I simply loved the Opinion piece (September 20th) in the US print edition of the Wall Street Journal, titled “The Reason Behind Obama Non-Recovery” by Mr. Barro, a professor of economics at Harvard University and a visiting scholar at the American Enterprise Institute. Mr Barro and colleague Tao Jin study macroeconomic disasters in 42 countries featuring 185 contractions of GDP. Basically they study economic contractions and how recovery pans out. The results are fascinating and won’t sit well with left leaning politicians.
In a nutshell:
- The current recovery is anemic and not because it was so deep an economic collapse (as some suggest)
- The cause of the slow non-recovery growth is lack of productivity improvement that tends to accompany all other past recoveries that are higher performing
- The polices adopted by the US government at the height of the collapse was almost the exact opposite of what was needed and what has reduced long-term impacts of economic collapse in the past: the US focused on increased transfer payments, increased regulation, failed to invest in infrastructure and positive educational programs, and tax polices that combined inhibit innovation and productivity growth.
- Finally the Federal Reserve stepped in as the US government checked out to help stave off financial ruin and resulted in hand-holding the economy to the point where now inequality, the fermenting spirit of the Left, has been accentuated.
The left will argue but the facts stand tall. We need economic freedom and a dose of real capitalism. This dose of socialism-by-other-name is not working; and has never worked.
As an example, there is another article in the same newspaper: “State Sue US Over New Pay Rule”. It seems the Labor Department is being sued by 21 states and businesses over a ruling that seeks to expand the definition of who qualifies for overtime payments. This federal overreach will simply lower productivity by increasing costs of inputs but not changing outputs. Winners in this whole debate will be lawyers and employed government workers.
Such policies are typical of this administration and should be stopped. We should consider shitting gown half or more of the Labor Department for all the good it has done.