The audacity of leave-us-alone

Courtesy of MCT

Barack Obama is a friend of mine. Well, on Facebook. President Obama has seized upon countless opportunities this summer to promote his economic vision for America, defend his spending habits, and excoriate his political adversaries for opposing his fiscal policies – all in the form of status updates. They said he’d bring change to Washington, and he’s exceeding expectations.

Seriously, though. I have been experiencing a three-month mental hang-up, as the president of the United States informs me and his twelve million other “friends” that our economy is “moving in the right direction,” while the numbers clearly seem to indicate the opposite.

The Associated Press reported on Aug. 19 that “new applications for unemployment insurance reached the half-million mark last week for the first time since November, a sign that employers are likely cutting jobs again as the economy slows.” Statistics from the U.S. Bureau of Labor indicate that unemployment has steadily hovered around 10 percent for the last 13 months. A Gallup study of underemployment released Aug. 5 reveals that underemployment remains remarkably unchanged today (18.4 percent) compared to what it was back in January of this year (19.5 percent). And clearly, there is a disconnect between what the president says and what the American people believe. A recent Rasmussen survey from Aug. 18 disclosed that 67 percent of Americans feel the country is headed in the wrong direction, 86 percent do not believe the job market has improved from one year ago, and consumer confidence “is at its lowest point in over 18 months.”

At some point, we are going to have to stop blaming this disconnect on Fox News and start asking whether the economic philosophy that guides Barack Obama’s decision-making works or not. Is it any wonder that jobless claims and unemployment rates rose at the same time the stimulus package money was drained from its coffers?

The president is referring to the policies of the Bush Administration when he warns us that “we can’t afford to start going backward and doing the same things that got us into trouble in the first place.”

But one also hopes that Obama will refer to history as he charts our financial course because history shows that some of the same misguided theories that prolonged the worst economic crisis in American history are being employed again in 2010.

President Franklin Delano Roosevelt experimented with governmental intervention into the economy during the 1930s in an effort to combat the effects of the Great Depression. Roosevelt increased federal spending throughout the 1930s and from 1930 to 1940 the U.S. gross national debt increased by a rate of slightly over 37 percent.  He hiked the top marginal income tax rate from 63 percent to 79 percent in 1936 and a severe recession promptly ensued one year later. In a year’s time, industrial production had dwindled to 1934 levels and by April 1939, unemployment ballooned to 20.7 percent.

Signs of economic decline as a result of FDR’s New Deal programs were evident even prior to the income tax hikes in 1936. The National Industrial Recovery Act (NRA),  which attempted to lower unemployment rates by putting the jobless to work for the government in federally subsidized infrastructure projects, ended up inflating the price of retail as the value of real wages in 1935 dropped to pre-1933 amounts, when the NRA was put into law.

After nearly two full terms of Roosevelt and his programs, unemployment rates were higher in 1939 than they were in 1931. A League of Nations study at the time revealed that unemployment rates in the rest of the industrialized world – where central economic planning did not play as serious a role – were contained at significantly lower levels than the United States throughout the 1930s. In 1938, U.S. unemployment stood at a rate of 19.8 percent compared to the World Index unemployment rate of 11.4 percent.

Finding any semblance of truth in the political sphere can often prove difficult but detecting lies shouldn’t be as hard. Simply put: government in a free society cannot create lasting jobs.

Certainly, it is capable of organizing nonpermanent public works projects and providing temporary employment through programs like the Decennial Census (from which, incidentally, hundreds of thousands of Americans are nearing a return to the unemployment rolls). But stopgap government employment is simply a band-aid intended to delay the real pain that is sure to follow. Other than members of the Congress, bureaucracy, or military, I can’t think of any compelling examples when the federal government has employed citizens with any degree of permanency. Even when government has engaged with the private sector in an attempt to stoke the creative juices of real job creators, the results are mixed.

At best, government intervention in the economy leads to false booms and bubbles that pop with inconvenient toxicity.  At worst, it devastates working-class people,  more so than the rich, and stagnates economic recovery.

By intervening in an area he should not, our well-meaning president has left us like a child trying to remove double-sided tape from his hands: entangled and exhausted.

If you really want to demonstrate compassion and put an end to this mess as quickly as possible, Mr. President, leave us alone.