The headlines represent a brave effort by the administration’s supporters to put a good spin on the bad news. Although not great, things are at least not getting worse is the implication. But things are getting worse. Last month the economy actually shed 85,000 jobs. The reason why the loss did not push up the jobless rate was because over the same period 600,000 discouraged people gave up looking for work. Because of this, they are no longer classified as unemployed. Had those workers been taken into the account, the December unemployment rate would have been 10.4 percent, the highest in almost thirty years.
When all those who have given up looking for employment are included, we get an overall unemployment level of 17.3 percent. This is the number that really matters, because it is a true gauge of the job market. It is also the measure that is given when people talk about the unemployment numbers during the Great Depression. Significantly, today’s picture is beginning to increasingly resemble that of the 1930s. And as luck would have it, all this is happening under the auspices of the man who rode into the Oval Office on promises of swift fixes.
As an aside, when unemployment was barely 5 percent in 2007 the media kept talking about the worst economy in our lifetimes. Today the grossly understated unemployment rate of 10 percent is a sign that things are “steady” and “stable.” Can you imagine what would have happened if the rate had shot up to 10 percent under George W. Bush? The refrain would have been “impeach and crucify.”
It would not, however, be fair to take President Obama’s promise of quick remedies too literally. It was made in the heat of a campaign when politicians must say all kinds of things to stand a chance. The president was actually correct when he later observed that the problems from which we suffer were long in the making and cannot be fixed overnight. Our problems are for the most part rooted in the many years of liberal/leftists policies, which, sadly, have been practiced by both parties. They also happen to be the same policies that President Obama has relentlessly pursued since the first day of his presidency. They include include government expansion, reckless borrowing, unsustainably low interest rates, heavy regulation and federal intrusion into every part of our lives.
This being said, the American economy has always possessed an inner resilience that time and again made it possible to shake off blows inflicted by the political class. The one exception was the presidency of Franklin Roosevelt – a driven and charismatic centralizer – whose policies kept the economy in the grip of a depression for over a decade. Given Obama’s FDR-like faith in the efficacy of government intervention, we may not only have a reprisal, but things may actually get worse than they did in the 1930s.
There are several reasons for that. When FDR assumed office the American economy was fundamentally stronger. The United States was an industrial giant producing and exporting goods. The private sector was largely free and the federal government was incomparably smaller than it is now. There was no federal debt to speak of and we had a sound gold-based currency. Today things are much different. We have a consumption-based economy. Around 70 percent of all economic activity in the United States is made up of consumer spending. Most of what we consume is imported from abroad and much of it is bought on credit. Bloated and octopus-like, the federal government stands poised to squeeze every last life-drop from the battered private sector. It controls, regulates and taxes as never before. Not content with the trillions it has extracted from the productive sector, it has assumed gargantuan debts it cannot pay.
Government propaganda notwithstanding, this nation can only be saved through revival of the private sector, since the private sector is the only institution that can create real jobs and real wealth. Government is the last place we should look to for provision, because in the final analysis government can only smoother, pilfer and waste. This is a truth we seem to have forgotten as a nation. It is now costing us dearly as we have a president who is using the power of the state to strangle America’s private enterprise. So vigorous his efforts have been that they even impressed the die-hard socialist Hugo Chavez. When commenting on Obama’s nationalization of General Motors, Chavez referred to our president as “comrade.”
But praise and approval from Chavez do not necessarily certify one’s competence given that Chavez is driving his own country into ruin. Although rich in oil, Venezuela is plagued with poverty and shortages of all kinds. It even has to ration energy and recently the government devalued the currency because of fiscal mismanagement.
Disturbing as it may sound, what we are seeing in Venezuela today may well be a preview of what’s in store for America. We are, in fact, already getting a partial taste of it. To begin with, we have an overbearing government that wants to run and control (Chavez-like) every aspect of our society. Our real unemployment is higher than that of Venezuela. Certain parts of this country have experienced blackouts. And the utter fiscal irresponsibility of on the part of our leaders has resulted in a dramatic drop in the value of our currency.
Looking at all this, one gets the feeling that our system is on the edge of a precipice and that only a mild push would suffice to send it tumbling down. Unfortunately, we have people in Washington whose misguided policies may well deliver that push. Such an event would be bad news for Americans, but it would certainly please Chavez who has repeatedly prophesied America’s collapse because its capitalism. Should there indeed be a collapse the Venezuelan will have been only half right. Genuine capitalism has never brought down any country, because capitalism engenders wealth, stability and prosperity. What bring societies down is those who nationalize, regulate and overspend. And they like to call themselves “comrades.”