2/07/2011

More examples of government failures as measured according to their own stated goals!

The most recent issue of Bloomberg Businessweek has two stories that I find rather illuminating. The first one we will address is in their Global Economics section titled, "While the Rich Splurge, The Rest Hold Back." This article documents how despite the recent soaring stock market back to its 2008 levels and government economic statistics telling us that we are in the midst of a great recovery and everything the government has done worked just as planned, reality paints a much bleaker picture.

Before I discuss the contents of the article, I want to preface this by saying the point I am trying to make here is that the government fails at accomplishing its own goals when measured by its own yardstick. I will not emphasize how their policy goals even if successfully achieved would actually cause more harm than good, as a result of their failure to understand sound economics. I will simply show that even on their own merits their policies fail to achieve their own desired outcome.

Mainstream economics and consequently the U.S. government have a flawed understanding of economics and the world. They believe that spending drives the economy. This is backwards. But we will leave that explanation to www.mises.org for now. Believing that the economy thrives and is based off of total consumption and consumer spending, the economic policy in favor is one to flood the markets with as much newly created money as possible, with the hopes that this money will reach the consumer, he will spend it, and presto! fixed economy.

One might recall during the whopping 48 hours before TARP was passed and it was being debated, that people rightly pointed out that the average middle class taxpayer was being forced to bail out the giant banks on Wall Street. Our friends at the government did not attempt to deny this, instead they justified it by saying that without saving the banks the economy as a whole would collapse. Presumably because there would be no one to fuel the debt based consumer economy we have become and thus without giant banks making giant loans to consumers, consumer spending would fall and the economy as a whole would fall right along with it.

In a nutshell, we have to pay to bail the banks out now, so that later we can go back to spending up a storm and boost our economy back up.

So let's see how that plan worked. Remember, this is actually totally backwards. Savings, not spending (especially debt-based spending!) is the lifeblood of an economy. But nonetheless let's see how their actions fared couched in their own framework.

According to the previously mentioned article, "Wealthy shoppers are bolstering the recovery-and masking the reduction of many less affluent Americans to join in. Sales are up at Tiffany and Coach, thanks to demand for $6,000 diamond pendants and $1,200 leather handbags as a stock market surge pads the wallets of the rich."
However, for the average consumer spending has not seen any increase in all. Wal-Mart Stores reports "that many of its customers are still living paycheck to paycheck."

Now this is the part I love about shredding the myth of Big Government. The modern day fascist party, otherwise known as liberals, constantly ballyhoo about the theoretical problems that could potentially occur if we ever dared to have a free market. One of the biggest problems is the disparity between the rich and the poor. (Ironically that problem has been growing alongside the growth of the very same government that is supposed to stop it.) Yet here we have a blatant theft of millions of middle and lower middle class working people's tax money to bail out the banks and devalue the currency to produce a rebound in the stock market in nominal terms, so that the elite rich can increase their purchased of diamond pendants and luxury handbags. Meanwhile if we check back in with the suckers who paid for this bailout, well they are still living paycheck to paycheck, so sadly Wal-Mart can not report the same increase in sales that Coach and Tiffany can.

In your efforts to prevent an economically illiterate myth that the free market punishes the poor, (which unfortunately for them all of recorded human history actually shows the exact opposite, in fact there has been nothing in all of mankind's existence that has benefited the poor more so than the free market. I know facts suck.) you have empowered a government to manifest the worst version of that thing you so desperately claim to want to prevent. The rich fleecing the poor. I don't know how one could fail on any grander of a scale. Hopefully if any supporter of government based on the belief that big government helps the working class, accepts reality and sees the actual effects it has, they will be inclined to pick up a copy of Economics in One Lesson and perhaps think of ways that actually help working class people, and not hurt them instead.

I will address the second article in my next blog post.