The Non-Existent Recovery

To conservatives, it's no surprise that the US economy is failing to grow and create jobs.  It's no mystery why the misery index rises, Americans become more despairing, and polls for Congress and the Obama continue to show deep distrust and anger towards government.

The fact is, government cannot cause an economy to recover.  Obama and the Democratic Congress (and the GOP Congress and Bush before) have engaged in numerous efforts that have sought to control the economy or some subsection of it.  Whether it be prescription drugs, mortgages, health care, or derivatives, the government has made extensive efforts aimed to control (regulate) and direct the economy.  This can only lead to market distortions inefficiency.

As we learned from the Soviet Union, no amount of planning, directing, or brain power can possibly take into account the needs for an economy.  This is also true for various segments of the economy.  Adam Smith's invisible hand still gives us the best description of how markets can best allocate resources in a world of scarcity.  Any intervention by bureaucrats only creates inefficiency and a misallocation of resources.

Thus, Obamacare, financial regulation, cap and trade, and whatever other scheme the government puts forward to direct the economy will result in market distortions that increase the costs of business while wreaking havoc with the forces of supply and demand.  As the bureaucracy increases, an increasingly weak private sector will be forced to fund larger government departments staffed with more unionized government employees.

Human behaviour can only be controlled to a point, it can also only be predicted in very limited means.  This is why allowing individuals to make economic choices free from government regulation and direction allows for an efficient market driven by supply and demand.  Of course, I am not advocating the absence of government in entirety.  But a society in which government directs 46% or more of the economy will become increasingly weak and increasingly less free.

As government makes more decisions, people make less.  Freedom is simply the ability to choose.  The expansion of government limits the choices of individuals.  This has been obvious since the passage of Obamacare as people begin seeing their costs increase, their choices narrow, and their access rationed by officials and regulations.

Absent from the debate over the government's increase has been any blame whatsoever in the government's role in this economic crisis.  Why did the government not see this coming? Why would we believe they will see the next crisis coming in time to avert it?

Think of the masses of regulations that restrict the market: the 33 Act, the 34 Act, Sarbanes-Oxley (which was supposed to prevent another Enron, sorry Lehman Brothers), Regulation D, and a thousand other rules promulgated by the SEC, Treasury Department, Commerce Department, Energy Department, and a myriad of other departments and agencies. 

It is impossible to follow the rules without an army of lawyers and accountants. How can an economy grow and thrive in such an environment when hurdles exist at every turn providing a disincentive to hire, invest, and innovate?

Until the government (President, Congress, and bureaucrats) makes it a priority to lessen the cost of business, provide incentives to grow and innovate, the economy will continue in a slump and the misery index will rise further.