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The economy makes my head hurt Many years ago I earned an A in my college macro-economics course, thereby proving the hypothesis there is no relation whatever between a report card and mastery of a subject. I still remember how much my head hurt every time I took a seat in that classroom and when I studied hard for exams. An economist I am not. Nevertheless, I do have some observations on the recession. My view is not optimistic, so you may want to skip it if you prefer to keep your upbeat holiday mood. We are now paying the price, I believe, for an uneducated and apathetic public, products of a dumbed-down, politically correct education system. That is no shot at teachers; we pay them far too little and strangle them with requirements that tie their hands, but that’s another column. The damning evidence is a news media, and masses who watch and vote, that exhibit negligible appreciation for limited government, private property rights and personal profit motive that are the building blocks of the American capitalist system. Some months ago a reporter stopped people on the street to ask their views on recent actions in Washington, D.C., and whether they worried about socialism. Predictably, some answered, “Well, what’s so bad about socialism?” Surely government programs to take care of us must be a good thing. Of course the problem is, government doesn’t produce anything, it just takes our money and decides who should receive it. If you have not yet learned what makes people tick, you might succumb to the notion that Karl Marx’s premise, “From each, according to their ability, to each according to their need,” is a virtuous way to spread the wealth because it seems so “fair.” But if you study economic principles and pay any attention at all to human nature, you will know that collectivism doesn’t work and doesn’t create any wealth to spread. The most stark example is Mao’s Great Leap Forward in China, a program started in 1958 in China to move the population to huge collective farms where their motivation was to be the good of the collective and the nation. Hard work evaporated along with the motive of personal gain, crops failed and tens of millions died of starvation. Winston Churchill said, “Socialism is a philosophy of failure, the creed of ignorance, and the gospel of envy, its inherent virtue is the equal sharing of misery.” Margaret Thatcher said, “The problem with socialism is that sooner or later you run out of other people’s money!” Someone more clever than I observed that socialism is like people in a circle, picking one another’s pockets. By contrast, the profit motive of capitalism built the greatest economic engine the world has ever seen, right here in America. And yet today, politicians who make decisions for us spit out the word “profit” as if it were an epithet. Our children watching the news are likely to believe “corporation” is a form of evil. The congressional do-gooders you should fear most have shifted their malevolent aim over time from tobacco companies to pharmaceutical companies to healthcare insurance companies and the list goes on. Perhaps we should require that every candidate for public office must have owned a business and met a payroll every two weeks, so they would be more attuned to the fact that government is a burden and that the very corporations they spit about create the jobs that make our family life and prosperity possible. All of that is background for this observation. I think the experts and reporters and prognosticators are missing something vital about the recession, especially when they chatter about recovery. I don’t think recovery is going anywhere soon and here’s why. Our country is somewhat evenly divided between left and right. The left is heavily weighted with people who want the government to take care of them, and the right is heavily weighted with people who want limited government to leave them alone so they can live their life. On both sides, many dream of starting new business efforts that create jobs as a by-product of their seeking to make a profit, hopefully an obscenely large profit! But what happened in 2008 when Obama took the lead in the Democratic primary? Millions of people on the right, including me, and surely some even on the left, became very worried about the anti-business environment he would bring to the presidency, and as the election neared, there was an increasing caution and fear. That caution and fear redoubled when we shook our heads in disbelief that so many of you voted for him. Businesses postponed hiring and expansion. Families postponed purchases and curtailed spending, deciding to “wait and see” before buying that new car, making the old washing machine last another year, staying home instead of taking the pricey vacation, eating out less, worry building about the future. Of caution in the business sector, and of such individual family decisions made by tens of millions, recessions are made. The election is more than a year gone, and what has been our experience? Gargantuan bailouts, borrowing in the trillions, a barrage of anti-business rhetoric, plans to let taxes increase in a year as the Bush tax cuts expire, likely re-instatement of the estate (death) tax, trying to push through a healthcare bill that penalizes businesses and transfers control of one-sixth of the economy to our incompetent government, spending hundreds of billions in borrowed stimulus money in politically-motivated ways, government borrowing from your neighbors to give you a rebate for buying a car in September instead of October, and so on. The government-controlled minimum wage was increased, and so businesses cut entry-level jobs. At least the Obama administration is consistent; every move they make, it seems, is something my hurting head remembers economists saying governments should not do. Competent businesses have already set their 2010 budgets. How many would you guess include more job cuts rather than expansion and creating new jobs? When will the profit motive overtake caution and fear? I expect more cuts. Businesses will prosper and create jobs when government takes a little weight off their back, when they can rest easy that more taxes and regulation are not just around the corner, when we consumers have enough optimism to loosen the purse strings to buy the new car and washing machine, enjoy the pricey vacation. So when do you plan to start spending? If you are like me, you’re still in the wait and see mode, along with tens of millions on the left as well as the right, in a defense mode, waiting to see. When will pessimism give way to the optimism that kick-starts our economic engine? My head-hurting non-economist answer is this – optimism will return when we replace the socialist crowd currently in control. Unfortunately, I think we have years more in the tank. I hope to be proven wrong. [Terry Garlock lives in Peachtree City. His email is tgarlock@mindspring.com.] login to post comments | Terry Garlock's blog
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