The lost decade continues along with the permanent Obama recession. (The latter name was coined by Morton Blackwell of The Leadership Institute and it shows the perilous position our economy is in and the slow growth that continues almost four years after a recovery was declared.) If the recent fiscal cliff showed anything, it showed Congress is not very serious in dealing with our fiscal problem or for that matter, designing policy for growing the economy.
Wall Street Journal writer Holman Jenkins noted, “We said it four years ago: A lost decade was coming, though not as some mechanical inevitability of the housing bust. Rather, that financial crisis put politics in charge in a way that would burden the economy’s growth for years to come. The latest fiscal cliff half-deal reached early (last week) is not proving to be a constructive episode. It is not leading to some great bipartisan whoosh of consensus to ensure our future prosperity so we can afford all the entitlements we can afford. There will be no grand bargain. The fiscal cliff turned into just another trial of strength by advocates of the welfare state to prove the welfare state is not rationally reformable in advance of a funding crisis. But we already knew that.”
The first problem is that no one is promoting policies that are designed to produce healthy long term private sector growth but we are designing policies which guarantee long term public sector growth which leads to long term stagnation. No prospect for growth could lead to a financial crisis.
Jenkins observed, “Let us repeat for emphasis: The crisis we fear, when investors no longer will finance our deficits, doesn’t begin with a failure to cut entitlements or raise taxes on the rich. It begins with an unexpected, persistent failure of the economy to grow.” The lack of economic growth, the failure to stem our trillion dollar deficits and failure to reform entitlements and our ax systems are all connected. As government gets bigger, it begins to control economic activity by directing economic activities through subsidies and excessive regulations. We are substituting an entrepreneurial economy for a bureaucratic run state. The weakness of Obamanomics is self-evident, it is based that government should direct economic growth.
In Obama’s world, one can tax the rich and should, and there are no consequences to be had. Government must direct the economy to produce fair and growing economy. For Obama, it is about fairness, not economic growth. Yes, the rich got screwed in their tax bill and with Obamacare these taxes on the wealthy will go even higher. However the Middle Class will see their taxes go up as they wonder why their paycheck is smaller after being promised they wouldn’t get gored? Well they got gored just like the rich and this is just the beginning.
An economic policy based on economic envy does not lead to economic prosperity but it does lead to a society that is divided by class, where economic policies are based on not what produces growth but what can my group get out of this deal and how can I screw the guys ahead of me. We are becoming a society where accomplishments are no longer appreciated and mediocrity is accepted.
We are headed for a lost decade for the simple reason that we no longer admire success but view success as a form of stealing. We are living in a society in which we view the economy as a zero-sum economy where one individual gain is another individual loss. A true market economy creates a bigger pie where more share and until Obama and the left understand that principle, we will see nothing more than what we see; a stagnant economy at best, a pie that doesn’t grow but shrinks.