Monday, October 8, 2012

The Global Economy Weakens

The global economy is deteriorating.  There are no real bright spots.  The BRICs are slowing, Europe is in chaos, and the US is stuck in the mud.  For all the promises that governments make, real economic progress for the average person comes only when economies are growing.  Economies can only grow when markets are free and individuals are willing to take risks to make money. 

Unfortunately, no modern politicians seem committed to free markets.  Romney is probably better than the alternative, but even Romney sees government as an important player in the economy.  His Massachusetts history gives one pause.  The real problem is that Americans and Europeans generally believe that twenty or twenty five years in the work force deserves eighty years of compensation.  The arithmetic doesn't work for that.  Something has to give.

Things like social security and medicare are not affordable.  No society can afford them.  What is playing out in Europe and will someday play out in the US is the outcome of an unaffordable dream.  Someone has to save and invest or eventually there will be nothing to consume.  Free markets are the only institutions that can bring forth the necessary savings and investment to provide for our youth and our elderly.  No other system can do it.

Economic growth is not a luxury good.  It is an absolute necessity if we are to educate our children and take care of our elderly.  Dividing up a stagnant pie -- the Obama plan -- is to give up on the future.  Hopefully, Romney will win the election and the Paul Ryan influence will move the US back toward free markets and out of the quagmire that we find ourselves in.