So, now it hits the fan.
You see, the about $1 trillion the Obama administration spent over the past two years stimulating the economy had exactly the effect people who try to understand the actual economy expected it to: those dollars employed people until the money ran out, and now they are out of work again.
You see, the problem is that $1 trillion in government spending is $1 trillion taken out of the economy, where individuals and businesses could have used it to grow what they were doing, and spent in the rigid and unimaginative manner governments usually spend. In this case, it was not just $1 trillion taken out of the current economy, but trillions taken out of the future economy in the form of the principle and interest.
You see, now people who support more taxes and expanded government intervention will scream that this is the time we need more taxes and expanded government intervention because look at all the people out of work who need the government to help them get back to work. They will ignore the colossal costs, as well as the fact that government spending reduces the economy rather than growing it, in favor of action for action’s sake.
If you look back to what will probably appear to be the golden age of the United States–the late 1800s to the mid 1900s–one of the things you will see is that it was the great era of private capital. For most of that era, taxes were low, government spending–even in the 30s and 40s–was restrained, and the amount of American capital going into developing business and industry was tremendous. It was during that era that the companies we now think of as the extinct juggernauts of American commerce roared to life. It was during that time that Americans conceived of the notion that it was possible for the next generation to be better off than the last.
Then came along the 1960s with its social justice and wars on everything except enemies. Along came government spending on social welfare; a continuous siphon of money out of the growing economy and into the cesspool of government control. Now, the federal government controls 30 percent of the annual gross domestic product, money that never grows or produces a profit, money that cannot be invested in the future or in jobs that become permanent, and a number that grows every year.
So, for those of you that want the government to intervene more, look at what is happening right now: the government money is running out, and there’s no more money to replace it. Meanwhile, in the intervening two years, employers have not grown, jobs have not been created, and even more people are on there way out of work.