What We Must Do Now

posted at 12:58 am on June 3, 2009 by Doctor Zero
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The economy stinks, and it’s going to get worse. Much worse.

What stinks about it? For starters, the Dow Jones Industrial Average has been fluctuating between eight and nine thousand, which is about five thousand points below its 2007 highs. The Dow is a calculated average of industrial stock prices, meant to measure the overall value of the American industrial sector. It includes major companies like Coca-Cola, Intel, Microsoft, Exxon-Mobil, and Wal-Mart. These companies lost a huge amount of value over the last two years, and they’re not growing in value now. They represent every major sector of the economy, so when the Dow is flat, it means none of the leading companies in any industry are gaining in value. That’s especially bad news, because as mediocre as it’s been, today’s market is probably as good as it’s going to get for a while. Huge amounts of “stimulus” money have generated nothing except waste and graft. The coming wave of tax increases, along with energy shortages from Obama’s insane energy policies, haven’t slammed into the industrial sector yet. The Dow also maintains indexes for transportation and utilities, and they don’t look so good, either. Cap-and-trade energy taxes will kill entire industries stone dead. Incidentally, one of the companies in the Dow industrial formula, since 1931, was General Motors.

What else is bad? Unemployment. Companies that are losing value don’t hire people. The current unemployment rate is 8.6%. For most of the Bush years, it was around four to five percent. Nobody expects this rate to go anywhere but up, or the media wouldn’t be parroting Obama’s ludicrous “create or save” language about jobs – a rhetorical dodge that only someone with great faith in the boundless stupidity of the public would attempt.

Another dangerous economic indicator is the trade deficit. It’s about six percent of our gross domestic product at the moment. The trade deficit means we’re importing far more than we’re exporting. To finance these imports, we have to borrow money from countries that are running trade surpluses. Running such a huge trade deficit means we’re not supplying our own domestic needs, and foreign customers aren’t buying our products. One of the major producers of a high-value product that both domestic and foreign customers used to be interested in was General Motors. Its transition from failing private-sector corporation to government-run disaster will not help that trade deficit any.

And of course, the fourth horseman of the economic apocalypse is our federal budget deficit, which has passed astonishing and become obscene. Endless billions plunged into pork-barrel spending, coupled with doomed attempts to keep the bloodless corporate host organisms of labor unions on life support, have threatened the bond market and the value of our currency. The current federal government debt is now over half a million dollars per American household, with plenty more reckless spending yet to come… including plans for a nationalized health care system that will suck another few trillion in imaginary money out of an utterly broke government that is mortgaged to the hilt. Among the genius ideas floated to pay for the nationalized health system is a brand-new value-added tax, a super sales tax of 10 to 25 percent, added onto the sales tax you already pay. The major immediate effect of such an idiotic scheme would be a massive reduction in spending by consumers, making an 8000 Dow look like a wistful memory of a bygone era. A significant result of nationalized health care will be a dramatic reduction of the average life expectancy, as a desperate government rations health care by declaring elderly people too expensive to treat. The elderly are generally wealthier than younger age cohorts, since they had a long lifetime to amass money and property… and since they won’t be able to spend money on staying alive, they’ll have more cash in the bank when they pass away, and those massive death taxes kick in. This will make one of the “unforeseen consequences” of socialized medicine an even greater wealth transfer from the private sector to the government.

These dire economic indicators are merely the prelude to the detonation of Social Security and Medicare, the Fat Man and Little Boy of financial catastrophe. These programs were going bankrupt anyway, but the doomsday clock has been greatly accelerated by a weakening economy and worse-than-broke government. Socialized medicine would relieve the pressure somewhat, by killing elderly people sooner and reducing the strain of paying their Social Security benefits, but it won’t be nearly enough to stop the avalanche of entitlement spending on the aging Baby Boomers. Retirees will fight to the bitter end to collect the benefits they paid for all of their lives, and it will be absolutely impossible to pay them.

We need dramatic action to remedy the collapsing economy now. A state-run economy does not have the flexibility to survive sudden expenses, such as major natural disasters or terrorist attacks. Everything that’s wrong with America is doubly wrong with California – what happens if they finally get that big earthquake they’ve always been worried is coming? Beyond the immediate physical destruction, the economic shock wave would bring the creaky American system crashing down, because we’re all plugged into California, whether we like it or not.

