The Nov. 2nd Election: Socialism vs. Economic Growth

The upcoming election on 11/2/2010 presents the American people with an opportunity to decide whether they want to regain control over their own lives, or if the Liberal/Progressive/Democrat leadership in Washington DC will continue to expand government, expand control over American's lives, and try to control all wealth in the United States.  Barack Obama and others dislike the word "socialism" perhaps because it accurately describes their agenda.  In many respects, this election is a referendum for Americans to decide whether they, rather than government, will run their lives.

In the Liberal/Progressive/Democrat worldview, government is the solution to all problems, real and perceived.  The private sector is viewed with suspicion and tolerated as a source of taxes and campaign contributions.  The fact that the private sector is the primary source of jobs, creates wealth, and delivers important innovations is completely missed by this worldview and its political agenda.  As a result, the Democrat economic policy for the past two years has been to inject repeated doses of economic steroids:

• Spend and print trillions of dollars.
• Debase the value of the dollar relative to gold and other currencies.
• Avoid any accountability for the ensuing problems.
• Increase government regulation and control over the economy and Americans' lives.

Just now, the Liberal/Progressive/Democrat leadership is wondering, "Why isn't the economy growing?  After all the money we printed and spent, why aren't businesses investing, growing, and hiring people?"  After all, they tried every trick in the Keynesian stimulus book.  The short answer is this leadership has no understanding and no direct experience with the private sector.  They have no idea what drives private sector businesses to invest, grow, and hire people and what actually works to get the economy growing.

As you consider the candidates for whom you will vote on November 2, 2010, identify whether a particular candidate supports the socialist agenda or Americans running their own lives.  If a candidate supports economic steroids or raising taxes in any way, they basically support the Liberal/Progressive/Democrat/Socialist agenda.  Candidates who talk about cutting government taxes, spending, and regulation support Americans running their own lives.




Socialism in the United States
Barack Obama and other Democrats have tried to discourage use of the word "socialism" and explain away their agenda.  It is easy for them to say they are not pursuing socialism, but their actions tell a different story.  There is a video on YouTube where Lt. Gen. (Ret.) W.G. Boykin puts recent events in the context of his studies and experience as a Green Beret dealing with Marxist insurgencies.  Gen. Boykin points out some rather unsettling parallels between China, Cuba, and Venezuela and what Barack Obama and other Democrat leaders are doing in the United States today.


Economic Steroids:  Keynsian "Simulus" vs. The Real World
The Democrats have tried every Keynesian trick in the book, and nothing is working.  Why? The reason is the Keynesian code words "shortfall of aggregate demand" which identifies the cause of recessions as people and companies buying, spending, and investing less.  That is accurate as far as it goes.  The simplistic Keynesian solution is for the government inject economic steroids noted above to eliminate the "shortfall."  This assumes the government can measure any "shortfall" accurately, and it's actions to restore "aggregate demand" will be successful.  History is not encouraging for either of these assumptions.

This approach is similar to saying, "our favorite team lost; they need steroids."  Most professional sports ban steroids for good reason.  In addition to being dangerous and harmful, "steroids" is too easy an answer which ignores many other things which go into winning and losing.  Consider the housing and real estate situation:

• Liberal/Progressive/Democrat leaders administered multiple large doses of economic steroids in the form of printing money and getting Fannie Mae and Freddie Mac into the subprime mortgage business.
• Mortgage issuers could then sell all the subprime mortgages they could write to Fannie Mae and Freddie Mac and bear no risk of the mortgages getting into trouble.
• Housing construction and demand for housing accelerated due to speculation and issuing subprime mortgages to buyers who normally would not qualify.
• Then the music stopped when interest rates increased which put adjustable-rate mortgages at risk, and people who could not afford their subprime mortgages stopped making payments.
• Demand for houses started shrinking; prices started to decline; some homeowners mailed their keys to the bank; in other cases foreclosures began.
• Housing collapsed and ceased to be a key engine of economic growth.

At that point, the Liberal/Progressive/Democrat leaders decided they needed to "fix" the problem.  Had the mistakes in the first bullet not been made, there would have been no problem to fix.  The people who need to answer for this are:

• Barney Frank:  Patron Saint of Fannie Mae and Freddie Mac.
• Christopher Dodd:  Patron Saint of Fannie Mae and Freddie Mac, who declined to run for reelection rather than answer for ethical issues involving "Friend of Angelo (Mozilo)" mortgages through Countrywide Financial.
• Alan Greenspan:  former Federal Reserve Board Chairman who forgot everything he new about monetary policy and started believing his own press clippings.
• Ben Bernanke:  current Federal Reserve Board Chairman who once suggested dropping money from helicopters.

Alan Greenspan has resigned, Christopher Dodd declined to run for reelection, and Barney Frank and Ben Bernanke need to be replaced.


The Solution:  Private Sector Economic Growth
There is a lot wrong with the Liberal/Progressive/Keynesian approach to the economy including a long history showing economic steroids have never and will never work.  Government spending, targeted tax cuts, and other such "stimulus" have a temporary impact at best.  They do not change how private sector businesses (a.k.a., the real world) view their situations and decisions regarding investing, growing, and hiring.  Businesses take a longer-term view of 3-20 years depending on the industry and specific investment, looking at:

• Government-imposed costs, both current and future, such as health care, taxes, and regulatory costs.
• Future growth or recession in the economy, often affected by government actions.
• Government actions which favor certain competitors in an industry over others.
  
• The effects on customers who buy their products and services.
• The probability and degree to which investments will be successful.
  

Businesses are currently holding back because of the uncertainty of making successful investments.  The degree and scope of government intrusion into the economy over the last two years is unprecedented.  The solution is to give all businesses the certainty they need to invest successfully.  This means both rolling back the recent government intrusion into the economy and stabilizing government economic policy, so businesses can confidently make longer-term, successful investments.  The Liberal/Progressive/Democrat worldview does not understand this.  Look for candidates who do.