Economics 101 vs. Government

Euro countries in financial trouble have all accepted a deal with the EU: a bailout in exchange for austerity measures that include serious budget cuts and privatization of government-owned businesses. And as a result, their bond demand has been strong, the cost of debt has decreased and stock markets have risen.

Europe is recognizing its past errors leading to financial crises and is slowly trending toward capitalism. It is realizing more and more that their statist policies have failed. So one has to ask: why in the U.S., where capitalism made us the greatest economic power in the world but where a trend toward statism has put us in a similar crisis, has our government chosen to initiate more statist policies as a solution?

We cannot hold interest rates artificially low, create too much debt, incent people to purchase homes they cannot afford, pressure banks to lend to them, support Fannie and Freddie holding bad loans, turn a blind eye to inflated credit ratings for mortgage-backed securities, bailout selected institutions under “too big to fail”, and not expect the financial crisis we had in 2008.

We cannot support environmentalist whims, spend wildly on irrational programs to promote inefficient energy sources, restrict supply of traditional energy sources; and not expect increased unemployment, high gas prices and greater dependence on foreigners for oil that we will need for many decades to come.

We cannot hire more government workers to support more irrational programs, over-regulate/tax/ dictate to businesses; and not expect reduced private-sector employment, outsourcing, reduced economic efficiency, increased business costs, serious inflation, and a devalued currency.

We cannot redistribute wealth to satisfy need and not expect class warfare, abuse of the rights of the wealthy and the most productive, ultimate harm to the poor and unproductive, and a serious negative impact on our economy.

We cannot support - philosophically or economically - a needs-based morality, harmful egalitarianism, an illogical expansion of the definition of “rights”, free health care or any other product or service deemed a “right”, and - along with the above - not expect a degrading culture and deficits/debt we cannot sustain.

This is Economics 101 and pure cause and effect. But politicians on both sides accept Keynesian theory and ignore both. Our administration has been implementing statist policies consistent with its ideology and without regard for the consequences. Americans must remember our roots, recognize that our trend is going in reverse of Europe and the ideals of our Founding Fathers, and support Presidential candidates who argue for rational and positive change.