Government Intervention: The Path to Prolonged Pain

The more government gets involved to fix a situation, the worse that situation gets.

A perfect example is the state of our economy.  The more government tries to fix the economic problems we face, the only result that Americans get is less people are working, fewer jobs are created and more people have stopped looking for jobs altogether. 

The problem is not the economy, but rather the political policy that not only worsens the situation, but prolongs it.

The government should not be responsible to get in the middle of the natural ebb and flow of the economy.  While some claim that it is heartless to do nothing because people are suffering, the other side of the argument is that people will suffer for less time if the government stays out of the way.

For the first 150 years of our country’s existence, the federal government had a laissez-faire attitude and our country survived just fine.  It wasn’t until the Great Depression, when President Franklin D. Roosevelt decided the government needed to get involved to solve economic problems that the country started to see a downward trend. 

In retrospect, it was found that FDR actually prolonged people’s suffering by several years.  It seems that would be the definition of heartless.

One just needs to look at how President Harding dealt with the economic crisis that Americans faced in 1921.  During that year, unemployment was 11.7%.  What did President Harding do to get the country back on track? 

First, he allowed the market to correct itself without government intervention and second, he lowered government spending. 

The result of was that by 1922 the unemployment rate went down to 6.7% and in 1923 was at 2.4%.

In four years under the Obama administration, unemployment is still hovering at 8%, which means a lot of people are suffering for an awfully long amount of time.

The whole idea of government pouring money into the economy defies common sense and is counter-productive.  Growing government programs increases the cost to run government and leads government to raising taxes in order to pay for it; or borrowing money with a high interest rate to pay for it; or printing money to pay for it with the result of reducing the buying power of the dollar.

Government taking money from you, through taxation, in order to put it back into programs that supposedly stimulate the economy is, simply, income redistribution.  Who is government to decide who should get that money? 

So far, government has put our hard-earned tax dollars to the tune of $50 billion, in green energy companies alone, to failed companies such as Solyndra, Abound Solar, Beacon Power, A123, Ener1 and most recently Compact Power.   Compact Power was given $150 million to make batteries.  Not only has not one battery been produced, but the company is now starting worker furloughs.

 Instead of that scenario, wouldn’t you much prefer to keep your money, make your own choices of where to spend your hard-earned income and be better able to stimulate the economy than the government? 

Government intervention is the government merely acting as a “middle man” – taking money from taxpayers, putting it in a pool and then giving it out where they see fit – mostly to politically connected corporations.  The result of this waste of taxpayer dollars is an unemployment rate that is still hovering at 8% four years into this administration acquiring the “worst economic crisis.”

Imagine how much sooner we would be have been out of this economic mess if the government just stayed out and left our money in our pockets in order for us to stimulate the economy.

Americans do not need the “middle man” to take our money. 

The longer the economy remains in such a poor state, more and more people will turn to government t assistance and those with jobs are forced to pay for all of it.

Until, of course, they become the next casualty of big government.

Where does the government go from there?  Greece perhaps?

If you think it’s impossible that we could be Greece, consider interest rates.  Right now, the Federal Government is borrowing money at extremely low interest rates, in the range of less than one percent to just under three percent.  But those interest rates are historically low, and cannot stay that low forever.  For example, the rate on a ten-year bond that you might buy for your niece or nephew is about 1.69%.  That’s a great deal, right?  The normal interest rate for that bond is 6-7%.  Once interest rates start rising again, which eventually they will, the interest due on the date will double, triple and eventually quadruple.

Once the debt payments quadruple, the government will have four options:  (1) default on the debt; (2) raise taxes to try to pay the higher interest payments; (3) cut spending; or (4) inflate away the debt.  No matter what choices the government makes, this debt problem will cause the next financial crisis because government chose to deal with the 2008-2009 financial crisis by borrowing tremendous amounts of money and simultaneously reducing interest rates to near zero.

Not only is this government medicine worse than the disease, it will kill the patient.