So, what can be done to fix these problems? It seems to me that we need the exact opposite of what we’re getting from the hapless Obama Administration. We need increased industrial activity, spurred by increased consumer demand, resulting in higher employment and more exports. None of this can come from tax-and-spend statist policies. The government does not create wealth, value, or hours of productivity when it spends money. It takes the money away from those who create those things, then skims a huge amount off the top due to bloated overhead costs, political graft, and the natural reduction of economic activity that comes from high tax rates. Major corporations and wealthy individuals have ways of avoiding high taxes, and most of them result in higher unemployment and reduced industrial output. The shriveled resources appropriated by the government are then spent inefficiently, with decisions made according to neurotic obsessions and political convenience. Digging our way out of the economic hole will require maximum productivity and efficiency. The path between employee, producer, and consumer must be as direct as possible.

We have to shut down the government. A great deal of it, anyway.

I wrote earlier about the enormous economic stimulus that would come from privatizing education. Many other such industries must be pried loose from the government’s talons, and fed to the private sector, where they can spur employment and commerce. Laws must be passed to prevent the sickening travesty of government officials controlling, or subsidizing, private industries. Laws that enable labor unions to bleed industries dry must be repealed, and the unions broken. Unions may have begun as collective bargaining entities protecting workers from exploitation, but they have devolved into quasi-governmental agencies that exploit everyone who doesn’t belong to the union – literally, in the case of the United Auto Workers, which has lifted about two hundred dollars out of your wallet over the last six months.

The only way to achieve these goals is with massive tax cuts. The leviathan can only be killed by starving it to death. Progressive taxation is a moral and practical atrocity that should be replaced with a flat tax or consumption-based tax (an argument for another day, but either would be better than the sheer tyranny of requiring half the country to pay 100% of the cost of bloated government.) We should flood the private sector with immediate, real money, broken loose from the government’s vaults. Since stock prices are predictive of anticipated trends, and companies figure upcoming quarterly tax assessments into their business plans, nothing could stimulate the economy faster than tax cuts. Tax and spend economies are simply a collectivist instrument for directing production as the political class sees fit, as wasteful as they are immoral. Return the freedom to create, hire, produce, and purchase to the private sector, and let the creative energy of millions of private citizens, making billions of transactions, produce results that can only astound the politically straitjacketed, manifestly incompetent minions of the Obama government. The spectacle of Treasury being run by a tax cheat, health care being administered by a lawyer with no medical training, and the fifty-billion-dollar GM boondoggle being captained by someone who appears to have been chosen randomly from a list of campaign operatives, is darkly amusing – but not at all surprising. This is the kind of garbage that happens every time politicians are given too much power. The private sector usually knows better than to hire a fraud like Turbo Tax Tim Geithner, and if it did make the mistake of hiring him, it would have fired him by now.

A revitalized, deregulated, lightly taxed private economy is the only chance we have of staving off the Social Security meltdown until private sector solutions can be applied to it. It is the only chance we have of preserving the value of the dollar, or stabilizing the bond market enough to make the Chinese stop laughing at us. Everything taken over by the government gets more expensive, but it never gets any better. We have to improve, to survive the coming storm. We need an army of screaming apparatchiks staggering out of Washington in shock, wondering what just hit them. We need the government to make sacrifices for a change. It is the largest employer, lender, borrower, and consumer in the country… or in the world. We’ve had enough of a blundering giant staring down at the little people and telling them to tighten their belts. It is time to declare the utter, absolute failure of socialism, made agonizingly obvious by the expensive fumbles of this President, and the coming crash his policies are only making worse. Socialism has failed comprehensively, in every particular. Every single problem it asserted the power to address has gotten worse. Its acolytes have brought a mighty engine of growth and commerce crashing into ruins. Its early New Deal triumph is about to collapse into a black hole that will obliterate the wealth of future generations. The current socialist government can only pretend it’s working by fudging numbers, making ridiculous excuses, and desperately trying to create distractions. We can’t afford this foolishness any more. The obsessions, hatreds, and superstitions of the Left have grown too expensive. We’ve arrived at our last opportunity to cancel their credit cards and make them get real jobs.

The national debt is currently 80% of our gross domestic product. In ten years, it will be 100%. No one can argue that’s efficient, moral, or sustainable. Bringing this bloated, spendthrift government down will not be an easy task, but we have no time to lose. We, the people, still have the power to control the destiny of the United States. We can do all the things the “smart set” tells us are impossible. We could do them in one single election. There’s no reason Obama should be anything but a helpless lame duck from 2010 to 2012. Bullies are also cowards. Instead of watching the Dow Jones Industrial Average drop another couple thousand points, let’s make the value of a Senate seat drop. Scare those people half to death in 2010, let them know you’re ready to finish the job in 2012, and a great many things can change very quickly. The second quarter of 2009 can either be the high-water mark of the post-Bush economy… or it can be remembered as the high-water mark of the total state. The choice is ours, as it always has been, but may not be for much longer.

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