Reality

On Saturday President-Elect Obama gave us for the first time some details from his forthcoming economic plan. While we all can appreciate his well meaning intentions, his rhetoric seemed to be displaying the same enormous deficiency that should have derailed his entire campaign: a complete disregard for historical precedent. Obama intends to “save or create at least two and a half million jobs, while rebuilding our infrastructure, improving our schools, reducing our dependence on oil, and saving billions of dollars.” And he’s going to do this by investing (taxpayer) dollars in infrastructure construction and repair- rebuilding roads, retrofitting government buildings and schools to be more energy efficient, and installing the internet in schools and hospitals. (The careful observer will notice that Obama’s promise of 5 million jobs made repeatedly in the campaign has now been scaled down to 2.5 million jobs.) Unfortunately, this proposal seems to be suggesting a warm and fuzzy sounding band-aid to a cancer patient in need of serious chemotherapy. What he is presenting is a re-packaged New Deal/Great Society government solution to a problem government created in the first place. It has never worked before, and it won’t work this time. Just ask FDR and LBJ. History shows that government intervention turned a recession into the Great Depression. As Reagan said in his first inaugural address, “government is not the solution to our problem; government is the problem.” In a great article entitled “Green Jobs“, John Stossel points out the fatal flaw in the “government created jobs” idea:

The fallacy is the same in every case: Even if the program creates jobs building bridges or windmills, it necessarily prevents other jobs from being created. This is because government spending merely diverts money from private projects to government projects…. Governments create no wealth. They only move it around while taking a cut for their trouble. So any jobs created over here come at the expense of jobs that would have been created over there.

Obama said in his address that one of the measuring sticks he will use to determine the success of these programs is “whether America is more competitive in the world.” It’s really much more simple to do than he thinks. Forget this “new” job investment idea. Cut business/corporate tax rates, of which America currently has the 2nd highest in the world. Why would business people want to invest in a financial environment like we have now? Make income tax cuts permanent. Cut capital gains taxes. Wealth cannot be created by the government, it can only happen in the private sector. So set the American entrepreneur free- let us keep our own money and invest it back into the market, or wherever we see fit. That is how jobs are created, and they will be created here, on our own soil. The stock market, which thrives on stability, would sky rocket knowing exactly where its money will remain. The only way to fix this economy is to allow the private sector- the American people- to fix it themselves. The government can only get in our way.