Tuesday, January 29, 2013

The Managed Economy

There seems to be some euphoria surrounding the Obama White House that the economy may finally be on track.  The stock market's behavior this month is a glowing chorus of approval, according to many observers.  Perhaps, the economy can be managed after all.  Perhaps, taxes and health care costs don't really matter after all.  Perhaps, the collapse of Europe is irrelevant.  Perhaps....

The cold reality, though, is that the numbers on the ground are still pitiful and have the potential to get worse.  What little pulse the economy has is now an occasion for celebration in the White House.  Strange.  The American economy has historically provided 3 to 4 percent economic growth as the American middle class became the envy of the world.

Yes, the middle class has greatly improved its economic position over the last three decades.  Only if employee benefits are left out of the calculation, which now amount to over 30 percent of employee compensation, can we reach the conclusion that the middle class is losing ground.  The middle class was doing better than ever until 2009.  Now, we have Obama.  Good luck middle class!

In the new Obama economy, only those at the top of the stagecoach will do well -- the rich, the famous, the politically entrenched.  Those who fight for jobs and profits in the private sector will remain under seige until the political climate changes....which won't be anytime soon with the retreat of the loyal opposition.

We have now entered the age of the "managed economy."   The Fed combined with government subsidies to preferred friends have largely sucked out the marginal dollar from legitimate free market uses to political purposes.  That spells no growth.

Businesses are still the enemy and they will remain the target of this administration.  Don't expect any help from a Republican-controlled House of Representatives.  The Republicans have fallen on their sword and should, deservedly, lose control of the House in 2014.  They have lost the will to fight for anything other than social issues and are willing partners in the rush to expand government.

Don't expect much from the new "managed economy" other than the absence of economic growth and a large permanent underemployed and unemployed class of Americans.