An enlightening piece from the WSJ on the theory so-called Progressives, like Obama, and liberals like Bush, relied on when implementing the now certifiably insane spending-our-way-out-of-debt tripe.
Before you read the article in full, here’s some background on Keynesian economics which promotes the notion that the private sector is too inefficient economically so public section action and intervention is required.
Now as the G8 has closed and it’s clear Obama’s plea for the rest of the world to continue down his path of economic death and destruction was rejected, this may be the final blow to those who believe the private sector and free market aren’t good enough. Deep in one story about the conclusion of the G8 and their closing statement ‘communique’ of accomplishments notes this:
The statement addresses a range of development and aid issues, along with trade, and environmental issues. It does not contain any broad statement about how countries will pursue economic recovery, saying progress will be made by the G20 toward sustainable recovery of the global economic and financial system.
That’s because Obama wants one thing and the rest of the world another. Check this story from the Daily Mail about the differences between Obama and the rest of the world’s approach argued by UK PM Cameron. Additionally, the notion of a global bank tax has failed as well.
We saw the failure of Keynesian folly unleash itself in Carter’s stagflation of the 70s, but liberals don’t like history as it remind them that they are in fact, doomed to failure. So instead they decide to keep trying the thing history has proven not only will not work, but fails miserably and destroys peoples lives.
So instead of turning to the theories of Ayn Rand while implementing Reagan policy of empowering small business and the free market, both Bush and Obama rushed instead over into the Keynesian Flophouse of Throw-Money-At-It. Again it failed, and again, our entire nation is at risk because a few very rich, very Ivy league and very stupid Political elites thought they knew better than the average American small business owner.
It’s you–the stakeholders in this nation and her economy who have turned into Tea Party Patriots signaling that not only is the Progressive disaster of Keynesian economics toast, so is the establishment that thought it would be a good thing to bring it back.
Here’s just a snippet of the article. Please do read the whole thing. It’s a great analysis in a nutshell.
For going on three years, the developed world’s economic policy has been dominated by the revival of the old idea that vast amounts of public spending could prevent deflation, cure a recession, and ignite a new era of government-led prosperity. It hasn’t turned out that way…Now the political and fiscal bills are coming due even as the U.S. and European economies are merely muddling along. The Europeans have had enough and want to swear off the sauce, while the Obama Administration wants to keep running a bar tab…
The difference this time is that the Keynesian political consensus is cracking up. In Europe, the bond vigilantes have pulled the credit cards of Greece, Portugal and Spain, with Britain and Italy in their sights. Policy makers are now making a 180-degree turn from their own stimulus blowouts to cut spending and raise taxes. The austerity budget offered this month by the new British government is typical of Europe’s new consensus.
Meanwhile, in Congress, even many Democrats are revolting against Stimulus III. The original White House package of jobless benefits and aid to the states had to be watered down several times, and the latest version failed again in the Senate late this week. Mr. Obama is having his credit card pulled too—not by the bond markets, but by a voting public that sees the troubles in Europe and is telling pollsters that it doesn’t want a Grecian bath.
The larger lesson here is about policy. The original sin—and it was nearly global—was to revive the Keynesian economic model that had last cracked up in the 1970s, while forgetting the lessons of the long prosperity from 1982 through 2007. The Reagan and Clinton-Gingrich booms were fostered by a policy environment for most of that era of lower taxes, spending restraint and sound money. The spending restraint began to end in the late 1990s, sound money vanished earlier this decade, and now Democrats are promising a series of enormous tax increases.
What the world has now reached instead is a Keynesian dead end…Meanwhile, individuals and businesses are supposed to be unaffected by the prospect of future tax increases, higher interest rates, and more government control over nearly every area of the economy. Even the CEOs of the Business Roundtable now see the damage this is doing.