The Economy is Broken Because we Tried to Fix it
The American people were bombarded with a slew of negative economic news recently and the DJIA suffered its longest weekly losing streak since 2004. The economy is not recovering like it was supposed to. Why?
The economy is broken because we tried to fix it. When the recession began, people panicked. The conventional wisdom is that recessions are a bad thing. The truth is, recessions are as necessary as booms to a healthy economy.
The economic “boom” we were experiencing before the recession was based on a bubble in home prices. The causes for this bubble can be explained in a different post. What’s important is that people could use their ever-increasing home paper values as collateral to borrow money. They then used this money to buy consumer goods and services, thus resulting in a boom based entirely on artificially-inflated home values. Very little real economic growth was actually taking place.
The recession was the market’s natural response to this economic abnormality. If allowed to run its course, the recession would have flushed bad debts from the system by bankrupting those consumers and bankers who either foolishly borrowed money or lent it. A recession would have also rebalanced our economy which has become too consumption/debt oriented. As the economist Peter “The Prophet” Schiff says, “Sometimes medicine tastes bad but you got to swallow it.”
Unfortunately we didn’t. We, like an ignorant child who doesn’t know any better, resisted the medicine. The United States government borrowed money to bailout financial and auto firms who deserved to fail. It borrowed money to throw at random projects across the country in an attempt at economic stimulus. And most importantly it printed massive amounts of money in order to induce economic growth (Quantitative Easing).
We’ve stopped the recession but only numerically. Since 2008 we’ve increased the money supply by 20% to achieve what… a few percentage points of growth and no decreases in unemployment?
Now we’re stuck. We prevented the natural course of the market which would have caused some pain and then rebalanced our economy, thus setting us up for a rebound of real growth. Instead we have rising food and energy prices AND lower wages and employment! We delayed the depression with inflation and now we’re going to suffer both.
Overall, we can try to make ourselves “feel” good by printing more money and “feeling” richer but that leaves us with a lot of green paper and no food on the table. If we want the benefits of a free market it must be free in good times and bad and government interference must be minimized. Capitalism requires rewards and risks. If America proves itself too immature to handle an adult economy where one is held to account for their own actions perhaps we can convert to an infantile centrally planned social welfare state but I assure you that system also has its own grave negatives.
Here the MSNBC host Chris Matthews condemns Mitt Romney for describing Obama’s economic policies as “European.” Matthews calls this description a “slur.” Since when is European a slur? Matthews also somehow equates this remark to the birther lunacy, another spurious connection.
Later in the video Matthews blasts the Republican Party for name-calling and then immediately refers to it as “nativist” and “weird.” I would think calling someone “nativist” (aka racist) is quite a bit more offensive than calling someone’s policies “European.” The remark that Republicans are “weird” just reveals Matthews’ exceptional intellect. What a wordsmith!
Matthews is a shining example of modern journalism. He asks Michael Steele what is meant by “European” and then continually interrupts him and plays a video clip over his answer. I wonder why most conservatives avoid MSNBC?
The fact is that Obama’s economic policies mirror to some degree the economic policies of Europe, a continent now facing mass unemployment and crushing debt. The truth shouldn’t be an unspeakable slur.
Get Out, Newt!
Newt Gingrich attacked Paul Ryan’s proposal to save Medicare, Medicaid, Social Security, and the country as a whole from fiscal ruin as “right-wing social engineering” and radical. I’m not sure what exactly Newt was trying to accomplish by using leftist rhetoric but he’s now realized the stupidity of the statement and is trying to back out of it saying that he “made a mistake.”
Newt buddy, do you honestly expect Republicans to believe you simply misspoke? Seriously, what happened? Did a mad scientist temporarily trade your consciousness with that of Barack Obama? No, I think we got a glimpse of what Newt really believes.
The GOP nominee for president is going to have to be tough as nails to take down this administration and the vast support network it has. The nominee can’t afford to give up any ground and most certainly cannot afford to be attacking reasonable plans for fiscal sanity as “social engineering.” Americans don’t want another wishy-washy Republican president who maybe cuts taxes here and there but doesn’t have the guts to cut substantial spending and, instead of rescuing America from its fiscal hole, digs us in deeper.
This, combined with Newt’s various scandals, has finalized my position on Newt’s candidacy. Newt:
GET THE…HECK OUT, NOW.
He’s already seeing his financial support dry up quickly. It’s only a matter of time before he is once again relegated to history books and occasional speeches at conservative conferences.
Bye Newt. Good riddance.
Give me Your Tired, Your Poor… and Your Tech Geeks Part 4: An Exchange Place of Innovation
Image via Wikipedia
Globalism and free trade are being implemented as economic policy around the world. Both of these philosophies are based on the free movement of three things: capital, goods, and labor. By allowing the free market to determine where these forces of economic prosperity go, they are allocated most efficiently.
While America has done a fair job of breaking down barriers to the free flow of capital and goods, movement of labor is still very restricted. Currently a guest worker can apply for and sometimes receive a visa to work but only for a certain employer. Often it is slow and expensive for employers to hire guest workers. Therefore they usually simply hire illegal immigrants.
