Monday, August 17, 2009

The Real Problem for the Economy

It is exactly the same issue that arose in 1933. Roosevelt had a clear mandate to "fix" the economy...whatever that meant. Obama had a similar mandate. So what did they do?

Both Roosevelt and Obama devoted the first few months of their presidency to bashing business leaders and bashing various industries. On the legislative front, both Roosevelt and Obama pushed new laws that would raise the cost of doing business, increase the costs of employees, and dramatically increase the regulations that businesses would face. What is the predictable result of these kinds of policies? Well there are a lot of results of this stuff, but none of them add up to economic recovery. Roosevelt presided over the worst US economy in modern times. Obama seems determined to try to match him.

Business folks were terrified of Roosevelt and rightly so. The result is that the depression never ended while Roosevelt held office. In his first eight years in the White House, Roosevelt never saw unemployment dip below 12 percent. Fortunately, Obama faces term limits.

Business folks are not the only ones terrified of Obama. The non-sensical and mis-named "health care reform" crusade of Obama has frightened the majority of Americans, if the Gallup Poll is to be believed. There is a big difference between angst with your insurance company and a two year wait for treatment for diagnosed cancer. Most Americans would prefer the former to the latter. It's one thing to be for combatting global warming and quite another thing to pay an estimated $ 3,000 per year in new taxes (in the form of higher electricity bills and product prices), in the name of global warming, but with no impact whatsoever on global warming (since China and India are completely opposed to any caps on their own carbon emissions).

People are frightened and when they are frightened, they don't spend money. Businesses are frightened and when they are frightened, they don't expand their business and they don't hire employees. Roosevelt never learned these simple truths. Obama seems determined to repeat Roosevelt's mistakes. The US economy will continue to limp along until the Obama crowd puts something on the table that encourages business (like tax reduction, less regulation, fewer employer mandates).