Monday, December 01, 2008

The Coming Incorrect Response to the Wrong Problem

In all likelihood, when the Electoral College of the United States meets in December, Barack Hussein Obama will be elected President. Despite his unproven eligibility, Obama is very good at behind-the-scenes political arm-twisting and race-baiting, and will probably garner enough votes push aside his closest competitors.

But leaving aside how we got to this point, Obama will live in the White House.

So what is he going to do? He's going to respond to the economic "crisis" as FDR responded to the depression of 1929: spend like mad, in an effort to get reelected. But as Yid With Lid puts it, that won't help us recover:

As late as 1938, nine years into the depression, almost one out of five workers remained unemployed. What the government gave with one hand, through increased spending, it took away with the other, through increased taxation, and the increased power of labor. But that was not an even trade-off. As the root cause of a great deal of mismanagement and inefficiency, government was responsible for a lost decade of economic growth.
And this is not the depression of 1929, or even 1932. It's a crisis in credit confidence brought on by years of systemic government over-regulation and intervention.

Companies have been burdened with reporting requirements that cost them millions in accounting charges, for little tangible benefit. Compliance with the Sarbanes-Oxley rules alone costs a business about a million dollars a year, and for the small-to-medium businesses that are the backbone of the economy -- where the jobs are -- that's a serious hurdle. And it's for nothing more than paperwork.

After forcing banks to make loans to people who couldn't afford them, Congress and the Obama-led forces of political correctness are now going to double down to keep people in the homes they still can't afford, in the name of pain avoidance. It will lead to the same place it did before: default and crash.

Now as each new company deemed too big to fail teeters on the brink of failure, rather than allowing them to fail and trusting that the system which has worked for hundreds of years will continue to work, we assume that we are smarter than our forbears. We can succeed in directing from Mount Etna the affairs of men. Yes, we can.

So rather than admit the failure of the Community Reinvestment and Sarbanes-Oxley Acts, we expand government without care or concern as to what the long-term effect of doing so may be.

It's a crisis!
We must to something!
This is something!
This must be done!

In reality we are not addressing the same problem they were faced with in 1929 or 1932. Even if we were faced with the Great Depression, imitating Hoover and Roosevelt would not solve it. The only answer is to first stop doing, with excessive intervention and regulation, the damage we are doing, and allow the natural wonder that is the American economy again to display its awesome powers.

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