Today’s Wall Street Journal highlighted a new $300 political stimulus campaign. Keynesian demand-management has re-conquered economics as surely as Fall 2008 has cemented Alexander Hamilton’s dreams for centrally managed governed finance.
Today’s global consensus: free markets cannot clear without government intervention.
This year’s dual stimulus “packages” foster political ends unrelated to actual economic recovery. Innumerable special interests benefit from an interventionist, mixed economy—and when things go bad, fundamental free-market reforms fly further off the table.
As George Mason University’s Richard Wagner points out, unconstrained democracy has a built-in bias toward deficit finance, so demand-side, Keynesian policy prescriptions have permanent survival value. Since modern legislatures are at root wealth transfer institutions, it is suicidal for them to acknowledge the limitations of their actual contributions to the real economy. So they “stimulate.”
Indeed, the political price is too high for election-bound lawmakers to entertain non-governmental recession recovery. As Friedrich Hayek pointed out, the politicians blamed during a bumpy transition to something closer to laissez-faire will be the ones who stop interest-group benefits or stop the inflation, not the ones who started those costly processes decades earlier. Thus the market’s prospects are very gloomy.
Any sincere economic stimulus would reduce the “tariff” on wealth creation. It would liberalize the world’s largest economy from excessive regulations, interventions, high spending, and from the undisciplined political money and credit creation at the core of the financial crisis. For starters, rapid and retroactive marginal tax rate cuts could facilitate economic activity via increased supply.
But such real stimulus requires unpalatable changes in what people expect from government, and more importantly, in what representatives in government are constitutionally able to do in the name of public service.
So political reality prevents halting the compounded economic damage that artificial stimulation and financial “bailouts to nowhere” promise to deliver.
“Stimulating” demand for the burgeoning supply of government programs, services, and wealth transfers never seems to be difficult, and it becomes ever-easier as earlier interventions fail but escape blame. So we get no sustained, wealth-enhancing campaigns to reduce regulatory interventions in the economy; and we establish no institutions to keep future such interventions minimal. That’s depressing, not stimulating.
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The latest presidential debate between the candidates was largely based on the economy, which has become the largest of the hot button issues that will be facing the next President of the United States. The winner of the election hinges upon the confidence that voters have in the strategy for fixing the problems that have become apparent in these turbulent times. One of the problems is with the issue of regulation or deregulation. It has become apparent that some regulation of the financial sector is necessary, since deregulation led to the current crunch that we are in. However, how much is too much? Total regulation delves into socialism. One of the lesser known industries that will be affected by the regulation of the financial industry is the payday loan industry. Payday loan lenders across the country are facing more and more regulation from government, which cites “predatory lending†and enormous interest rates that would only be possible if a consumer were to take out a loan every two weeks for an entire year, which most lenders would not allow. Restricting legislation at the national level would outlaw the industry in all but name, and this service which exists to help people in their time of emergency need would cease to be, leaving the only options available to be credit cards, overdraft and resultant NSF fees, bank loans, and other options such as going to loan sharks, none of which are very palatable and get people further over their heads than a payday advance possibly could from most reputable lenders. Do not let the government take away your right to choice even in dire circumstances.
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Wednesday, the 14th of October of 2008 saw the third and final U.S. Presidential Debate between the two candidates in Hempstead, New York. Sen. Barack Obama went into the debate with an eight point lead in the polls, and he was content to sit on that lead. Sen. McCain went after him as he rested on his laurels, and took it directly to him about his policies, judgment, and character. McCain was keen to point out that he is “not President Bush†whilst Sen. Obama was far more critical of the last eight years of economic policy. Both candidates outlined their approach to trimming the budget, with McCain’s approach of using a hatchet to some areas and a scalpel to others, whilst Obama pledged to “go through the budget page by page, line by line†in order to find what isn’t working and deal with it appropriately. Both candidates say that they will bring the necessary change to America, but where does it leave certain industries, such as the PAYDAY LOANS industry? Americans deserve the freedom to choose beyond what the major interest groups (like banks and credit unions) want them to be able to choose.
Those who depend upon the availability of payday loans for unexpected emergency expenses they hadn’t budgeted for must speak up this election day. We cannot allow Ohio’s HB 545 to take away the financial freedom we have, and have been fighting for. This House Bill is not a Robin Hood that will “steal from the rich and give to the poor.†In actuality, it is more like the Sheriff of Nottingham appointing more vassals. Other financial institutions, such as banks and credit unions, are certainly pleased to support such measures for they seek to snatch up the business payday lenders who have been squeezed out of business will leave. Moreover, they will subject consumers to a product that will be even more profitable for banks: overdraft fees. They strive to magnify the “horrifying†391 percent APR on faxless payday loans, but overdraft protection typically costs in excess of 1,000 percent APR. This further proves their gluttonous intentions to overwrite every other financial institution, like the payday loan industry, and become consumers’ only option when unexpected financial fallbacks occur. Bear in mind that payday loans are typically only two-week loans to begin with, so it’s no doubt a circle and stripe argument. Plus, voting NO on HB 545 will prevent the annihilation of about 6,000 jobs in Ohio, which will support the further destruction to an already suffering economy. Odds are that many who lose their jobs because of the government overregulation will be forced to work and/or live outside of Ohio, which will definitely create a tax and spending power deficit for the state. In conclusion, if you want to help fix your state’s economy and value your rights to financial freedom, vote NO on HB 545.
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Election Day is behind us, and America has a new leader. The U.S. has chosen “change†by electing Barack Obama. There is no doubt that change is in store for the United States. Whether the United States changes for the better or for the worse is yet to be seen. It’s obvious that Americans believe Obama will bring a positive change to our country. Obama has promised the U.S. a lot of things like lower taxes for the middle class, putting a timeline on the war in Iraq, and trimming the federal budget “line by line.†What many Americans don’t realize is that Obama has also supported the elimination of the payday loan industry. Obama thinks doing away with the payday loan industry will protect low-income, and often minority, families from being victimized by predatory lenders. However, getting rid of the payday loans is a violation of our financial freedom. Maybe Obama will give America what it needs, but taking away our financial freedom isn’t a great start to creating positive change. Click to read more on Payday Loans
Upon declaring Barrack Obama is the winner for the said election her we come also the few question does the American citizen lies on their head that the some changes in the economy they must. Of does the promises of the Barrack Obama can be granted, whatever the sudden change is we may also we anticipate of what happened next. Congratulations, Mr. Obama on becoming the 44th President of the United States of America. If you thought the arduous 22-month campaign was hard, wait until you sink your teeth into the issues that await you with the American economy. The financial system and the ailing economy must be stabilized, and to your credit, you have proposed a number of different stimulus packages in recent weeks. The two most likely to score points on both sides of the aisle may just be your ideas about temporarily exempting seniors from having to make annual withdrawals from their IRAs and 401(k)s after age 70 ½ and temporarily exempting the unemployed from having to pay tax on their unemployment benefits. But the largest issues should be keeping the bank bailout/credit repair that Bush started on track, stemming the tide of real estate foreclosures and change the outlook of financial regulation and oversight, making it “more transparent.†You have your work cut out for you, Mr. President-Elect. Oh, but for the carefree days of the campaign…
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