Daily Archives: June 24, 2010

USA Today Writers Are trying To Make The Case That More Government Spending Will Improve The Economy

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In USA Today, I ran across an article titled “G-20 nations must balance growth hopes, deficit fears” and the article is trying to put forth the idea that we can’t have economic growth without more government spending. The article starts out:

To spend or to save? That is the question.

It’s a tough one for most families. It’s tougher for President Obama, who faces conflicting challenges: boosting the nation’s still-struggling economy while restraining a swelling national debt of $13 trillion.

‘Swelling’ debt? Way to try and minimize the problem.

If you stated spending $1 million a day from December 25th in the year 0 until today, you still wouldn’t be close to spending one trillion dollars. You would still have to spend one million dollars a day for an additional 730 years to spend reach $1 trillion.

After spending one million dollars a day for 2740 years, you still wouldn’t have spent 10% of the national debt of $13 trillion.

The story continues:

As he heads this weekend to his third summit of the Group of 20 major and emerging nations in Toronto, Obama is on firmer economic ground than he was last spring in London or last fall in Pittsburgh.

I hate to break the news to our intrepid USA Today writer that with nearly 10% unemployment, the stock market moving sideways, lowest new homes sales month ever and the recent durable goods orders drop, the ‘recovery’ isn’t really happening.

The U.S. economy is growing again, and banks have rebounded from the depths of the financial crisis he inherited 17 months ago.

Seriously, when is Obama going to be responsible for anything in the liberals eyes?

By the way, the roots of the financial crises Obama inherited reach back to 2007, when the Democrats seized both houses of Congress.

S&P 500 from November 2007 until today

And the story muddles along:

Yet Obama, like many G-20 leaders, is on tough political terrain. Faced with voter anxiety about a weak economy and unemployment near 10%, he has asked Congress for more stimulus money to spark stronger growth. That spending, however, could complicate his administration’s longer-term efforts to reduce a $1.5 trillion deficit, which has fueled voter anger, symbolized by the “Tea Party” movement.

Note the sneering quote marks around “Tea Party.” How cool is that?

Now for the befuddled USA Today writers economic analysis:

“That’s the grand tension of the G-20 nations: How do you restore growth while cutting the deficits that can prove very self-defeating?” says Kati Suominen of the German Marshall Fund of the United States. “This is the fine balancing act. And there are no easy answers.”

There is an easy answer to creating economic growth. The US Government needs to do three simple things:

  • Cut spending
  • Cut taxes to put more money in the hands of business and consumers.
  • Get out of the way of the economy.

The following are two great videos to help out our friend at USA Today:

Keynesian Economics Is Wrong: Bigger Gov’t Is Not Stimulus:

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Eight Reasons Why Big Government Hurts Economic Growth:

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Remember The Free Markets?

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This is a great example of how the free markets, innovation and risk taking work. Via Regulation 2.0:

Remember why the Antitrust Division brought an antitrust case against Microsoft in 1998? In a nutshell, the feds contended that Bill Gates’ monster so dominated the market for key information technology (the PC operating system) that rivals couldn’t compete without a little help from Uncle Sam.

Fast forward to June 2010. Microsoft has lost 40% of the market in Internet browser use — Google’s Chrome browser and the “open source” Mozilla Firefox browser control one-third of the market along with 100% of the media buzz. And in spite of years of effort, Microsoft owns a mere 3% of the search market worldwide, compared with 84% for Google. Indeed, the notion that Microsoft can use its dominance in operating systems as leverage to push other software makers off their own turf is such a non-starter (to everyone but regulators) that the world barely noticed when the company started giving away terrific anti-malware software to Windows users.

Microsoft isn’t killing on other fronts, either. It barely qualifies as a major presence in smartphone platforms or in music players. (Remember the Zune: Someday, it will be a show stopper on trivia quizzes). And even Microsoft’s near-monopoly in office productivity software is finally being challenged, as Google and others offer free applications that live entirely on “the cloud.” The move has forced Microsoft to match their free Web offerings, accelerating the erosion of the traditional market for Office.

So now that the king is dead, should we be worrying about the anticompetitive behavior of the pretender to the throne? The Federal Trade Commission thinks so: It is investigating Apple for its efforts to leverage its market power in digital music and mobile devices to other services. But look more closely and Apple’s quasi-monopoly begins to resemble that of Microsoft’s a decade ago. Practically since the introduction of the iPhone, it’s been conventional wisdom that Apple had a hammerlock on high-end smartphones because it had created an incontestable lead in mobile apps. Yet, in a matter of months, Google’s Android managed to build an online store with 70,000 apps, and one forecaster thinks Android devices have a good shot at passing iPhone sales in the next few years. Arguably more ominous from Apple’s perspective, Android users are already clicking on more mobile ads than their iPhone counterparts.

Free markets work.