Time to dust off the ol’ keyboard and write a post. I’ve been busy… working, oddly enough in this economy. Actually, I am helping a friend remodel a house (he’s a contractor and had to fire his workers for drinking on the job, leaving him in a tough position after getting his bid accepted to remodel this particular house). I have the requisite skills, I haven’t done it in a while, so it sounded like fun. We’re transforming a house damaged by a fire (set by a murderer who killed the renter occupants of the home… but that’s a long story) into a really gorgeous home. It’s fun to build. It’s extremely satisfying to put in some work, both physically and creatively, and turn something that had almost no value into something with far more value than it had even before the fire. I’m creating wealth. Who’d have guessed?
Certainly not the POTUS. After his speech in which he stated that “the private sector is doing just fine,” and that it’s the public sector that needs help, it’s more clear than ever that he does not understand wealth creation. Democrats tend not to understand that simple concept. Obama does not realize that taking basically nothing, adding intelligence, creativity, and labor, to arrive at a point where you have a product (or service) with value to others is how you create wealth. As an example for the truly thick: Let’s say you have a piece of barren ground. You search around, start digging holes, and discover that this piece of ground contains a mineral called iron in it. You figure out how to get more of the iron out, you begin digging, and the next thing you know you have a boxcar load of ore rolling toward a smelter to make steel used in all manner of things. You are paid for your ore, that previously was simply in the ground doing nothing. You, my friend, have created wealth! Also, the company who built the factory that converted the raw ore into useful steel created wealth. The company that took that steel and built a car out of it also created wealth.
Let’s contrast that with a bureaucrat working for a government agency. While the iron miner took nothing and produced valuable ore and was paid based on how the market valued the ore he mined (if the cost of extracting the ore was less than the money he was paid, he made a profit), the government bureaucrat is paid with money taken, via taxes, from the miner (and everyone else creating wealth). The bureaucrat is not paid based on value he creates as determined by the market, or on his productivity in producing more value than his salary. He’s not creating wealth at all. In fact, chances are excellent that his job entails piling extra costs onto the miner or other wealth producers. When doing his job correctly, he’s adding more costs, decreasing the wealth produced by the miner, all while being paid BY the miner (albeit indirectly). The good news (the ONLY good news) is that the government bureaucrat will spend his salary, which helps the economy. But if you contrast the total boon to the economy of the bureaucrat spending their salary with the miner and his workers the total economic boost is not even close. The bureaucrat takes money out of the wealth producing private sector for his salary (take into account not only the direct cost of taxes to pay the salary, but also the future value of that money which may have enabled investment in other things, like equipment or personnel), and adds cost burdens onto the wealth producing private sector through regulations and fees. The miner and his workers are not only producing wealth, paying for their own salaries through productivity, but they are also contributing a product that enables others to do the same, and they are spending their money, just like the bureaucrat–who they are paying for.
The point is that there is a productive sector of the economy–the private sector– that creates the wealth. And then there is the government sector, which at best redistributes that wealth to unproductive, and often to counterproductive people. This president thinks the two are equivalent. He doesn’t understand the difference between productive employment and unproductive employment. He thinks it’s all the same, because he doesn’t know where the wealth that leads to prosperity comes from. In fact, based on things he says, I’m pretty sure he thinks that it comes from government. It’s Keynesianism taken to the extreme, where the belief is that the source of wealth is the government, not the wealth producing private sector. Even a regular Keynesian understands that what Keynes was talking about was government spending to spur private sector productivity so that wealth will be created, including enough wealth to cover the deficit spending the government needed to buy the spurs, because they know that the actual source of wealth is the private sector. This guy, President Obama, seems to actually think the government is the source. He must, because he keeps putting government ahead of the private sector, believing he can increasingly milk the private sector through taxes and impose regulations and somehow create a thriving economy out of non-productive government worker labor.
The other thing I wanted to touch on today in this long post, is Obama’s weekly address in which he said:
“We have the answers to these problems. We have plenty of big ideas and technical solutions from both sides of the aisle. That’s not what’s holding us back. What’s holding us back is a stalemate in Washington,” Obama said in his weekly address.
Obama said that when it comes to most ideas that would boost hiring and the economy, Capitol Hill Republicans “haven’t lifted a finger.”
“They’d rather wait until after the election in November,” Obama said. …
“Every problem we face is within our power to solve. What’s lacking is our politics. Remind your Members of Congress why you sent them to Washington in the first place. Tell them to stop worrying about the next election and start worrying about the next generation,” Obama said.
I want to point out a couple of things that Obama wants you to forget or not to think about.
First is that Obama and the Dems had complete control of the government for two years, during which time they ran roughshod over the Republicans and passed everything they wanted (Obamacare, Dodd Frank, the stimulus…). The net result was suppression of job creation and stagnant growth. Remember, this guy who is suddenly upset that Republicans won’t work with him is the guy who looked John McCain in the eye during negotiations over the stimulus package and said, “I won.” In other words, “Shut the F up, Republicans, I’m doing it my way.” And he did do it his way. And the result wasn’t pretty.
Second, the Republicans have put forward several of their own jobs bills that have died in the Senate. Together, there actually have been bills touted as jobs bills passed. It ain’t workin’ in the business climate, fiscal climate, and uncertainty that the Obama administration has created.
Third, sometimes two visions are so disparate that there is no middle ground to negotiate. If one vision is for unleashing private sector creativity and entrepreneurship and the other is to have the government control the economy, there’s no middle ground that can be found. There is no middle ground between statists and free marketers. You’re one or the other. There’s no middle ground between reforming entitlements in order to avoid bankruptcy and refusal to touch them so that you can use any attempt at reform to bludgeon your political opponent to the economically ignorant and self-centered.
Obama put forth two budget proposals so outrageously inane that they garnered no votes in the Congress. The Senate hasn’t even put forth a budget proposal. Why? So that they could use the Republican budget proposal from the Republican controlled House as a political tool to scare the electorate… or at least those parts of the electorate so ignorant that they don’t understand the looming catastrophe that Democrats are purposely ignoring, or accelerating us toward. Obama claims that the Republicans are blocking proposals for political purposes, while the Democrats tend to do absolutely nothing that isn’t politically motivated, including purposely doing absolutely nothing.
Sorry for the length of the post. It’s been a while… Had to get that off of my chest.
Good article by Erika Johnsen at Hot Air.