Saturday, February 9, 2019

Memo to the NJ Star-Ledger: Obama Didn’t Cause the Recovery

This might come as a disappointment to some, but the trajectory of America's return path to greatness was well established by the time Donald Trump and his dizzy economic vision for the country came down that escalator.

And then asserts:

One indisputable takeaway is that the shadow of the great recession was lifted by his predecessor: The median income - that's the household income that sits in the middle of the salary ladder - rose 3.2 percent last year (to $59,039), after rising 5.2 percent in 2015.

The S-L editorial goes on to blast Trump for proposing cuts in some welfare programs, saying that this will result in more people in poverty.

The implication of this editorial is that the government is responsible for a strong economy, and that the only way for anyone to get out of poverty is not to work her way up, but to get a handout of unearned goodies. This is upside-down. An economy advances because human beings, by their nature, must work to produce the goods necessary to sustain their lives. An economy therefore has a natural tendency to grow, without government “help,” as long as people are left free to produce and trade.

A government doesn’t cause economic growth. Individual initiative does. Government’s can hamper growth. But they do not cause it. And hamper growth is exactly what Obama and previous administrations have been doing. In the past 20+ years, we saw a perfect storm of government interference—regulatory, monetary, and politicians’ affordable housing crusades under Clinton and G.W. Bush—inflate the biggest housing bubble in history, bust it, and cause the worst financial crisis is history. Then we saw an avalanche of regulation and spending as Obama’s “cure’ for the resulting Great Recession—and instead of a roaring job-filled recovery like the ones following the 1920-21 depression or the 1980-82 recession, we got a mini-version of the 1930s; not as bad, but still the most anemic recovery on record which took a decade for incomes to finally catch up. Obama didn’t lift “the shadow of the great recession.” He simply smothered the recovery.

Add to this the burgeoning welfare state, which disincentivizes work and advancement. Contrary to Leftist dogma, redistribution of wealth doesn’t alleviate poverty. It merely turns low income people into parasites by locking them into perpetual handouts. The Star-Ledger itself acknowledged the economy-crippling effects of perpetual handouts. In a 2/6/14 editorial titled “ObamaCare's collateral damage”, the Star-Ledger wrote that their is. . .

. . . a fundamental problem in America’s approach to its welfare state. [L]ow-wage workers will lose subsidies as their earnings increase, giving them less incentive to work hard and climb the income ladder. Much of what they gain in earnings, in other words, they will lose in subsidies.

This is a problem liberals need to face squarely. . .

That’s not Trump. That’s not a Right Wing think tank. That’s the liberal Star-Ledger in a fit of candor. And every word of it was and is true. And yet every cut in subsidies—even “cuts” that are really reductions in spending growth—are savagely attacked as “heartless”—even though the welfare cuts are a drop in the bucket compared to the massive growth in government redistribution spending and deficits since 2000. I’m still waiting for liberals to face the “fundamental problem” of the welfare state.

Productive individuals, not government or politicians, cause prosperity and reduce poverty. A government is vital to the establishment of the social conditions that lead to prosperity, but only to the extent to which its laws protect individual rights--especially the right to earn a living. Property rights, free trade, production, policing markets against force, fraud, and deception—the rule of objective law—are vital to liberating individuals to work and prosper. But when the government turns to massive economic regulation and redistribution of wealth, you get what we’ve had the past two decades—a boom-bust-barely above stagnation recovery.

I disagree with Trump on many issues. But if he can reduce the regulatory burden while reigning in the welfare state, he will have done real good for the productive individuals and the incentive for upward mobility that are the real drivers of economic progress.

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