Sunday, July 5, 2009

If at First You Don't Succed Why Not Fail a Second Time

It's reported that White House economists and President Obama are thinking about a second wave of "Stimulus". The first gamble worked so well. Why not double down? If stimulus works so well than why don't we just do it as a matter of routine economic policy? Do you remember the 1.5 multiplier that was promised? That's the one where it was suggested for every government "Stimulus" dollar thrown out we would get a 1.5 that amount in return due to all the extra shopping and consuming that would occur. It's July. The "Stimulus" was passed in February. How is that working?

Many of my earlier posts when Obama was hatching these policies were written out of the horror of the policies I was watching become law. Things have not really changed. Obama's economists suggest they're willing to do "whatever it takes" to get the economy going again. Ok. Mr. Obama, here's what it will take:

1. Cease the crazy government expansionist policies such as healthcare, cap and trade, etc. They create uncertainty because nobody in business with money to invest knows the details. This hurts business planning in certain major industries.

2. Stop the daily barrage of radical government expansion proposals including financial regulations that you've proposed.

3. Don't denigrate capitalism with such terms as the "system failed". Certain things didn't work well such as subprime mortgages and a lack of regulation in derivative markets. Don't denigrate the other stuff becuase they weren't the root of the problem. Don't scare entrepreneurs into thinking you're a literal European Socialist.

4. Cut taxes and cut government spending. You're doing the opposite. government spending has lags, tax cuts help quickly and are easier to administer.

5. Be a leader and don't let Congress write your legislation. This is under-reported but Congress is writing these major bills. Usually the administration would lead on such issues. But with Obama it's the democrats in Congress. That's not good given how liberal those people are. The result is that the bills get passed but they end up incoherent and laced with special interest loopholes that undermine the overall intent of the policy. This makes already bad stuff even worse.

6. Defer to business leaders. I know this has to be hard for a guy like Obama. But the truth is that you need them since they are the people whose companies do the hiring. They know a lot more about business than you do. Give them the tools they need beyond just empty platitudes that you will reduce their healthcare costs by starting the process of socializing medicine. Generally, they're not stupid people. They know that doesn't make sense. Listen to them and give transparency. You have a different role. You don't create jobs, businesspeople and entrepreneurs do.

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