Presidential Politics Series.
The Economy: Increase Government Regulations OR Encourage Individual Initiative
August 19, 2007
Ronald Reagan used to quip that government was like a baby's alimentary canal, "A voracious appetite at one end, and no sense of responsibility at the other." In our column today, we deal with the second of several critical issues...the economy.
There are those political candidates who call for the need to grow government, pass more regulations and increase government spending in order to control the economy; then there are others who see encouraging individual initiative and strengthening free enterprise entrepreneurship as the backbone of our economy. In fact, it seems to come down to those who call for greater economic collectivization and thus regulate the lives of people OR either, those who call for greater individual initiative and thus utilize the great strength of the free enterprise system. In the former, the growth of entitlements and increased governmental spending is a case in point. And in the latter, corporate and family owned businesses, investing and saving are central to the health of the economy. There is a dichotomy of views and the Presidential candidates need to clarify where they stand.
Think about it, does government do anything as well or as cost effective as the private sector? When making such an analysis we ask, do we want to grow an efficient burden, or an efficient marketplace?
There are those sources in the so called "main stream media" and the so-called company of "political extremist" that would have us believe that the economy is in a state of doom and gloom. And they seem to relish in that mentality and see it as an advantage politically. In fact, the current economic boom seems to get little respect or coverage from some of the media sources or even found in the rhetoric expressed by some politicians. As background, one only needs to look at the facts and documented numbers and then draw a conclusion.
The labor report shows remarkable strength. Treasury Secretary Henry Paulson announced that the economy is fundamentally strong. The unemployment rate stayed at the comparatively phenomenally low figure of 4.5 percent. Does anyone remember 20% unemployment in the 70s? We have never had such abundance. There were 132,000 new jobs created in June. Since August 2003, more than 8.2 million jobs have been created with more than 2 million over the past twelve months. Remember the media's howling of a "Jobless Recovery?" Our economy has now added jobs for 46 straight months. The average jobless spell is now less than six weeks. Comparatively, these figures are extraordinary. Every European nation would covet such exceptional figures, but it has gone virtually un-noticed.
At the same time, the "doom and gloom" reporters and commentators fail to report that tax revenues are significantly higher than anticipated, cutting the budget deficit far more deeply than was forecast. Real after-tax per capita personal income has risen by 9.9 percent nearly $3,000 per person during the past six years. Real wages rose 1.1 percent over the past 12 months. This is faster than the average rate during the 1990's and it means an extra pay in the pocket of the typical family wage earner. In fact, Brian Riedl noted economist states, "overall tax revenues are growing at the fastest pace in 40 years." In fact, since the tax cuts were fully accelerated in 2003, tax receipts have risen by over 34.6 percent. Point in fact, one way to shrink the deficit is to boost economic growth by cutting tax rates on work, investment and savings and that is precisely what the defining situation is. More Americans are working and paying taxes, more investors have had capital gains from the sale of assets and more businesses have had higher earnings thus have paid more into the tax coffers. So much for those, who in their gloom, spread doom and call for an increase in taxes and for the elimination of the legislative tax cuts. It is a fact, when taxes are too high, people fail to produce, and when people fail to produce, and taxes do not get paid.
In short, the American economy is strong and vibrant. Particularly in light of the fact that the vast majority of Americans have faced with dignity horrific natural disasters such as Katrina, the terrors of 9/11 and the destruction of the World Trade Center, huge defense costs, excessive discretionary spending and runaway entitlements. Where else but in America with its free enterprise system can one face such demands and yet show such remarkable growth and surging economic vibrancy. Thanks to the rank and file of the American people.
Nobel Prize winners and economists F.A. Hayek and Milton Friedman claim that when economies are too much dominated by government, a society becomes more government-dependent and the free-market sector and individual freedoms are compressed. If 10% of an economy's national income depends on government spending and control, then its economy can be called 10% 'socialistic' and 90% free-market. If government steadily expands its control over time faster than the economy, such that say 44% of the economy becomes socialistic (dependent on government spending), then only 56% of the economy is free. We are dangerously close to that today. And those ideal's are on the "Ash heap of history." Winston Churchill called Socialism, which some today propose, "A Deadly fallacy. Socialism is the philosophy of failure, the creed of ignorance and the gospel of envy."
We conclude, today the US economy is healthy and running on all cylinders. This is a productive and working society of optimistic people. We have an unshakable belief in the American strength and economic exceptionalism and so should the candidates who want to be President. It will be highly enlightening when we are able to obtain a clear and definitive position on this subject from all the candidates who want to be the next President of this great nation. That is how we see it FROM OUR PERSPECTIVE.