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Oh, George, Where Art Thou?

What is most infuriating to business owners (or anyone with an understanding of basic economics) is the lack of forceful, outspoken leadership from our government officials in dealing with the economic malaise. But we shouldn’t be having such a difficult time finding leaders who will fight for the policies that will cure our economic woes. After all, the solution isn’t that complicated: we simply need an iron clad commitment to less government spending, lower taxes, and fewer regulations.

The success of free market capitalism has been well documented over hundreds of years. The United States is the premiere example, especially during the century between 1785 and 1885. During that period, America had low taxes, minimal regulation and a tiny federal government, and we went from an infant nation to a world power. No other nation or culture in all of human history ever experienced so much growth in so little time.

Also well proven are the failures of big-government interference in the private sector. From Hitler’s Germany and Mussolini’s Italy in the 1930’s to the imminent collapse of Greece, Spain, and much of Europe today, the legacy of socialism is one of ever expanding entitlements, declining productivity, massive debt, and looming economic collapse. And the handwriting is clearly on the wall for America as well. But only if one is willing to read it.

Here at home, the “Occupy Wall Street” brats currently throwing their infantile tantrums are whining about the results of the very kind of socialist government control of the economy that they support. They complain that their college loans are saddling them with crushing debt, but ignore the fact that it was precisely because of government subsidizing college education that tuition rates have soared – growing at twice the rate of inflation. And their solution? Why, more government subsidies, of course.

The “gimme” generation of professional parasites also wants someone else to pay their medical bills – they demand that “the government” provide them with “free” healthcare. But once again, the real culprits in rising healthcare costs are rooted in government subsidies, which drive up demand, and thus prices. And regulation at every level, including state mandates on what insurers must cover, and laws that prohibit people from buying insurance across state lines, further stifle competition and drive up costs.

The result? Federal and state subsidizing of health care has driven up demand, forcing up prices – the more “free” anything becomes, the higher the actual cost. When anyone, even an illegal immigrant, can walk into any clinic in America and get “free” healthcare, who do you think ends up paying the bills? The rest of us.

And even the best run medical facilities in the nation will admit that a massive 40% of their costs are to pay for compliance with mountains of government regulatory paperwork, none of which has anything to do with caring for patients. Most organizations now have people on staff whose sole job is “compliance monitoring.”

Health insurance companies are likewise affected – they have no choice but to pass the cost of state imposed mandates onto all of their policy holders. And when a resident is limited to “state approved” insurers, a government instituted monopoly results, with concurrent increases in premiums – crony capitalism at it’s worst.

Small business expansion has almost stagnated. Today, if you want to start a business, you are confronted by a mountain of obstacles – taxes, zoning rules, city and county ordinances, state mandates, Federal regulations from the out of control EPA to the Endangered Species Act. And the affects are felt everywhere.

I know a builder who could not build on a whole section of his development because it contained a tiny pond filled with weeds. It was declared a “wetland” you see, and a “waterfowl habitat” – in spite of the fact that the only creatures that inhabit it during the summer are millions of mosquitoes. Apparently, exposing the families who live in the development to West Nile Virus is a necessary cost of protecting a swamp. By the way, the result of his being unable to maximize his land use was that each unit cost had to be priced approximately $20,000 more than it would have, just to cover the loss.

Naturally, there are those who will argue that without nanny-state government bureaucrats looking over the shoulder of every business owner, mayhem will most certainly ensue, in spite of the fact that this view is contradicted by history. Politicians, especially liberal Democrats like Barak Obama, Nancy Pelosi, and their “ground troops” in the “Occupy Wall Street” mob, hysterically proclaim that without a massive Federal government bureaucracy we will have “dirty air, dirty water, starving children,” yada, yada, yada.

But perhaps more disturbing is the number of people, many of whom claim to be supporters of free markets, who actually trust a government bureaucracy more than they trust a private business. In view of the historical record, from the impending bankruptcy of Social Security and Medicare to the frighteningly dictatorial power of the EPA, such blind faith in “the government” is simply baffling.

Then there is the matter of government “investing” in private business. The SOLYNDRA scandal, in which the tax payers are now on the hook for over half a BILLION DOLLARS, is not surprising – it is the entirely predictable result of government intrusion in areas where it manifestly does not belong. It’s called “malinvestment” – funneling money into projects that the private sector already recognizes as a bad bet.

The problem is that government always “invests” for a political return (i.e. votes and campaign contributions), unlike the private sector, which invests for an economic one. In the case of SOLYNDRA, the false promise was “green” technology, and the “return” was intended to be support from the militant environmental lobby. But then the manufacturer of solar panels went down the tubes.

Even the “housing crisis” was the inevitable result of government interference in what should have been a completely private transaction. But in their relentless quest to buy votes from the “poor,” Democrats instituted the “Community Reinvestment Act” and numerous other schemes designed to force financial institutions to loan money to people who represented an inordinately high risk of default. Then, when the inevitable happened, and the bubble burst, who got blamed? The banks! And who got elected? The same Democrats (and let’s be honest, more than a few Republicans) who went along to get along.

And that is the biggest problem with government “investment” schemes – corruption. SOLYNDRA is not unique – it is just the latest example of businesses that are big political donors to Obama and Democrats getting a huge check, then, when they go bankrupt, leaving the tax payer’s holding the bag. Then there is General Electric, the poster child for crony capitalism – G.E has been in bed with government on everything from Federal mandates on light bulbs to wind turbines, both of which (surprise, surprise) G.E. just happens to make.

Sadly, few Republicans, even those who claim to be conservatives, have shown the leadership and integrity to forthrightly argue for real, substantive cuts in entitlements, or for the long overdue dismantling of most of the regulatory behemoths that are strangling our economy. Even when it comes to taxes, no one seems to have the courage to face what we all know, that almost half of all Americans are dependent on the government, while paying NO income tax whatsoever.  The time has come to cut drastically cut entitlements, lower taxes on those paying the most, and yes, raising taxes on those currently paying nothing.

Leadership matters. Margaret Thatcher made sweeping changes to England’s socialist government structure in the 1980’s and ushered in decades of prosperity and growth. Ronald Reagan did the same – the so-called “Clinton Economy” that Democrats love to take credit for was primarily the result of Reagan’s policies.

Unfortunately, today we are beset with politicians of both parties who want to merely tinker around the edges of the current system. But today, with our national debt reaching a staggering $15 TRILLION, bold and far reaching changes are the only way to reverse decades of big-government entitlements, nanny-state regulations, and a tax system that rewards slackers and punishes achievers.

We are at a critical moment in history, and we need more than just “the next Ronald Reagan” – we need a 21st Century version of George Washington.

 

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