Monday, August 4, 2008

A 1970s Redux? Sure Looks That Way...

Both New York City and State are looking at a fiscal meltdown.

America is involved in a protracted, increasingly unpopular and widely misunderstood war.

Inflation, interest rates and unemployment are on the rise.

Is this 1978 or 2008?

Sometimes, it’s hard to tell. The current occupant of the White House has been a reckless social spender throughout most of his administration – the “No Child Left Behind” and the “Prescription Drug boondoggle” are just two of the most glaring examples.

Like the 1970s era Republican, Richard Nixon, he has embraced a number of disastrous Keynesian policies, most recently an ill-conceived “Housing Bailout” program on top of another poorly thought-out “Stimulus package” that seeks to give taxpayers up to $2500 to “stimulate the economy.”Somewhere, John Maynard Keynes, the icon of failed anti-market economic policies is smiling.

The Dow Jones has reacted to the all this by shedding over 3000 points. The surging price of energy (oil) throughout the first six months of this year and rising healthcare costs have ramped up inflation, while massive government spending has put even more pressure on the credit markets. Locally, high-tax localities like New York City are contracting as they find themselves with LESS in tax revenues and most have to responded, first with higher taxes, fees and fines and subsequently with major cuts in government services.

Is there irony in the fact that a President (G W Bush) who began his administration with one of the greatest stimulus packages ever – the Supply Side inspired ACROSS THE BOARD TAX CUTS, would be undone by his accommodation with Democratic inspired Keynesian policies? Absolutely, it’s a bitter irony.

Even MORE ironic, is the fact that the Democratic Congress that has been in session since January 2007 has seen energy prices (oil and natural gas) rise precipitously under their watch.

The prospects for 2008 look very much like those of 1976. Jimmy Carter, a trained engineer and business owner ran on a campaign of “change” away from the policies of the unpopular Nixon administration, just as Barry/Barrack Obama now runs on “change” and “hope,” and against yet another unpopular President and another misunderstood war.

January 1977 thru January 1981 was the last time a Liberal led House and Senate teamed with a liberal Democratic President and it quickly delivered Stagflation (double digit inflation, unemployment and interest rates) at home and humiliation on the world stage – the failed helicopter rescue of the Iranian hostages, due, in large part, to Carter’s reckless and dangerous Military cuts.

Will Keynesian policies fail AGAIN?


Will, we (middle and higher income working Americans) pay the price for all this?

Without question!

America faces the same reality that France and Germany do. India and China are not only industrializing rapidly and demanding unprecedented amounts of energy, but are forcing the world to embrace free trade and an ever more open/free market economy.

In an interview with Ted Koppel for the Discovery Channel’s “The People’s Republic of Capitalism,” one Chinese official noted that “Many Western European nations, such as France, England and Germany are more socialistic than we are.” He could’ve easily added the United States and been equally correct.

America has veered away from the marvels of the Free Market over some ill-conceived dream of “financial security,” for established businesses and the jobs they create.

That “deal with the devil” has resulted in the contemporary Corporatism (the highly regulated economy that is today embraced by Europe and the United States).

The 20th Century have clearly shown that there is only ONE alternative to contemporary Corporatism and that is the unbridled Free Market.

The “Command (State Directed) Economy” of socialism has only resulted in massive poverty and mass murder, as the middle and upper classes must be eradicated in order for the state to take possession of their property.

What would a true Free Market look like?

It would look like an ugly rugby scrum, a cannibalizing, free-for-all in which the clever gain and the weak are hopelessly buoyed about on waves they neither control nor understand. In short, it would look like an economic masterpiece.

That kind of economy, although offering little nor no security to neither established businesses and industries, nor the millions of workers who work for them, would deliver unprecedented levels of innovation, scientific and industrial advancement and an as yet unattained level of prosperity for the greatest possible number of people.

Of course, it would also remove government subsidies and sanctions from established industries and bar government from regulating cut-throat competitors out of the market in order to “protect American jobs and American businesses.”

John Maynard Keynes argued that government spending, especially large scale social spending and rebuilding projects actually improved the economy.

J M Keynes was wrong.

Like Karl Marx, John M Keynes was not a trained economist and that showed with his pathetic showing when he debated the great economist and fellow Nobel Laureate Friedrich Hayek.

Sadly over the last six decades, while Hayek may have overwhelmingly won the head-to-head battle with Keynes and Keynesianism, the Keynesians still have a long shot at winning the war.

After all, government not only doesn’t want to be shut out of the economy, it refuses to allow itself to be. So it seems that no matter how badly Keynesianism screws up, it will always have its share of well-connected supporters.


WomanHonorThyself said...

hey there JMK..Like Karl Marx, John M Keynes was not a trained economist and that showed with his pathetic showing when he debated the great economist and fellow Nobel Laureate Friedrich Hayek...and now the Marxist lovers like Hussein Obama wish to convert us to a Stalinist state....arg!..great analysis!

