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June 18, 2012 - Tim Nerenz, Ph.D
Unless the dictionary now defines fine as “not quite Greece
yet”, I’m worried that our President may have just had a stroke, or maybe an
acid flashback. Or perhaps he has a
girlfriend named Private Sector; maybe she is fine – that might explain it. But the economy is not fine; and neither is
the judgment of anybody who thinks it is.
More Americans are not working than at any time in our
nation’s history. The rate of job
creation is so bad it does not even keep up with population growth. Over the past four years, the net worth of
Americans has dropped by an astonishing 40%.
46 million Americans are on food stamps, and 26 million adults live with
their parents.
Dude, that is not fine.
Our national debt now exceeds our annual GDP and it would
take a growth rate of 6% just to keep our heads above water at the rate
government spending is growing. GDP grew
by a paltry 1.9% last year, while interest on the debt increased to $454
billion. Our President can’t even get a
single member of his own party to vote for his budget; that is how messed up
his fiscal policy is.
No es bueno, mi amigo.
Even Obama cheerleader and liberal economist Dr. Paul
Krugman knows our economy is not fine; he recently called this mess we are in
by its real name - depression - in a rare Austrian slip of a Keynesian forked
tongue.
But don’t be surprised if the government suddenly reports
healthy growth in GDP over the months running up to the election; it might
start to look fine on paper just to make the President look prescient. GDP is like BLS jobs statistics - a slippery
and fluid statistical concept that is not at all what you think.
Nobody is running a calculator in Washington adding up
everything we produce. No, GDP is a
bunch of computers with very complicated programs that estimate theoretical
economic activity and then adjust and benchmark and bend and twist and perform
all manner of digital voodoo to torture data until it confesses a number they
like.
GDP is a mysterious estimate of spending and everyone with a
deadbeat family member knows that spending is not the same as producing. All those nauseating ads that were run in
Wisconsin for the recall election – they count toward GDP. Ditto for the gas to bus people up from
Illinois to vote in it. The salary of
the President’s speech writer who told him to say “fine” – more GDP.
When President Obama’s 2009 stimulus gave union teachers and
fire-fighters raises, it increased GDP.
When the banks loan money to each other and charge each other fees, GDP
grows. When the Fed’s member banks buy
or sell treasuries, those fees are included in GDP, too.
If Ben Bernanke wanted to give his boss a little boost
before the November elections, he could just buy and sell U.S. treasuries back
and forth to himself a million times and crank up GDP by the fees on the higher
transaction volume. There would be a
whole lot of liberal politicians, academics, and media types that would buy it
hook, line, and sinker. And since the
Fed’s member banks are not officially government, it would make the private
sector look…dare we say it…fine. Maybe
that’s the plan.
I don’t know why we count government spending in the GDP
total anyway - it is like counting your kid’s allowance towards your household
income. All the money government spends
is siphoned out of the private sector.
Every dollar was taken from someone who would have spent it (or invested
it) somewhere else instead. Government
drains the economy; it does not add to it.
If you lose your job, does increasing your kid’s allowance
get you back to work sooner? If you
answered “no”, then congratulations - you are smarter than all those Senators
and Congressmen who voted for President Obama’s Stimulus Bill in 2009.
They are all still baffled that the economy did not get
stimulated. You and I are baffled too –
baffled that they ever made it to Capitol Hill without knowing jack bo-diddly
squat about how the economy actually works.
Most of them think government, the economy, and the American people are
all the same thing.
They are not; they are three different things. The President has added 88,000 government
jobs since taking office. Every job
added by government takes 1.5 jobs out of the private sector, according to a
study conducted by the University of Paris.
Yes – Paris, France. Even the
French university commies know more about free enterprise than our President –
how sad is that?
GDP stands for Gross Domestic Product. The word “product” implies something is
produced, something of value. In the
real economy, growth happens when more is produced; when we become more
productive.
If you want to know why this President has not been able to
pull the country out of the recession he inherited, just try to name a policy
choice he has made that provides you – you personally - with an incentive to
produce more of anything.
Can you name one? I
didn’t think so. And if all the people
reading this column right now can’t think of one either, chances are pretty
good there isn’t one. We have just
squandered four years indulging a President who is as ignorant about economics
as he is hostile to liberty.
Mr. Obama came into his one term hoping to be the most
transformative President in U.S. History; he will leave his one term having
transformed a deep recession into a prolonged deep recession. He will be remembered as the golfing guy who
buried us in debt while blaming his predecessor for everything – not exactly a
Mt. Rushmore resume.
But the important thing is that he will be gone. And at least we will have the opportunity for
our economy to become fine once again.
“Moment Of Clarity” is a weekly commentary by Libertarian
writer and speaker Tim Nerenz, Ph.D.
Visit Tim’s website www.timnerenz.com to find your moment.
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