Guest op-ed: Bill Connor, "The Proven Failure of Obama's Keynesian Economics"

Today's guest editorial is penned by Orangeburg Republican Bill Connor, an attorney and Lt. Colonel in the U.S. Army Reserves who occasionally shares his thoughts via the Blogland. You too can contribute by sending an email to earl@earlcapps.org.

John Maynard Keynes wrote prolifically about economic theory as the world moved through the Great Depression in the 1930s. "Keynesianism" posited what has come to be accepted wisdom among so many of our current“elites”, particularly those in the Obama administration: The requirement for government involvement in the free market to stimulate spending. This was the motivation behind Obama's failed economic "stimulus" spending in 2009 and continued over-reach of government control. Keynes wrote that the greatest danger to a national economy during recession was in savings. He preached that government and consumer spending magically “stimulated”economic growth through demand. Therefore, he admonishes, political leaders should deter personal savings through inflation and interest rate tinkering. The past three years of stagnation have proven the failure of government stimulus and control.

It gets worse.

At the same time as the stimulus spending, according to Keynes the government should engage in deficit spending to further produce demand during recession. This has also been attempted under Obama to utter failure. As Peter Schiff writes about Keynesianism: “Individuals, companies or cities with heavy debt and shrinking revenues instinctively know that they must reduce spending, tighten their belts, pay down debt and live within their means. But it is axiomatic in Keynesianism that national governments can create and sustain economic activity by injecting printed money into the financial system.”

Americans have learned over the past three years of a brutal recession that our trusted “elites” in the Obama administration were wrong by following John Keynes into this mess. If Obama is ousted from office, it will be due to his misplaced faith in the "genius" of Keynes.

Read what Gary North, wrote about Keynesian economic theory before Obamas attempts at stimulus and Obamacare: “The Keynesian believes that the key to long-term economic prosperity is spending, and if this requires deficit spending, so be it. It does not matter to the Keynesian whether a consumer with poor economic judgment goes out and spends his money, or whether a government bureaucrat with even worse economic judgment goes out and spends the government’s money on poorly conceived economic projects. The Keynesian is convinced that both of these individuals, despite their poor economic judgment, are capable of producing economic prosperity simply by spending money on whatever they find amusing.” Mr. North also writes: “The Keynesian assumes that in a recession, the world is no longer suffering from scarcity. He believes that there are no remaining opportunities for profit in serving future consumers.”

“The Keynesian believes that the central government must intervene and spend money in order to stimulate the economy. Expected private demand for future goods is insufficient to persuade entrepreneurs to invest money to meet this demand. The expected return on capital is zero … There will be economic growth, and therefore the government will reap a positive rate of return on its investments. This is what politicians are promising. ‘The government will be repaid.’ It is a fantasy, but even if it comes true, this will benefit the government, not taxpayers … By borrowing more than it can ever pay back, the government will guarantee higher inflation for years to come, thereby diminishing the value of all that Americans have saved and acquired.” In the past three years, Obama has almost doubled the National Debt from about 8 Trillion to almost 16 Trillion Dollars. Think about something: It took our nation around 230 years to develop the 8 Trillion dollar debt, but under four years to double that number! We are reaching the point in which it will be impossible to pay off our debt and our children will pay the price.

What causes this clearly flawed theory to hold such incredible sway over the Washington elites like Obama? Gary offers what I believe is the best explanation: “I believe these ideas hold sway largely because they promise happy, pain-free solutions. They are the economic equivalent of miracle weight-loss programs that require no dieting or exercise. The theories permit economists to claim mystic wisdom, governments to pretend that they have the power to dispel hardship with the whir of a printing press, and voters to believe that they can have recovery without sacrifice.”

Of course, all economists know that any jobs or other economic activity created by public-sector expansion merely comes at the expense of jobs lost in the private sector. As the government chooses to save inefficient jobs in select private industries just to create paychecks, more efficient jobs are lost in others. As more of the economy comes under government control, like Obama's attempts at National healthcare, the more inefficient our entire economy becomes. Inefficiency destroys our economy.

Americans now realize: The Obama administration will not be able to spend and “bail” its way out of this recession and we only dig ourselves deeper. Liberal elites have let down America in the worst way. It's time to change course and pull back from government control and toward classical economic theory: Common sense. The recession will continue to be painful in the short term. However, Americans realize digging our nation into insurmountable debt, as Obama seems to command, is not the answer. The appalling part of this whole mess is that our financial wizards now realize (if only subconsciously) they are only making things worse for our future and impossible for our children. Instead of admitting mistakes, they patronize the American people. We need true "Hope and Change" and Obama has had his chance. True change must come at the ballot back in November. While America still has the chance.

God Bless America.

1 Response to "Guest op-ed: Bill Connor, "The Proven Failure of Obama's Keynesian Economics""

  1. Gasbag Alert 3/2/12 15:53
    Blah, blah, blah, blah, blah.

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