President Obama just lost the argument at the G-20 summit on whether governments should continue “stimulus” spending or whether it is more important to get deficits and debt under control. Interestingly enough, the Europeans, particularly Germany and Great Britain, have embarked on curbing spending and are opposing Obama’s continued record-breaking spending binge.
The largest European economies, Germany, Great Britain, Italy and France, are now all led by center-right governments. The elections that brought these governments to power were a rejection of European welfare state socialism and, while they are far from perfect, they are pursuing better economic policies than the United States under the current administration.
CNBC analyst Rick Santelli captures the sentiment of the majority of the American people and, at this point, the dominant opinion among the leaders of the largest economies in the world:
One of the few supporters of Obama’s wrong-headed policy is Paul Krugman who in a New York Time op-ed piece proclaims the start of a depression which he attributes to “inadequate spending” by government.
Krugman, who like Obama is a Nobel Prize winner, should read “The Forgotten Man” a book by Amity Shlaes about the Great Depression. Shales argues that a key reason why the economic downturn following the 1929 stock market collapse resulted in a decade of economic depression was the uncertainty created by an activist government that made it impossible for businesses to know the rules by which they would have to play. We previously commented on the relevance of Shlaes’ book:
Shlaes identifies one of the key factors that prolonged the Great Depression throughout the 1930s: the uncertainty created by the continued experimentation of Franklin Roosevelt’s New Deal. Not only did the government pursue policies that hurt the economy. Business leaders also never knew what crazy policy would come next. The failure of Roosevelt’s New Deal is often obscured by the fact that Roosevelt stayed in power long enough to lead the United States into World War 2 and, ultimately, to victory over Nazi Germany. A byproduct of the the war was that it finally ended the Great Depression.
Entrepreneur Steve Wynn echos these concerns in a recent interview:
“Common sense has disappeared in Washington, DC.”
He talks about the unpredictability of the US government when asked about the business climate in Macau, China where he will relocate a portion of his business: “Macau has been steady, the shocking, unexpected government is the one in Washington. That’s where we get surprises every day. That’s where taxes are changed every five minutes. That’s where we don’t know what to expect tomorrow.”
He is frightened about “the next crazy idea coming from Washington. … The financial institutions, the cars, … the taxes, the health care. Everything is cuckoo in Washington and God knows what’s next.”
Obamacare “is going to produce the exact opposite of what they said. … When demand goes up and the supply of doctors goes down what happens to the price?”
“The uncertainty of the business climate in America is frightening, frightening to everybody. And it’s delaying a recovery. We are on our way to Greece in the hands of a confused and foolish government.”
He quotes Alexis de Tocqueville: “The American system of democracy will prevail until that moment when the politicians discover that they can bribe the electorate with their own money.”
Common sense economic arguments, Tea Party protests and now opposition from abroad have not persuaded Obama to change his radical spending spree. The American people will have the chance to change Obama’s ability to act on November 2, 2010 by defeating his Democrat majorities in the House and maybe even in the Senate. Will the people vote for change for the better on November 2 or will Obama be able to bribe enough people by promising them more goodies from the government?