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Those “protective guarantees of the welfare state,” however, required government debt and deficits to keep up with the expanding expectations of people who had become used to getting la dolce vita for nothing. But high taxes, oppressive regulation, and onerous employee rights inhibited the economic growth necessary for creating the wealth the state has to expropriate to fund such entitlements. If that assessment seems exaggerated, consider the recent ruling from the E.U. Court of Justice that grants another vacation for workers who get sick on vacation. Even the liberal New York Times had to admit that such labor practices “make it hard to put more people to work and revive sinking economies.” Europe has now reached the stage that Margaret Thatcher marked as the end of socialism: it has run out of other people’s money.
The crisis of the Eurozone economies makes clear that only by reducing entitlement spending can governments stave off chronic sluggish growth or ultimate collapse. Yet despite that object lesson, here at home the Obama administration for nearly 4 years has doggedly pursued the same failed policies of debt, deficits, and increased spending. He has created a new health-care entitlement projected to cost $1.76 trillion over ten years, squandered nearly a trillion dollars on a failed “stimulus,” doubled spending on food stamps to $80 billion, incurred $5 trillion in debt, raised federal spending by 27.3%, increased the budget deficit to 8.3% of GDP, wasted nearly $10 billion on “clean-energy” boondoggles, multiplied job-killing federal regulations at a cost of $46 billion, and proposed budgets and spending increases that will accelerate the downward spiral of debt and deficits.
Yet in response to the sluggish growth and high unemployment caused by these policies, all Obama can offer is stale class-warfare rhetoric and schemes to raise taxes on those upon whom economic growth and jobs really depend. And like his E.U. counterparts, he disguises this ruinous tax-and-spend economic policy as “growth,” camouflages money given to his public-employee political clients who manage the welfare state as “investment,” and smears spending reductions as social Darwinist “austerity.”
What Obama is up to has nothing to do with an ignorance of simple math or economic facts. He won’t change his mind by reading Frederic Bastiat or Henry Hazlitt on the hidden costs of government spending. Obamanomics is about a progressive ideology that promotes government control and regulation by techno-elites as the way to achieve “social justice,” which is code for radical egalitarianism and the liberation of people from the normal travails of human life. Obama himself said so, back in 2008 during a debate with Hillary Clinton. When ABC’s Charlie Gibson pointed out that historically the government loses revenue when it raises the capital gains tax, Obama answered, “Well, Charlie, what I’ve said is that I would look at raising the capital-gains tax for purposes of fairness.”
In other words, engineering equality of outcome is more important than growing the economy, even if tax revenues suffer. Just borrow more money if you need more revenue. And no matter how big the debt gets, borrow even more money so that the government can expand entitlements and “grow” the economy by giving tax money to politically favored industries and clients. Yet as the Wall Street Journal’s Daniel Henninger points out, such centralized economic planning “often appears in emerging, underdeveloped economies, not in an advanced economy like ours in which the discovery and diffusion of productive new ideas is spontaneous, rapid and unpredictable.” Allowing the market to reward the creativity and hard work of millions of free people is what creates economic growth.
For those, however, enthralled by the progressive vision of techno-elites wielding government power to create the social justice utopia, the “spontaneous” and “unpredictable” behavior of free people is precisely what gets in the way of the progressive agenda. This year and the ones to follow will show whether enough people have understood that failure and its causes, and are willing to pay the necessary price for changing course and rescuing our economy from its current slow-motion collapse. On that decision depends the future of our country.
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