Friday, January 30, 2009

The Administration Has Begun...

Many Americans were very excited about the election of Barack Obama, believing he would bring change. And change is here.

Remember the "expensive" war in Iraq? Expensive it was, but nowhere near as expensive as the new "stimulus." Projections for how much the war in Iraq would cost in 2009 if it were to continue at its current rate were $136 billion. But President Obama's administration has made this number negligible, coming in with an Emergency Stimulus plan at nearly a trillion dollars. $1 trillion sounds like a big number, but just how big is it? $1 trillion is approximately the amount of individual income taxes that the government collects in a year ($1.0237 trillion in 2006, to be exact). That's right, for the amount of this "stimulus," Americans could have an income tax free year. Think about how much more everyone could do to stimulate the economy if they were allowed to keep their earnings instead of seeing it redistributed to those who are less productive than themselves.

This leads to the real reason why "stimulus" plans are not only misguided, but counterproductive. Anyone who has had a job knows that if you are known to be unproductive, if you don't show up to work, and if you don't carry your weight, your company does not offer you more money -- it (eventually) will fire you. The company offers its money to those people who were productive and helped the company succeed, so that it can continue to succeed in the future. This is the opposite of what these so-called stimulus plans do. They promote redistribution programs, which take money from those who were productive and give it to those who are not. But look at what great items are on the ticket... $600 million for the federal government to buy new cars, $650 million for DTV conversion coupons, and even $200 million towards planting grass on the National Mall.

Yet, the sentiment seems to be that economists nationwide are in full support of the need for the government to "jumpstart the economy" as though it is a car whose battery has died and there's some external force capable of making it run. President Obama seems to believe, "There is no disagreement that we need action by our government, a recovery plan that will help to jumpstart the economy." The CATO Institute issued an article disputing this, signed by hundreds of economists. Among them were Nobel Laureates and respected college professors, but this is still by no means an inclusive list. These economists say, "With all due respect, Mr. President, that is not true." Government does not make the economy run. Economics is the interaction of billions of individuals who, in pursuing their own living, make the lives of others better. It is not taxes or government spending that spur new invention, new medicines, and new technologies. It is the promise of profit that drives people to devote themselves to countless hours of research and education. It is profit that causes even the most selfish people to concern themselves with the needs of others, and to meet those needs. Government ignores this true driver of growth and prosperity, and arrogantly presumes that our money is its money to throw away.