This opinion piece originally appeared at Reuters.com.
Firing teachers, cops, firemen…The stuff always trotted out when calls are made to get the budget under control. Never a word about the absolutely huge and unnecessary bureaucracies, especially in education. Never a word about foolish projects. Never a word about overblown pensions. Never a word about the real cause of our financial straits, the housing act supported and protected by Frank and Dodd even when it was clear that we were heading to ruin. Just keep spending all will be well. What a load!
Where did Mr. Johnston get his economic degree — the School of Severe Blows to the Head? This is more Keynesian economics – the most failed economic theory in the world. If spending more would solve problems, then Greece would have no problem. Nor Ireland, or Italy or Spain or any of the other bankrupt governments of the world. When a government gets so deeply into debt by overspending, it quickly reaches the point where no one wants to buy their IOUs (bonds), so they have to jack up interest rates to get people to buy them, taking a greater share of the national income. Taxes have to be raised or the problem just gets worse and pretty soon, no matter what interest rate is offered, no one will buy their bonds. Or, they can print more money (Having control of their money supply? Good grief. What drivel.) And soon, the money causes inflation and it is worthless, too. Look at history. That’s how Germany got into trouble between WWI and WWII and was the direct cause of people supporting Hitler and his rise to power. If just spending more money worked, then Communism would work. But it’s colossally failed everywhere it’s been tried. Plain common sense tells anybody with half a brain that this is true. We might want to believe in this Keynesian utopia, but it doesn’t exist in the real world. The only reason the U. S. has been able to get away with it for so long was that we were the “last man standing” after WWII. The world’s economies were devastated. Their factories were bombed out. They’d spent all their money on war and what little they had wasn’t enough to even feed their people much less rebuild their countries. The U. S. did that. Men were able to come back to high paying manufacturing jobs because their wives, who had filled them during WWII, went back to being homemakers. And tens of thousands of the former soldiers, sailors and airmen went to college or technical training on the GI Bill. (Something we need to do again.) I don’t care what fantasy land you live in, you can’t spend more than your earn and governments can’t spend a dime that isn’t earned by a worker i the private sector and then taken away from him/her through taxes – with legal penalties if you don’t pony up. But there comes a point, even when you are the world’s largest economy by far, that your bad habits catch up with you. That’s where we are now. We’ve got massive problems with unemployment, failing infrastructure. failed ecucational systems, and a new world economy that is different than anything we’ve ever faced before, and this idiot says, well, let’s domore of the same! Insanity is defined as doing the same thing again and again and expecting different results. If this is the best you can offer, keep your stupid opinions to yourself.
“Those who disagree with this say that only private spending can create wealth and that government spending is inefficient. I think the first argument is wrong, but the second is often true, which is why citizens need to pay close attention to their government.” I got my business degree in 1979 and I totally disagree with you, you idiot. Here’s a little lesson for you: I think = common man, I believe = great man, I know = great leader.
The idea that government can create wealth is just plain a farce. Government money all comes from the private sector – government produces nothing in terms of wealth in and of itself. Government’s role as far as business goes is to provide the physical, social and logistical infrastructure for producers so they can make profits and in turn pay for that infrastructure in the form of taxes. Johnston is one of those who believes that income tax paid by government employees constitutes a revenue stream. And there is no comparing to the 1946 debt to our current 15 trillion dollar debt in terms of its sheer size. But more importantly, throughout the largest part of that 6 decades he cites where the 1946 debt became insignificant, the US economy grew like Jack’s beanstalk. That is no longer the case. Resources, energy cost and availability, foreigh competition (that did not exist after WWII), trade policies will not see our economy expand nearly 5 times as it did between 1946 and 1996. Our economy is in decline, and no amount of government spending can offset that. What we need is a realistic set of policies. The US still has plenty of stuff the world wants, we just need to give them reason to buy it from us. We could start by making it more lucrative for companies to operate and manufacture at home than to outsource or move operations to foreign soil. We could easily tie US services provided to foreign countries to trade incentives that favor US products. But austerity IS called for. The cost of government to provide that afore-mentioned infrastructure is a necessary expense. The Constitution outlines exactly what the government is charged with doing. Our current government is way out of bounds in what it provides – it’s operating far outside the parameters of it’s Constitutional frame. It needs a good dose of what Thomas Jefferson did upon taking office – He cleaned house in reducing the size of government!