Tuesday, November 2, 2010

The Immaturity of Obamanomics

Obama’s economic plan is doomed to failure because it ignores human motivation. It is the same reason socialism doesn’t work and communism results in genocide. When John Maynard Keynes (Keynesian Economics) helped structure the British wartime economy, he was impressed how the British (and Americans) pulled together in a controlled economy and was surprising successful in extremely difficult times. Keynes theorized that if a similar economic structure could be constructed in peacetime, than capitalism, which appeared to be on it's last legs after the last depression, could not only be saved but would thrive. What Keynes later realized was it was not the structure of the economy and government planning that resulted in the economic stability at the time, it was the motivation of the workers. The President is making the same mistake now as he attempts to stimulate the economy by injecting large amounts of borrowed money into the economy, while necessarily increasing the national debt. The Keynesian theory that recessions are the result of a lack of spending does not go far enough. Obviously people spend less during a recession, but just handing out additional money to spend is not going to address the underlying cause, which is a lack of confidence and stability. The mindless belief in Keynesian theory is the result of the progressive worldview, that the government elite by it's very nature is superior in it's decision making, so these elitists have embraced this overreaching theory that espouses influence over the collective to manipulate their spending, making the issue less an economic problem and more a government control issue; but both concepts are horribly flawed.

If citizens are to enjoy their god given rights of life, liberty and the pursuit of happiness, then free market capitalism is the only viable economic plan known to man. Any other plan requires strict control of human behavior because only capitalism recognizes the inherent or inalienable individual rights and human dignity. This is why all forms of socialism always require some form of draconian re-education. When General Eisenhower warned the Nazis to "Beware the fury of an aroused democracy." this was not a warning based on a war time economy, but the realization that when free citizens band together to fight for their freedom, there is little that can stand in their way. In a controlled economy, such as national socialism, austerity and sacrifice are forced; in a Democracy austerity is volunteered. It is a simple matter of fact that enthusiastically volunteered sacrifice will have a more robust result and delayed gratification than forced sacrifice. Further, only in a democracy does delayed gratification have any real meaning, for only with self governess is the individual allowed to succeed or fail based on his own actions and self reliance. The result is the ultimate delayed gratification best personified by Christ's sacrifice, "Greater love has no man than this, that a man gives up his life for his friends."

The Keynesian's belief is that delayed gratification of the masses is very short sighted and can be easily overcome. As I said before, while there is no argument that one of the symptoms of a recession is a lack of spending by the citizenry, Keynesian theory views this is as the primary cause and this is where Keynesian theory goes horribly wrong. The Keynesian believe that all that is necessary is to “prime the pump” by putting cash in the hands of the citizenry and that this will motivate them to spend and end the recession. But the United States has a very mature citizenry and before they increase their discretionary spending they will be looking for a stable income, not a one time "stimulus". The reason stimulus' fail, is that by their very existence it means the economy is in trouble and the mature citizenry knows that spending a one time windfall, rather than saving until the economy stabilizes would be irresponsible. This shows the inherent economic immaturity that exists in government, where spending never seems to be associated with the debt it causes. Probably the height of government elitism and arrogance is Nancy Pelosi and her belief that unemployment insurance. “.. is one of the biggest stimuluses to our economy. Economists will tell you this money is spent quickly. It injects demand into the economy, and is job creating. It creates jobs faster than almost any other initiative you can name because, again, it is money that is needed for families to survive, and it is spent.” Certainly unemployment insurance is a safety net, but the idea that it is a stimulus and is job creating is the blind worldview of the out of touch elite. It is almost absurd that one has to explain that then unemployment insurance is less, usually about 60%, of a person’s wages and the result of unemployment is a sharp reduction in expenditures and the slow leaching of employees qualifications for future employment.

The employed in a recession will not be motivated to spend government stimulus because they are not short sighted and business will not spend or hire because of government stimulus or short term credits because they are not short sighted; in both cases the reasoning is economic maturity. Not only does government not have to balance a budget or make a profit, it is totally ignorant of either concept. The Obama administration has latched onto Keynesian economics theory, not because it has a proven track record, but because it espouses government control and planning. And as much as Neo-Keynesian economics becomes market oppressive, the concepts of a free market and supply and demand have created the greatest prosperity known to man. The reason is self-evident, the free market rewards initiative and delayed gratification and is to date the only economic theory that does not have to be forced on a populace; and like no other forced economic method, it promotes human dignity.

The use of Keynesian economic theory for the purpose of government planning is being rationalized to supposedly free Americans from economic worries. F.A. Hayek warned about this in his book, “The Road to Serfdom”, “It is often said that political freedom is meaningless without economic freedom. This is true, but in a sense almost opposite from that in which was used by our planners*. The economic freedom which is the prerequisite of any other freedom can not be the freedom from economic care which the socialists promise us and which can be obtained only by relieving the individual at the same time of the necessity and the power of choice; it must be the freedom of our economic activity which, with the right of choice, inevitably also carries the risk and responsibility of that right.”

*”planners”, meaning those who would free us by making our economic choices for us. Since “The Road to Serfdom” (1944) was written before Orwell’s 1984 (1949) and the concept of “doublespeak”, Hayek becomes one of the first pre-Orwell to comment on what Hayek called the perversion of language.This was best personified when Christ stated, "Greater love has no man than this, that a man gives up his life for his friends

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