Senate Minority Leader Mitch McConnell (R-Ky) has come up with a vivid new way to express his contention that the nation is spending way too much money it doesn't have. McConnell includes the tweaks in his opening remarks on the Senate floor on the 51st day that President Obama has been in office. "In just 50 days, Congress has voted to spend about $1.2 trillion between the Stimulus and the Omnibus," McConnell says. "To put that in perspective, that's about $24 billion a day, or about $1 billion an hour-most of it borrowed. There's simply no question: government spending has spun out of control." The math: 50 days times 24 hours equals 1,200 hours. 1,200 times 1 billion equals 1.2 trillion (a thousand billions is a trillion). – Politico
Dominant Social Theme: Wasteful politicians.
Free-Market Analysis: So Mitch McConnell (pictured above) is outraged over American congressional spending. One has to wonder where he was during the years of the Bush presidency. Under Bush the national debt increased from $5 trillion to $10 trillion and the result was, in part, a crashed economy married, increasingly, to a quasi-police state. McConnell was silent as all this occurred. Such obvious contradictions make Americans very cynical when it comes to politics. The Republicans are in full cry when it comes to overspending by the Obama administration, but their lack of criticism during the Bush years makes their current concern seem opportunistic.
Of course, the point that McConnell is making is a good one despite the evident hypocrisy. The spending shows the futility of what the Obama administration has set out to do. How does governmental spending of a billion an hour benefit the economy in any way? Government is NOT subject to the invisible hand of market competition. Government is a control device for the most part, and has its own ineluctable logic based on very understandable human self-interest. Government seeks to expand, just as any other entity. But when business expands, free-market needs are inevitably fulfilled. Society benefits. When government expands, the marketplace is not necessarily fulfilled. Government perpetuates itself by seeking to spread tentacles of control. It fulfills its own internal logic, but that is not by any means the logic of the marketplace.
This is the fundamental flaw behind the Keynesian solutions that Obama has adopted. It is like something out of an absurdist fairy tale. In times of economic depression the government is to spend money on everything and anything to put people back to work. Using this justification, the government could build a million "bridges to nowhere" and gradually the economy would recover from its slump. It doesn't make sense on the face of it, but this is now official government policy under Barack Obama.
What the Obama administration is pursuing, policy-wise, is a kind of variation of the "broken window fallacy," – the idea that war, for instance, is a stimulating economic force. When one destroys, so the logic goes, one begins to erect an economic turn around since much will need to be rebuilt. Yet this is patently untrue. War does destroy and society, in the long run, uses up much more resources and energy rebuilding than it would have had to absent so much destruction. Does anyone seriously think, for instance, that Germany, almost totally destroyed during the Second World War, was better off for it from a strictly economic point of view? Or Japan, after two nuclear attacks?
Destroying things to rebuild them is not an economic policy of great merit. Not to mention a morally bankrupt and very un-Christian thing to do. Building bridges to nowhere is similarly a waste of resources and one that will not ultimately benefit the economy, though it may temporarily put some people to work. But in fact, the misallocation of resources is merely prolonging the pain because only the market itself can produce the jobs and businesses necessary for the economy. It does this through competition, Adam Smith's rigorous, invisible hand.
People are waiting nervously to see if President Obama's $3.2 trillion stimulus-budget will work (if passed). But it will not work because it does not put money into the hands of individual entrepreneurs and consumers who are necessary to the basic health of the economy. Instead, it channels trillions through government-oriented gatekeepers and deciders. These groups and bureaucratic individuals will aim the money in directions that fulfill their own agendas, which will have little or nothing to do with what the market requires. The money will be wasted. Tax cuts, an honest money regime, regulatory downsizing and generally a lower level of militarism and government control is what is needed now. It is a very simple recipe, but it is one that Obama probably genuinely doesn't understand. He is said to look tired and drawn these days. He probably knows he is missing something, but what? Even a Harvard law degree does not help now. Perhaps a little vacation to Appenzell might be good for his head? Although, he'd likely find that to be one expense slip his bosses wouldn't reimburse. Don't worry Obama… it's on us. Although we can't guarantee any Swiss banks will be available for a meeting.