June 29, 2009
Why Obama Cannot Fix The Economy
Eric Kaad asked:
First, what is an economy? An economy is the ability for a country to produce, trade, and consume the goods and services that it produces - Business supply and consumer spending.
Some recognizable components of a healthy economy would be 1) a vibrant business climate supported by high manufacturing levels 2) very low unemployment 3) a stable equities market 4) affordable goods and services 5) and low outstanding corporate and personal credit obligations even though the credit is available.
Achieving economic recovery under the Obama administration would go against the very core of current Democratic Party ideology in that it would need to develop an alliance with the big business community.
The Democratic Party establishment has moved so far to the left in adopting progressive liberal policies; government provided healthcare, high taxation on the wealthy, and the elusive global warming issues, that to even consider working with the business community in order to realize economic revitalization would be considered heresy by party elitists.
Whether we like to admit or not the wealthy and the business community are the producers of our society whereas the government does not produce anything. Therefore, you cannot have two competing messages: “We will tax the wealthy and redistribute income for social programs” and “We will work with business community to spur the economy.” Each statement cancels the other out.
The vitality of the economy is driven by the level of business activity so the question then becomes what position should the government take during an economic downturn?
After the stock market crash of 1929, the FDR administration tightened its grip on business by instituting the National Recovery Administration and set price and production controls which stifled competition and kept prices artificially high. The notion being, that corporations and the wealthy would pay the brunt of taxes which would ensure the welfare of the general citizenry.
The effect it created was rampant unemployment for almost a decade averaging 16% and at some points reaching as high as 25%. In order for businesses to stay solvent they had to limit their payrolls, however were further aggravated by strong unions who often went on strike as companies asked workers to do more with less in order to meet production demands.
Only until post WWII did the government loosen its grip on business. During the war families built sizable savings resulting from the lack of consumer products available as most manufacturing efforts were devoted to supporting the war effort. After the war, factories retooled to manufacture household goods and consumers showed up in droves with cash in hand and the economy took off.
Despite this lesson of history, today’s far left democrats applaud FDR’s policies based upon the social programs and government controls that the FDR administration developed. Even though the programs were largely unsuccessful in creating any long term prosperity for its citizens or stabilizing the economy, they are still regarded as successful because it increased the power of the government.
In kindred spirit to FDR’s policies, this is most evidenced by adding a government mandated initiative to the recent economic stimulus package for developing an electronic medical records database. In so doing, sets the platform for government subsidized healthcare program, however does nothing to stimulate the economy.
An example of liberal oriented government involvement lies within the creation of the housing bubble.
Despite the fact that far left democrats view businesses and business leaders as greedy and the cause of our economic ills, they nonetheless instituted lending policies for banks to promote sub prime lending to low income families in the late 1990’s.
In 2004 after receiving an audit came back on Fannie Mae and Freddie Mac indicating that the quality of loans was extremely poor and posed great concern, democrats came out enforce to defeat Senate Bill 190 which called for tighter lending practices. Not surprisingly, the then Senator Barack Obama was one of those democrats voicing opposition to SB 190.
As was then and as is now, true economic reform will never be realized under Democratic Party rule as it is averse to the relevance of the business community as a partner in achieving economic reform. Only when government views business as a vehicle to promote economic vitality will we see an economic improvement.
However, this attitude will not be realized during the Obama administration. If Obama dare change political direction he would lose all support of his liberal political base - most ravaging would be the liberal media giants who would look upon this as sacrilege of progressive ideals.
At some point the voters will figure this out and hopefully sooner rather than later as the 2010 mid-term elections approach.
Designer Scented Candles
First, what is an economy? An economy is the ability for a country to produce, trade, and consume the goods and services that it produces - Business supply and consumer spending.
Some recognizable components of a healthy economy would be 1) a vibrant business climate supported by high manufacturing levels 2) very low unemployment 3) a stable equities market 4) affordable goods and services 5) and low outstanding corporate and personal credit obligations even though the credit is available.
Achieving economic recovery under the Obama administration would go against the very core of current Democratic Party ideology in that it would need to develop an alliance with the big business community.
The Democratic Party establishment has moved so far to the left in adopting progressive liberal policies; government provided healthcare, high taxation on the wealthy, and the elusive global warming issues, that to even consider working with the business community in order to realize economic revitalization would be considered heresy by party elitists.
Whether we like to admit or not the wealthy and the business community are the producers of our society whereas the government does not produce anything. Therefore, you cannot have two competing messages: “We will tax the wealthy and redistribute income for social programs” and “We will work with business community to spur the economy.” Each statement cancels the other out.
The vitality of the economy is driven by the level of business activity so the question then becomes what position should the government take during an economic downturn?
After the stock market crash of 1929, the FDR administration tightened its grip on business by instituting the National Recovery Administration and set price and production controls which stifled competition and kept prices artificially high. The notion being, that corporations and the wealthy would pay the brunt of taxes which would ensure the welfare of the general citizenry.
The effect it created was rampant unemployment for almost a decade averaging 16% and at some points reaching as high as 25%. In order for businesses to stay solvent they had to limit their payrolls, however were further aggravated by strong unions who often went on strike as companies asked workers to do more with less in order to meet production demands.
Only until post WWII did the government loosen its grip on business. During the war families built sizable savings resulting from the lack of consumer products available as most manufacturing efforts were devoted to supporting the war effort. After the war, factories retooled to manufacture household goods and consumers showed up in droves with cash in hand and the economy took off.
Despite this lesson of history, today’s far left democrats applaud FDR’s policies based upon the social programs and government controls that the FDR administration developed. Even though the programs were largely unsuccessful in creating any long term prosperity for its citizens or stabilizing the economy, they are still regarded as successful because it increased the power of the government.
In kindred spirit to FDR’s policies, this is most evidenced by adding a government mandated initiative to the recent economic stimulus package for developing an electronic medical records database. In so doing, sets the platform for government subsidized healthcare program, however does nothing to stimulate the economy.
An example of liberal oriented government involvement lies within the creation of the housing bubble.
Despite the fact that far left democrats view businesses and business leaders as greedy and the cause of our economic ills, they nonetheless instituted lending policies for banks to promote sub prime lending to low income families in the late 1990’s.
In 2004 after receiving an audit came back on Fannie Mae and Freddie Mac indicating that the quality of loans was extremely poor and posed great concern, democrats came out enforce to defeat Senate Bill 190 which called for tighter lending practices. Not surprisingly, the then Senator Barack Obama was one of those democrats voicing opposition to SB 190.
As was then and as is now, true economic reform will never be realized under Democratic Party rule as it is averse to the relevance of the business community as a partner in achieving economic reform. Only when government views business as a vehicle to promote economic vitality will we see an economic improvement.
However, this attitude will not be realized during the Obama administration. If Obama dare change political direction he would lose all support of his liberal political base - most ravaging would be the liberal media giants who would look upon this as sacrilege of progressive ideals.
At some point the voters will figure this out and hopefully sooner rather than later as the 2010 mid-term elections approach.
Designer Scented Candles
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