Don’t harsh my recovery
By Roger Hedgecock
“Don’t Harsh My Recovery.” So said a tweet I got in response to an analysis I did on America’s continuing economic non-recovery on my radio show. The tweet went on to say, “I want to believe the economy is recovering Roger if I believe it will.”
“Think and grow rich” might work for an individual envisioning business success, but is delusional as national economic policy. We can’t wish or will the country to prosperity, or recover from a recession caused by too much debt by incurring more debt.
“Together We Thrive” was not only inappropriate as a theme for a memorial to the victims of the Tucson shooter; it is the economic policy of the collective, not of a free society.
“When the truth hurts, lie to me” might help you cope with interpersonal relationships, but it doesn’t work in economics. The truth about the American economy hurts, and when it does, too many Americans want to be lied to.
Specifically, too many Americans want to believe that government “investments” will create jobs. Polls show majorities favoring more government spending on infrastructure and schools. The public assumption appears to be that such spending will build new roads, bridges and broadband and fix our failing K-12 government school system. That assumption is false.
Obama’s original plan to recover from the recession was to stimulate the economy by spending hundreds of billions of borrowed dollars on “shovel-ready” projects, with “90 percent” of the jobs “created or saved” in the private sector. According to a study done by economists at Stanford University, between March 2009 and September 2010, just $4 billion was actually spent on “infrastructure,” while $173 billion was handed out to state and local governments to subsidize their budgets.
The president says we need more money for education? The sad fact is the U.S. already spends more than every other industrialized country on earth for K-12 education, with the poorest results of any of those countries. Does anyone really still think that more money is the answer to our failing public education system?
Despite these facts, most Americans lapped up Obama’s State of the Union call for more government “investments” in infrastructure and schools.
In a parody of the children’s fable, “The Emperor Has No Clothes,” Obama declared the end of the recession and the success of his economic recovery plan, pointing to the rising Dow Jones Industrial Average as proof. But nearly every economic indicator, except the Dow, is flashing negative, as the real world signals persistent unemployment coupled with rising food and gas prices.
By contrast, in 1981, President Ronald Reagan inherited a recession as bad as the current one. By 1986, oil was $10/barrel, the growth rate of the economy was 9 percent, and by the end of the decade, more than 20 million private sector jobs had been created. Why? Reagan’s view was that government was the problem, not the solution. His solution: cut taxes, encourage business development including oil and gas drilling, and get government out of the way. Oh, and defeat the Soviet Union too. It worked, even when the Democrats in Congress insisted on deficit spending to protect “entitlements” and welfare.
Fast forward to today. Obama’s own experts predict his economic policies will result in high unemployment, low GDP growth rates and trillion-dollar deficits stretching to the horizon. Yet this president continues to tout the “success” of his policies.
The State of the Union address repeated calls for solar and wind power, while Obama bans oil and gas drilling wherever he can, even revoking drilling leases previously granted. Abundant, cheap coal also faces extinction in the Obama era, signaled by the cancellation of a permit for a coal mine already under operation in West Virginia.
The American consumer will face skyrocketing prices for all sources of energy and higher prices as well for all the products we need that are made and/or delivered with that energy.
These government “investments” are by definition made by politicians using political calculus; money is allocated based on political gain rather than the price mechanism of a free market.
In the State of the Union address, Obama also correctly called for an increase in American exports to increase American jobs. Reagan said the same thing in 1981 and his low tax, reduced government regulation approach did, in fact, increase American exports by the end of the decade. Unfortunately, Obama is pursuing a depreciation of the value of the dollar as the quickest way to lower the cost of American exports. The price of this policy will be to reduce the purchasing power of your income and your retirement savings. In other words, it’s “inflation.”
Sorry, tweeter. The real facts of our economy today are harsh and no amount of wishful thinking or hopeless collective utopianism will change that. Only freedom will.
Roger Hedgecock is a former mayor of San Diego and is a nationally-syndicated radio talk show host.