Government Bubble

The end of the Clinton era saw the bursting of the dot com bubble. Rampant speculation drove tech stock prices to unsustainable levels, and what went up came crashing back down.

We just witnessed the housing bubble's big bang, with resulting downsizing of irresponsible lifestyles. There is talk of bulldozing entire vacant neighborhoods in some failed cities like Detroit.




Big Government Bubbles
Unfortunately, government gamblers who are incapable of learning anything continue to pump hot air into the increasingly unstable big government bubble.  President Obama, fresh from blowing trillions, brazenly says we are borrowing too much money from China, we're broke, and the irresponsible spending must stop. Oh, and he also wants to fund windmills and free health care for everybody.

California is Exhibit A
Paul Krugman can always be relied upon for liberal doses of economic advice.  Like practically all liberals, he stubbornly pins California's fiscal disaster to proposition 13, the conservative ballot measure that capped property taxes.

William Voegeli exposes Krugman's gross ignorance:

Property-tax revenues in the state have increased from $4.9 billion to $47 billion in the 30 years since Proposition 13. Adjust those figures for inflation and population growth, and property-tax revenues in California were 87 percent higher in 2009 than they were in 1979, chiefly because of rising property values.

Heedless of facts, Krugman goes a step further, predicting the same disaster for the US for the same reason: Those angry, stingy conservatives are blocking "responsible" tax increases that would pay for all this spending.

For Statist Progressives like Krugman, it's always too little taxation; never too much spending.

We all want something for nothing and the politicians are too cowardly to tell us no, so we end up with more government than we can afford.

China and the US are in a Mexican standoff: We can't stop irresponsible borrowing, they can't stop irresponsible lending, and the negative synergy has us on a mutual downward spiral.

Why doesn't it occur to anyone to downsize our overleveraged government?

Obamanomic Uncertaintly Killing Jobs

Liberals are pointing at Republicans and screaming that they are stopping Obama’s economic recovery.  

This after they used the press as a giant bullhorn to continually badmouth the Bush economy until it finally did start sinking.  They don’t understand that unemployment benefits are not an economic stimulus...  but anyway, it’s a bog of economic ignorance and class warfare rhetoric too muddled to even try and sort out.




Here’s a Question for Sensible Americans...
If you don’t know what regulations will befall you in the near future, and your future earnings are in doubt, and you suspect taxes and fees will be raised, how will you react?   Will you blow your money, or will you stash it away?  

Simple decision, isn’t it?.  Well, businesses have reached the same conclusion:

The Bureau of Economic Analysis reports that U.S. corporations are sitting on $1.6 trillion in cash reserves, a record amount, because they are reluctant to expand in the uncertain policy environment.

It’s the Economic Uncertainty, Stupid!
Thomas Cooley tells us what’s wrong with job growth:  Economic Uncertainty.

He starts with the specter of ballooning debt at the state and municipal levels.  We know it’s there, we just don’t know how big it is yet, but we know it’s big.  Add to that...

There is also a lot of uncertainty about the extent of underfunded pension liabilities and the impact they will have because they do not typically show up on budgets.

Given the rhetoric and previous policy initiatives of the Obama administration, it is virtually certain that corporations and wealthy individuals are going to face higher taxes, but in what form?

Even the liberal NY Times gets it, although they stand the uncertainty argument on its head.  They perversely argue that now is the time to set up a program to funnel more money to states while passing cap and trade that will increase the cost of energy.  Get the pain over with so businesses can calculate the costs and press on with hiring and expansion plans.  At least they're half right...

Becoming Europe Won’t Help, Either
Even the liberal intelligentsia realize becoming Europe will only make things worse, reports Lloyd Grove at the Daily Beast:

He said jobs were going to be his No. 1 priority—there’s a huge disconnect between Washington and what’s going on out in the country,”

“The president’s economic team kept talking about a ‘cyclical’ problem. Larry Summers said jobs were a lagging economic indicator. All these things are simply wrong. The president put all his trust in the wrong economic team—an economic team that didn’t understand what was happening.”

That quote is not from a vengeful Rush Limbaugh, but from Obama supporter Ariana Huffington.  It’s the economy, stupid, and businesses, not government, fuel expansion by hiring people.  Even liberals are waking up to that fact.

Big Government: Overpromised, Undersold

The End of Big Government

It's not just us.  Governments around the world have overpromised and undersold.  They had dreams of wiping away every tear, free health care for all, generous old age pensions...  The only thing they completely accomplished was racking up trillions of dollars of debt.

Liberals call it noble, trying to take care of everybody by forced redistribution; spreading it around, as President Obama would say...  But the scheme has collapsed.  There's no way to continue paying for it.  Bernard Palmer sums it up nicely:

bernardpalmer wrote:

Feb 11th 2010 4:21 GMT

World wide Socialism is really dying. We should get ready to celebrate and say goodbye to the huge governments and their armies of parasites who have fed themselves fat for so very long. Hopefully Copenhagen was their last big romp.

It's the Economic Uncertainty, Stupid!

The Economist, a highly-respected British magazine, is an excellent source of dispassionate, unbiased news.  Studiously apolitical, they are a trusted source around the world.  They don't go quite as far as Bernard Palmer in condemning big government, but the solution they proffer looks a lot like Reaganism:

That points to a renewed focus on freeing trade, cutting spending rather than raising taxes and agreeing on new financial regulations.

Some of today’s nervousness comes from “policy risk”. Nobody—neither firms, banks nor individuals—is quite sure where government policy is going. The more that governments can do to reduce such uncertainty, the stronger the recovery is likely to be.

If the Federal Government merely froze spending and announced a moratorium on government regulation and taxes, our economy would grow as a result.  Uncertainty is killing us.

Keeping America's Edge

Jim Manzi has written a thought-provoking article on the social and economic transformations our nation must go through if we want to survive and thrive in the 21st Century.

That chart says much.  America's manufacturing output, as a percentage of GDP, has not changed, but it now requires less than half the workforce it did in 1947.  Productivity increases mean many factory workers have to go find a job somewhere else.

Creative Destruction is a bracing shock to cities, families and individuals as well as whole industries, but we're better off for it in the end.  I expected to follow Papa Silverfiddle into the factory after high school, but economic upheaval wrecked my plans.  I'm not from Pennsylvania, but Billy Joel's "Allentown" explains it all. I went into the Air Force instead and I'm a better man for it.

Innovation, as always is the key

Our success owes much to our dynamism and innovation.  We now need to throw it into hyper-drive.  This involves putting slow-thinking, sclerotic government on a diet and getting it out of the way, of manufacturing, technology innovation, and education.

I recommend you go read this piece.  It is long but interesting.  Thankfully, the author avoids partisan left-right arguments while challenging us to think in new ways.