The Case For Free MarketsÖ Despite What Politicians May Say

by Prescott Johanson

Letís be completely honest with ourselves for a moment shall we. Forget about which administrations you have supported over the last 100 years and ask yourself one question; ďAre governments efficient with our money, in their management of our resources?Ē I firmly believe that the majority of Americans would answer that question with a resounding ďNOĒ. Why then do most politicians, specifically Democrats, believe that they are the ones to solve all our problems as long as we allow them to spend more of our money? Nowhere is this more relevant then the current battle to pass an economic stimulus bill.

Iím no economist, but I do have a background in finance. My personal preference would be for the government to do absolutely nothing, to let the economy work itself out. I believe, regardless, that 2009 will be a very difficult year, but that in 2010 we will have a substantial recovery. I could be wrong, but what I am sure of is that if we pass a Trillion dollar spending bill, money we donít have and will borrow, we will be hurting our long term future and leave an even bigger burden for our children to clean up. Do I believe that a stimulus bill could possible help, yes. What I see is that instead of focused spending, and more importantly, tax cuts, it is a trough for the biggest pigs in Washington to reward all their constituents who voted for them. Itís absolutely laughable and ridiculous that they try to put this out there, but the people have spoken and then have said ďNOĒ.

Economies rise and fall over time, and thatís alright, until itís not. The largest problem is this notion that we canít have any painÖat all. State and City leaders are failing because instead of saving during the good times, they spent and spent, so now they need more of our money. Companies that didnít invest properly should fail, let them. The reason why is that other companies will take their place. People should be rewarded for success and punished for failure. The start of all this was the failure of Fannie Mae and Freddie Mac, which I believe was because they were guaranteed by the government, but also had shareholders that they had to make a profit for. It was bound to fail because their 2 fundamental missions completely contradicted each other.

What do I think would work as far as a stimulus plan you may ask, well let me tell you. I think some infrastructure spending, targeted, may work. Only if it improves the business climate. What we need to do to get Americans back to work and the economy humming is to make America a great place to do business again. As much as people want to demonize corporations and business people, they hire Americans and produce goods. They create, they build and we need to provide more incentives for them to do so. The corporate tax rate in the US is the second highest in the world, 35%. We should cut this to 25% immediately. It is ridiculous that we wonder why we canít compete with other countries, but right now it is better to do business elsewhere. Also, in many industries we need to actually lower regulation instead of increasing it to make it easier to produce.

The first part of this is so easy, so easy it gets completely past the politicians even though the people all know it. Green jobs are great, but right now there isnít an efficient alternative to nuclear and carbon based fuel. I wish there was, but there isn't. I consider myself a green person, more for the geopolitical ramifications of not providing our own energy, but regardless. If we fast tracked the construction of nuclear power plants we would help to solve our energy issues and also provide jobs for Americans, good high paying jobs. Why not do it, get out of the way. In many cases this would cost the government nothing, just get out of the way and let good American companies do what they do, produce, create. It would also help us get away from foreign oil. Why is this so hard to fathom?

In the case of spending versus tax cuts, tax cuts are worlds more viable of a stimulus for no other reason then there is no paying the government and then them spending it back out. Cut out the middle man and you cut out a substantial amount of the cost. You know "Administrative Expenses", what a crock. It just stays in honest hard working peopleís pockets and that works because again, government is inefficient. A good hunk of this money that they take in and spend just disappears; it falls through the cracks. I donít know what happens to it, but I know a bunch of it doesnít do what it is supposed to.

So that is why my conclusion is to do nothing, let the economy recover on its own, and it will. It will be hard, but it will be better for us long term if we donít spend more money we donít have. Isnít that the main problem, so how can the solution be more spendin? We donít have it to spend, it just isn't there. The second part is letís make it easier for companies to do business in this country, letís get hungry again and rebuild. Americans are the greatest entrepreneurs in the world, or used to be. Letís get that back by rewarding those that "do". Letís not walk around any longer with the attitude that nothing and no-one can fail, they have to. There is no success without failure; itís a part of life. Letís get back to what we were and what we are supposed to be. If we donít, we as a country are heading towards bankruptsy, and it will be our children and grandchildren that will be the ones that will be left paying back the creditors.

PJ

@Copyright 2009 Prescott Johanson

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