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Tuesday, February 24, 2009

Pork/Stimulus vs. Economic Growth

Pork/Stimulus vs. Economic Growth
I must say that it is hard to understand liberal “economists” when it comes to economic growth.  The jury is not out on how to grow the economy.  The verdict is clear—you grow the economy by putting more money back into the hands of the people, not into the hands of the government. 
Calvin Coolidge cut tax rates and the economy soared.

John F. Kennedy cut tax rates and the economy soared.

Ronald Reagan cut tax rates and the economy soared.

George W. Bush cut tax rates and averted an economic disaster that could have been brought on by 9/11 and Hurricane Katrina.

What is it with the liberals?  Can’t they figure out that two plus two equals four? 

Franklin D. Roosevelt’s massive government programs, wild spending and high taxes extended the depression.

Free markets work.  Government intervention, such as that promoted by Carter and Clinton into the housing market mandating loans to folks who could not afford them not only fail, but also cause long time damage to our economy.

There is no such thing as a government stimulus package.  When government takes your hard earned dollars and spends them, it always hurts the economy.  There are no exceptions.  Sometimes government spending is unavoidable and even necessary—as the US Constitution and the Founders knew—to provide for the common defense and promote internal order.  When government goes beyond these two legitimate functions it begins to reduce your freedom and mine.

When 435 members of the House of Representatives and 100 members of the Senate, along with the President, decide to spend our dollars for pork and to “stimulate” the economy, all they are saying is that they are smarter and wiser than you and I are.  It’s not only foolish political arrogance, it’s dangerous to our economy and to our freedom.

When government tries (in vain) to stimulate the economy, they cause non-market driven misallocations of capital and labor resources.  Bad and inefficient economic decisions are made.  As Adam Smith pointed out, it is only individuals making millions of independent decisions who act like an “invisible hand” to properly allocate resources for the common good.

Liberal “economists” would say that catastrophic events like Hurricane Katrina stimulate the economy because of all the work that must be done to repair the damage.  What they don’t see is what those same resources might have built or created by market demand if they were not caused to be expended on re-building and repairing.  There is not expansion of economic well-being for the citizens of America when a disaster occurs.  There is only contraction.  There is no expanded purchase or creation of consumer goods and services when money is spent on buying a new aircraft carrier, there is only contraction.  Every dollar spent by the government for defense is a dollar that you could not spend as you saw best for your own needs.  Every dollar spent to build a tank is a dollar that could not be used for research and development of new consumer products and services.  Every one of your dollars spent by government reduces your individual freedom.

This is not an argument against spending funds on national defense or any of a thousand wasteful and dangerous government programs, but it is an economic reality.

The best way to recharge the American and world economy is to put more money back into the hands of American citizens.  A so-called government stimulus package will only drive the economy down toward a depression, as it did under FDR.  If you want the stock market to recover and business to grow, freeze government spending across the board, suspend all capital gains taxes and suspend all corporate income taxes.  These simple steps would get the economy back on track faster than any other action the government could possibly take.  They are based on sound economics, not short-sighted, wishful thinking by power hungry politicians.

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