It’s not just Obama’s legacy being created now. It’s that of the whole Keynesian economic edifice. We’ve always said the bailout’s not only would not work, but could not work. Sure it can kick the can down the road, postponing the inevitable adjustment at the cost of making it worse. But real consumption can only be paid for through real production. It’s production that creates wealth to enable consumption and investment. The only way to sustainably boost the economy is create an environment favorable to production.
Governments giving more money to poor people will provide a sugar hit, but at the cost of distorting price signals. This in turn results in inappropriate investment decisions. Ultimately it undermines the economy. Sure there may be isolated incidents of successful engorgement investment. Of government guided economic development. Singapore comes to mind. But not all countries will be blessed with a Lee Kuan Yew rather than a Kim Jong-il. Even Singapore may not always be guided by enlightened hands.
History is more akin to a marathon than a sprint. Blair’s “Cool Britannia” burst of government led growth will leave a long and toxic legacy. Many will rue the day they elected a Labour administration. That’s if the politically correct media are not able to assign blame elsewhere. But back to Obama. How’s the United States performing:
Only 54% Of Young Adults In America Have A Job: Young adults (18-24) in the US, the employment rate is just barely above half, or 54%, which just happens to be the lowest in 64 years, and 7% worse than when Obama took office promising a whole lot of change 3 years ago… of all age groups, this is the one that has actually seen its wages drop the most under the Obama administration.
It’s OK. They are just kids. Hungry kids:
Growing Number Of Americans Can’t Afford Food, Study Finds: About 18.6 percent of people — almost one out of every five — told Gallup pollsters that they couldn’t always afford to feed everyone in their family in 2011.
The evidence is clear. Bailouts might enrich vested interests, but it is not good for society more widely:
America has lost almost a decade of progress to the financial crisis: Just six of the 34 “advanced” economies categorised by the IMF have GDP per person higher in 2011 than in 2007. Notable among them are Germany and Australia.
Rank injustice, with people going backwards and the youth largely unemployed. That will do wonderful things for social stability.