An overwhelming majority of respondents to the NSBNEWS.net Insta Poll indicated an unwillingness to support a government bailout of the Big 3 Detroit automakers. And with good reason. Because they realize intuitively that a government handout is not the answer.
The only way to improve an economy is to produce more goods and services, known as classical- or supply-side economics.
The main ways to stimulate people to produce more goods and services are lower taxes, sounder money, fewer business regulations, unhampered foreign trade and protection of private property by the court system. This has been said before but it is well worth repeating.
This set of stimulations works every time they are tried and are called supply side economics. They will work again if anyone will try them.
The economic stimulus favored by many politicians and other ignorant people consists of giving people and businesses monetary hand outs. This stimulus fails every time it is tried and is called Keynesian economics or demand side economics.
The supply-side economics succeeds by giving people the incentive and means to produce more goods and services. Demand side fails because it merely gives people “more paper” to compete for an unchanging supply of goods and services. It does nothing to stimulate the supply.
Demand-side economics makes people temporarily happy and helps elect demagogic politicians. However, when the dust clears the economy is actually a little worse off since the process usually takes from producers and gives to non producers and it causes some inflation..
Tax cuts stimulate and encourage you to work and invest and do the things that are productive while hand outs do not stimulate you to produce more. It is as simple as that.
Fewer regulations make it easier to run a business and do the things that are productive.
Sound money is necessary to run a good economy. Inflation is a major contributor to the mess we have now. Inflation makes it hard to plan your business moves.
Unimpeded foreign trade makes it easier for customers to get what they want at better prices and for businesses to both buy what they need to produce and in turn sell what they make. Everyone benefits.
Without legal protection of property rights it is impossible to have a good efficient economy.
Notice that government bailouts that the auto industry is now seeking and what the banks already received were not included in the list of things that stimulate the economy. First, note that a bailout takes assets from the people who are doing things right and gives them to people who are doing things wrong.
There can be no economic benefit in this type of action. Second, bailouts are inflationary and will no doubt end up under the control of self serving politicians. Third, bankruptcy is a much better solution as it affords the companies a chance to either correct their modus operandi or sell out to someone who can.
This brings us to the question of what specifically should the Obama administration do to get and keep a good economy:
# First and foremost, make the Bush tax cuts permanent and then make the cuts much deeper all across the board. Forget the class warfare bit; all it does is starve the poor.
# Go to a tight money policy and make the dollar strong.
# Reduce regulations on business and forget all the nonsense about tightening down on business management. Forget about increasing the power of unions to destroy American businesses.
# Cut or eliminate tariffs and quotas on virtually everything imported into the country.
# Reform the legal system so that it becomes a better protector of our rights and property and less of a means for trial lawyers to pillage America . This includes making the loser pay all court costs, eliminating the deep pockets doctrine and making it much tougher to bring class action suits.
# Refrain from bailouts except maybe in very rare cases.
If the Obama administration were to do these things, the economy would turn around faster than anyone could imagine. There is nothing new or original about these ideas they were introduced by Calvin Coolidge, John F. Kennedy, Ronald Regan and now others all over the world. They are always met with success whenever implemented.
One of the reasons for our present economic distress is that in the election campaign Obama implied that he planned to do the exact opposite of most of the above recommendations just like Hoover and then Roosevelt.