To form a more efficient system NAFTA, the North American Free Trade Agreement, could be modified to allow the free movement of anyone with an American, Canadian, or Mexican passport within those three nations. This would encourage people to pass through legal checkpoints, thus encouraging general order. If all the well-meaning migrant workers are able to use legal checkpoints, then the volume of people crossing the border illegally will be reduced to those with malicious intent such as drug and weapon smugglers. A semi-borderless NAFTA would allow much-needed migrant workers, California’s fruit and vegetable industry relies upon them, to come to the US quickly and legally. Georgetown Law Professor T. Alexander Aleinikoff provides a picture of what this could look like: “It is time to think seriously about a future when travel within North America is largely unrestricted … the free flow of workers, tourists, and family is in the continent’s best interests. Mexico [should not] have to reach [economic] parity with the United States before freer travel is instituted.”
Additionally, the guest worker visa program in place now does not allow for the most valuable of all immigrants to come to the United States: entrepreneurs. In general, immigrants are much more likely to be self-employed than natives. Just consider the number of immigrant-owned restaurants, markets, and other businesses in a community. In fact, Google, Yahoo!, and Sun Microsystems were founded by immigrants from Russia, Taiwan, and India respectively. Just imagine the US economy without these companies. Imagine how many more of these companies could exist had entrepreneurs eager to do business in the US been allowed to come. In a society where people from all over the world are moving in and out, ideas are coming from around the world. By allowing the free movement of people, starting with NAFTA, the US can bolster its position as the central exchange place of ideas and innovation.
Not All Cultures are Equal: Rape-Beading in Kenya
Image via Wikipedia
It is popular in some groups, particularly academics, to claim that all cultures are equal and that we cannot judge other cultures by our own standards because morality is subjective to one’s society.
I simply must disagree… Some cultures are better than others.
Recently CNN did a piece in a remote part of Eastern Kenya on a practice known as “Rape-beading.” Rape-beading occurs when a close male relative of a young girl gives that girl a necklace of beads. This is essentially a “claim” on that girl… a temporary engagement during which the man is given permission by the girl’s family to have sex with her. Shockingly girls even as young as six years old have been “beaded” and raped in this backwards society.
Even more perverted is the fact that, while the man is allowed to rape the girl, she is not allowed by the cultural tradition to get pregnant… as if she has a choice! If she does get pregnant she is beaten by her family and forced to have an abortion which, in this remote area of Kenya, has a great chance of harming the mother. If she manages to hide the fact she is carrying a child, the families will often simply kill the baby after it has been born. The girl’s only hope is a group of regional activists who occasionally manage to rescue these poor girls or their babies. The few babies who make it out of this murderous tribe are adopted if they are lucky. If the girls are discovered to have kept their babies, this twisted culture will never allow them to marry. How can anyone say this culture is not worse than others?
Ironically, CNN interviews a male in the community who, after stating this practice reduces promiscuity in young girls (what?), shares the views of the aforementioned academics who believe it wrong to judge other cultures:
“This is our culture, it’s part of us. We have been practicing it and accept that these girls should be beaded. Sometimes the girls just get pregnant.”
Wow. Sometimes they just get pregnant, are beaten, never allowed to marry, and have their children murdered… but hey it’s part of their culture!
This is absolutely disgusting. The sheer disregard for human rights and human life in some parts of the world is sickening. And don’t try to blame this on poverty as so many do. There are millions, if not billions, of people living in poverty and most of them have not made the rape of six year-old girls a cultural tradition. Clearly the moral core of these people is so decayed that they cannot see the evil of their ways.
This is a perfect example of one culture being inferior to others. I certainly believe that American, Western, and moral cultures around the world are superior to this particular tribe because we fight this sort of behavior.
P.S.
I’d like to point out that when I say culture, I don’t mean race. So often people equate these two and so would call this post racist because the people in the situation are black. This would be an entirely unfair criticism. Culture is defined as: “The attitudes and behavior characteristic of a particular social group.” The fact that the activists saving the girls are black totally destroys the case that condemning evil cultures is somehow racist. The rape of six year-old girls is wrong no matter what the rapist’s skin color is; on that I hope we can all agree.
CNN Video Report: http://www.youtube.com/watch?v=2SAZP21m2qk
BREAKING: Osama bin Laden is Dead
The New York Times reported on May 1 that Osama bin Laden has been killed and that the United States is in possession of his body. Obama has announced he will speak on the topic later tonight. Hopefully there will be more to report tomorrow!
Hopefully the story is true and the mastermind behind the worst attack on the US in recent history has been brought to justice!
Give me Your Tired, Your Poor… And Your Tech Geeks Part 2: A Desperately Broken System
The essential component in increasing legal immigration is to simplify the system. This flowchart illustrates the insane complexity of trying to become a US citizen. The red tape and inefficiency that pervade the system result in incredibly long wait times.
For example, a foreign minor child of a US citizen is eligible to receive a green card. After five years of living in the US, that child is eligible to apply for citizenship. After six to twelve months of processing delays and civics and language tests they can receive citizenship. It took six to seven years for this child of a US citizen to receive citizenship. This is even more disappointing because this is one of the fastest tracks to citizenship. For some immigrants it can take twenty-eight years and for others, mainly unskilled people, legal immigration is impossible.
Currently the road to America involves jumping through a myriad of bureaucratic hoops, having the right credentials, applying at the right times to meet visa quotas, getting lucky and not having your paperwork lost, paying fees and passing tests. Oftentimes a potential migrant will get halfway through the process and then have their application denied due to mere chance and timing. Why would people subject themselves to this torture when they can instead pay a lump sum to a smuggler to be delivered to the US? Complexity slows the free flow of people, is unfair to potential Americans, and encourages illegal immigration. Therefore American lawmakers must do all they can to make immigration fair and simple.
