President Obama has done what only one other president in our history has successfully done. He has stopped our economy, and brought us inflation.
Of course, Barack Obama isn’t the only person to blame. He’s only been an elected official for less than a decade. However, those who think like him about the economy, and those who support them are to blame.
When I took economics at the University of Washington, the entry level class was “microecon”, which was all about Adam Smith and The Wealth of Nations. In microecon, the lecturer carefully explained how individuals acting in their own self-interests (Mother Theresa and Hitler not being excluded) create wealth. We learned how prices send critical messages about supply and demand. We learned how profit is a reflection of the wealth the profiteer has created for others. We also learned about failures in the individual transaction, caused by limited information or outright fraud.
The next quarter I took a course on macroecon. This was all about the “big picture”, and it talked about Keynes’ theories of money supply, inflation, and wealth creation. John Maynard Keynes advocated government control of the economy. He wanted the government to plan an active role, investing right along with the investors, choosing winners and choosing winners. He wanted high taxes during times of prosperity, and high spending during low times. Of course, no nation has ever applied Keynes’ theories, partially because he forgot to account for one critical flaw: we are all human, and that means we are all selfish, including the politicians and officials who run our governments.
The 80’s brought in a revolution in economic thinking. For the past 50+ years before the 80’s, people thought John Maynard Keynes was right about everything. After all, they had a reason to believe it was right: it puts banks, giant corporations, and governments in charge of vast amounts of wealth that they could otherwise not get access to. While they gave lipservice to Keynes, behind the scenes they were making themselves and their friends fabulously wealthy. When the 80’s rolled around, Milton Friedman was able to effectively persuade practically the entire world that Adam Smith was right and Keynes was wrong. The best government does the least. The people themselves should be in control of their own capital, and free to invest it however they wish. Only through the chaos of free markets can wealth be created, while the order of government taxes, spending, and regulations destroys wealth.
The reason why America chose Reagan and Milton Friedman’s economic policies is partially because Reagan was a good politician, but mostly because his immediate predecessor, President Jimmy Carter, had completed destroyed our economy. Just like today, those who lived through the Carter years thought the best years were behind us.
I am grateful that America has experienced, once again, the corrupt policies of government officials who think they know how best to run the economy. At least now, with growth that barely registers, and inflation rapidly rising, we’ll get to experience for ourselves the fruits of slavery.
I hope and pray that Americans across our country will wake up and realize that what makes America great is not our government, but the lack thereof. Specifically, what makes America great is that we can have a limited government, leaving the people free to choose for themselves.
If we dramatically reduce the size of government by eliminating entitlement programs, cutting taxes, reducing spending, rolling back regulations and regulatory agencies, and ending the policy of deficit spending, then we will see the same kind of economic growth we saw in the 80’s. We can end the era of slow economic growth and high inflation only by sacrificing the god of government, and restoring our trust in ourselves and our own capacity to create wealth.