JMK said...

Well Angel, Supply Side economics has had a 25+ year run and it's ironic that over that period, the two Presidents who really flirted with Keynesianism were Bush Sr. (a Nixonian Keynesian) and Bush Jr., who did so by way of various "compromises" - the NCLB Act, the Prescription Drug boondoggle and other kinds of excessive social spending.

Clinton warred with the Democratic Congress from January 2003 through December 2005 and it was the Gingrich Congress that got welfare reform, cut the Cap Gains tax, balanced the budget and created those surpluses that Bush Jr inherited.

Since Gingrich resigned the GOP Conggress acted exactly like their Democratic brethren.

It seems as though we might be in for some hard times before things get better.

I just hope the hard times come quick and are over in ONE term for the a unified Democratic government....if we are indeed doomed to that.

As I've said all along, my greatest fear is that a McCain win will only "muddy the waters", allowing the MSM to blame a Republican for the bad stuff almost certainly heading our way, including the Rangel-engineered across the board tax hikes.

With McCain surging last week (now 44.6 for Obama and 44.3 for McCain on the agregate polling) it looks as though we could certainly get that split, although I'd prefer a Republican House and Senate to a Republican President any day, especially if there were a Gingrich-type figure there.

Uncle Joe said...

Bingo! Bingo on the follow up post, too. Clinton is given credit for the "balanced" budget of the '90s, the '90s welfare reform, and the dot com boom of the late '90s.

However, he is given a pass on the dot com crash, the failure to detect 911 planning, and his apology for welfare reform.

JMK said...

The MSM is nearly 90% Democratic and that's almost all "Liberal Democrats."

The funny thing about "Liberal policies," is that even though they deride "the rich" and claim to revile corporations, those policies most benefit the truly rich!

Who benefitted more than the big banks, who made many reckless and irresponsible loans, from the recent mortgage bailout?

Who'll benefit most from government taking the healthcare burden FROM corporate employers and placing on the taxpayers via making it a government program?

And who benefits MORE than Exxon-Mobil, Chevron, Conoco-Phillips and BP-Amocco, by our current non-drilling policy?

Higher oil prices = huge profits for those Big Energy giants. The Libs blame "Republicans" and "Bush" for the rising price of oil and yet it's their own policies that insure higher prices!

Moreover, they WANT higher prices!

They feel that way, "the little people" will be compelled to use less fuel.

Don said...

Seems there will always be a certain level of production and reduction included within every Era. But I can't even deny the downward spiral which is now being witnessed. I like what China does - if I didn;t know any better I'd say they have built themselves into a Superpower.

JMK said...

I like what China and India have done too, Don.

Although much of what's going on would be unacceptable here, like the executing of hundreds of building inspectors and other civil servants (including the undersecretary to the Minister of trade over the recent pet food fiasco).

Industrialization is not without its ugly realities as both Western Europe's and America's history attest.

What troubles me is that so many Liberals still seem to cling to the HOPE that Marxism could work. Despite the fact that history proves that Marxism can’t work and despite the fact that economics also proves that Marxism can’t work, too many of today’s Liberals WISH, WANT and HOPE it can work.

The Market WORKS because it rewards the things we need for prosperity – productivity, innovation, entrepreneurship and creativity/investment, while Marxism/liberalism CAN’T WORK precisely because it rewards indolence, sloth, disability and mediocrity at the expense of the most productive people.

The fact of the matter is that Marxism inevitably leads to an economy filled with people with huge needs...or appetites and tiny abilities...or bad backs.

I appreciate both your passion and your honesty Don, and as always I wish all the best to you and AttorneyMom.

conservative brother said...

Since liberals want to link McCain with Bush by calling him "Mc Bush", the McCain camp should link Obama to Carter aka Jimmy Obama or Barack Carter. I will die laughing if McCain brings a tire gauge to the first debate lol Obama doesn't have an energy plan, the fool said he was ok with gas prices at $4.00. The best way to beat Obama isn't to go after him, just goof on his lame plans.

JMK said...

I fully agree Tyrone!

In fact, Barack Obama's tax policies are right in line with Jimmy Carter's.

Amazingly enough, Obama isn't the only dope who doesn't mind $4 gas, or even $10/gallon gas....Mike Bloomberg recently came out with the same kind of idiotic statement.

Hey! Thanks for stopping by and for leaving such thought-provoking comments.

I LOVE your blog!

Although I often find myself in some ugly verbal jousts with P A Allen.....some of those exchanges can be tedious.

He seems to see "racism" as the cause of everything. That's a tough way to go through life.

There are people who don't like us for any number of reasons or no reason at all....that's usually not bigotry, just personality least that's what I've found.

American Ideas Click Here!