Posted by
Bryn T. Jones on Thursday, November 13, 2008 1:33:54 PM
Many want to give President-elect Barak Obama a "chance" to prove good on his promise of opportunity for the middle-class, if not for everyone. Such folks say we should judge him on his actions, once he takes them, not presume a catastrophe. Fair enough, in theory. In reality, however, we can certainly voice deep concerns regarding what he plans to do, though yet unfulfilled. After all, the likelihood of him changing course from now until January 20 without an electorate to impress, is unlikely. And what we know about President-elect's plans should cause us concern.
He plans to issue an executive order locking up energy reserves. This will end any hope of weening ourselves from oil provided by our philisophical and political enemies. Naturally, his solution is to raise energy prices to force further conservation while using tax dollars to subsidize "green" energy that is less efficient and more costly. In short, this is the exact recepie for furthering our current energy crisis, which has only abated due to a crumbling economy (which has reduced demand).
He plans to continue the Bush bailout plan. It is ironic that while the democrats blame the "Bush policies" for creating our economic crisis, they offer "more of the same." Big government intervention in a free market has caused our economy to spiral out of control on the credit side and the housing market. Expanding government programs and national debt have weakened our currency and shackled us further to those who would succeed us, namely China and Russia. The bailout plan is simply more defecit spending with our money that will do nothing to correct the problem caused by government regulation and bullying.
On our present course, we can expect the government to assume control of large swaths of our economy, further weakening our economic power. With rising unemployment, the solution to such big governement-minded people is to provide government jobs akin to FDR's New Deal. This will mask the unemployment to a certain extent, but will do nothing to heal our economy. The programs will be using borrowed money to pay workers for an unnecessary job, or one that could be done more efficiently in the private sector.
The underlying problem with the current path of government is that rather than provide opportunity, it kills it. Imagine if you saw a job posting and, after dusting off your resume you applied for that job. Putting on your best clothes, you go and turn in a great interview for that post. Under normal expectations, you would have exercised your priviledge in a free market for a job opportunity. Then consider that a month later you learn that the position had been filled prior to the job posting and before the interview process. Suddenly, what felt like the promise of opportunity feels like a sham in which you should never have wasted your time and effort. An experience like that fosters a cinical view towards any job listing or application process.
By government stepping in and forcing economic change via bailouts or subsidies, the free market is boxed in, allowing a third party to determine who gets the chance to succeed or fail. CEOs with the proper government connections get bailed out or get subsidized, while other, less connected entrepenures are left to fail because they can't compete against their large, well-connected competetors. While in a free market the failure of large companies provides opportunity for smaller, rising companies, the government steps in and "fills the position," stifling economic adaptation.
While it appears these bailouts aid our economy by rescuing companies from bankruptcy and stocks from bottoming out, what we forget is that bankruptcy is a part of business life. Companies fail and get bought out all the time. This part of the risk of embarking on business ownership. And without risk, there's little reward.
If Obama wants to provide opportunity, he will get government out of the way. He will allow the auto manufacturers to reorganize or fail on their own merits. He will lower taxes on corporations, giving them more room to adjust their prices. He will cut capital gains taxes to the floor to encourage investment. He will, in short, allow the free market to work.
The problem with Obama, which happens to have been the problem with Bush, is that he doesn't believe the free market can work on its own. This is why there are those of us who do not hold this starry-eyed hope for the new President-elect.