Wednesday, June 20, 2012

Economics Wednesday - Let Us Not Mourn the Death of Keynesianism

Good morning, buckaroos and buckarettes. Today is Economics Wednesday. (Actually, as you may have already figured out, any day can be Economics Day around here.) I ran across these three articles that build the case for free market capitalism that you might be interested in.

The first comes from The American Enterprise Institute and is entitled John Taylor: Yes we can cut and grow. James Pethokoukis is the author and in it he cites Mr. Taylor's research that predicted the "unexpectedly" dismal results of President Obama's budget busting Stimulus Bill. But the best part is Mr. Taylor's proof of something that we all know instinctively: contrary to progressive economic arguments and the European Economic Model (in which "austerity" is a dirty, riot-causing word), cutting government spending will lead to economic growth.

Granted, there's a PDF link inside that post that contains a lot of exotic-looking mathematical symbols, but don't let that concern you. The point is that there is some genuine work going on behind the scenes by serious economists proving the Backwards Postulate of Governmental Economics.

And what is this postulate, Mr. Boy? It's simply that the federal budget is no different than the budget of a typical American household, except with a lot more zeros at the end of it. If more is spent than taken in, problems will result. Don't allow yourself to be fooled by people such as Ben Bernanke and Timmy Geithner. There is no magical formula for solving our economic troubles, and they don't have any special insight into economics that the rest of us don't have. Actually, there is a formula: it has worked before and will work again if we can elect some politician who understand it and will get government out of the way.

Capitalism works.

If you can manage your household budget and have money left over at the end of the month, you're more qualified to set economic policy that either one of those guys.

It isn't rocket surgery. Understand the fundamentals of capitalism and stick to the basics, the rest will take care of itself as a matter of course.

The second article is also from the AEI titled Why Free Enterprise is About Morals, not Materialism by Arthur C. Brooks.

No hard numbers here, just a moral argument for free market capitalism and the role it has played in lifting up the life of mankind the world over. Here's a sample:

Americans learn early on in school that the Declaration of Independence claims for us as our birthright the rights to "life, liberty, and the pursuit of happiness." The Founders used this phrase because they wanted to make a moral case for our nation's struggle for independence.

But what does the right to pursue happiness mean? It means earned success: The right to define and seek our happiness as we see fit, through creating value in our lives and in the lives of others. For some people, this leads to prosperity in business. But for others it means saving souls, helping the vulnerable, raising kids who become good men and women, cleaning up the environment, or creating beautiful art. Either way, it doesn't mean mindlessly pursuing money for its own sake.

This also happens to tie in with another article over at Matt Drudge's place where a UN official named Helen Clark declares pompously that "Western nations don't need more cars, more TV's, whatever."

Really? Who are you to declare what I, or anyone else needs, Ms. Unelected Bureaucrat? She says, "So the issue is how to get human development that will see it continue to rise for the world’s poorest people and people in developing countries."

Here's an idea for you, Ms. Clark: how about abandoning the disproven theory that mankind is causing the Earth's climate to change, and start recommending what we know works, namely freedom and free market capitalism. You will not achieve your goals by tearing down Western nations and redistributing the wealth they created through your taxation and regulation in a New World Order of reparations. The answer is not to stifle capitalism, but to promote it.

It's true the Earth's resources must be exploited to meet the needs of humans (that's why it's here). But the wealth generated by that also provides the means for the cleanup. Destroy the wealth and we'll be  worse off environmentally. Much worse.

(Have you noticed that so many restrictions have been placed on the free market that it's nearly inoperable? And how those who have distorted capitalism are the first to say it doesn't work? It's madness, I tell you.)

She seems oblivious to the fact that the poorest countries are nearly all dictatorships. She is also ignorant of world history, specifically the Twentieth Century where aggregate world incomes increased and poverty decreased at the fastest rate on record. This was driven not by governmental mandate (or anything the United Nations did), but by capitalism and freedom.

So, you have your reading assignment for the day. The articles are pretty short so read them all and click on all the links and be glad that some people recognize simple economic truths.

No comments: