Oh…and that car we bought last month?  The Crews family just bought an even newer one!  We have got to buy a new car or people are going to think we are poor!”  How long do you think it will take you to go broke?  China and India have been buying the newest infrastructure.  It makes sense that, for the moment, their infrastructure will be newer than ours and will probably be in better shape because they are just now getting around to building it.  However, if a bridge will be serviceable for twenty years, what is the logic of tearing it down and building a new one just to compete with China?  Even if the bridge needed to be replaced, it should probably fall to the state to build it, and there would be plenty of money to do it if we stopped wasting the money on crap that the government isn’t supposed to be doing!  Just look at how New Orleans spent money on other projects when they knew the levy needed repairs.

Of course, there is really only one answer for our problems.  We have to learn to say “No, thank you.”  We have to turn down the money that the government is offering us.  We have to say, “I know that I qualify for food stamps, but I don’t really need it.  I will just cut off my cable and not have a cell phone.  If I do that, I will be able to afford the food on my own.”  Will it be hard?  Absolutely.  Will it suck?  You bet.  But only when this mentality is embraced by the majority of Americans do we have any shot of getting out of this mess.  As long as we demand that cuts be made except when it comes to me, then politicians will not have the guts to cut anything at all.  We can still help those who need help, but those who could work must work.  We accept so many things as rights or as a standard of living that are really luxuries (cable, television in general, Coca-cola, etc).

Long Live the Constitution!

Obamanomics – A Study in Keynesian Economics

Posted by Troy on 6th June 2011 in Political

I believe Liberals do to the business world what they claim Conservatives do to the environment.

If you pollute a little, the Earth will clean it up. However, it is possible to take this process for granted. In doing so, someone may clear cut entire swaths of forests, creating a virtual desert where nothing will grow for hundreds of years.

Obama has done this to the economy. When he got into office, he did so with the smug knowledge that the economy would rebound. A typical recession lasts about two years. His thought was he could pass a huge stimulus plan, the economy would rebound, and he would be able to take credit for saving the economy as well as making what amounts to bribery to voters. It didn’t work. Now he sits in his office and wonders what happened. What went wrong? The only possible way that Keynesian Economics works is by tricking people into feeling more confident about the economy and make them feel comfortable about spending and investing. Obama did the opposite. The fact of the matter is, all of his policies clear cut the forest. There is still time to save it, but we must stop these destructive measures.

We must make a consistent environment in which the private sector can grow. We must learn to do for ourselves what should be done by ourselves. We must learn to give up “freebies” from the government. There’s no such thing as a free lunch, after all.