In the latest Gallup polling, 62% of self identified liberals have positive image of socialism, while 59% have a positive view of capitalism. That means at least 9% of liberals have positive images of both socialism and capitalism – diametrically opposite political economies.
Maybe these liberals are just really positive people.
Or maybe they are the epitome of low information human beings.
God save the Republic.
Progressive and socialist economists across the world are at a complete loss. Nothing in their world view appears to be working.
Progressives and socialists religiously subscribe to the theory that, for every $1.00 the government borrows and spends, the economy will grow over $1.50 and business will employ millions of workers. Before they took power in January 2009, the Obama economic team made just such a prediction in a white paper promoting the president-elect’s trillion dollar “stimulus” plan as a great investment in America’s economy.
Of course, this idea is ridiculous on its face. If government spending creates 50% growth in GDP, then communist nations spending nearly all of their wealth would have grown at 50% annually and left “poor” nations like the United States on the ash heap of history. Instead, the economy of every communist nation eventually imploded and the ideology went nearly extinct.
The 2008-2009 recession provided progressive and socialist governments with another chance to justify their article of faith that government spending leads to economic growth. Led by the Obama administration and the European Union, government went on the largest peacetime borrow and spend spree in human history to drive economic recovery. Yet, the OECD nations who borrowed and spent the most money, experienced the sharpest downturns during the 2008-2009 recession. Not only did government spending fail to increase economic growth above a normal business cycle recovery, borrow and spend depressed economic activity:
If you pause to think about it, the reason for the failure of socialist and progressive government borrowing and spending is obvious. Government does not create wealth. Government can only take wealth from those who create it through taxing or borrowing and then spend the money on things the political class values, but the citizenry generally does not.
Under the Obama “stimulus” plan, the U.S. government removed investment capital that normally went towards business and employment growth and instead spent it on things like expensive wind power no one would buy voluntarily. The result was the first recession since the Great Depression without a normal business cycle recovery.
This gives new meaning to the phrase “tilting at windmills.”
A good analogy for the faith in borrow and spend is taking a bucket of water from the deep end of a pool, spilling water from the bucket walking around the pool, dumping what is left of the water into the shallow end of the pool and then expecting the level of the pool to rise.
Faith should be reserved for God and has no place in economics. It is time for borrow and spend to join communism on history’s ash heap of really bad ideas.
Presumptive GOP presidential nominee, Mitt Romney, commented last week at a campaign event: “With Obamacare fully installed, government will come to control half the economy, and we will have effectively ceased to be a free-enterprise society.”
The LA Times’ Doyle McManus asked the Romney campaign to explain the candidate’s comment and was told:
In 2010, government expenditures for all purposes — federal, state and local, including Social Security benefits — amounted to about 38% of the U.S. economy.
By 2020, the Centers for Medicare & Medicaid Services project that government spending on healthcare, currently about 8% of GDP, will grow to about 10% — partly because of Obamacare’s coverage for some of the uninsured but also thanks to baby boomers signing up for Medicare.
So that’s an increase of 2%. Add it to 38%, and you’ve got a projection that by 2020, government spending will come to about 40% of the economy.
At this point, the Romney campaign indulges in what (depending on your taste) you might call a magic trick, a redefinition or just a subterfuge: It adds in all projected private spending on healthcare in 2020 — private health insurance, physician and hospital bills — to declare another 10% of the economy government-controlled.
“If we count that as under federal control, we get to 50%,” a Romney aide emailed me.
In the Introduction of my book Never Allow A Crisis To Go To Waste, I noted that the favorite GOP argument for why Barack Obama was a socialist is that he spent a lot of money. Both former Speaker Newt Gingrich and current Senator Jim DeMint advanced this argument at one time or another and Mitt Romney appears to be adopting it.
Unfortunately, the argument has no merit. While socialist governments are invariably large, not all large governments are socialist.
Socialism is the government directing the economy to redistribute wealth from those who create it to those the government prefers.
Obamacare itself is a faithful application of German Zwangswirthsaft socialism where the government leaves business in nominal private ownership, but abuses the government’s regulatory, taxing and spending power to achieve the socialist goals of affirmatively directing health insurance to redistribute wealth.
Obamacare’s socialist inefficiencies are likely to cost health insurance consumers a great deal more money than the program will cost taxpayers.
If GOP candidates are going to convince the citizenry that Mr. Obama is a socialist advancing socialist programs, the Republicans themselves need to understand the nuts and bolts of the ideology.
