Key to Economic Progress
We have witnessed the folly of
printing money and giving it away to fat cat corporations. It’s obviously not
working. Unemployment, the best economic health indicator, keeps going up. The
answer to our economic crisis has been demonstrated many times in past history and
forgotten.
The answer is increased
productivity.
·
Bill Gates was more responsible for the great
leap forward in prosperity and a balanced budget than the government. His
genius made us all more productive.
·
Before that the space program’s research helped;
·
Before that the telegraph, and telephone;
·
The Industrial Revolution and the steam engine;
and before that
·
In around AD 1000 a newly invented horse collar
enabled horses to plow much better than oxen and doubled farm productivity.
All these increased productivity and
benefitted everyone. The Government cannot increase productivity, but can
encourage it.
Death and resurrection are better
than rusting away. World War II destroyed the industrial might of Germany and
Japan. They were forced to retool from the ground up. It hurt and took time, but with their new industries
up and running those countries progressed more rapidly than our older
technology. Giant China emerged from its long sleep and started new industry
with new technology. What was China’s secret? The oppressive government finally
recognized that people had to be free to use their natural initiative based on hope of reward rather than fear of punishment motivation that
destroyed the Soviet Union.
General Motors was a dying dinosaur,
diseased with greed, but instead of letting it die, the Government put it on life support. Greedy
executives thought only of their bonuses. Their partner in crime, the Auto
Workers’ Union, demanded and got two or three times more pay than equivalent
workers in other industry. The results were decreased productivity and shoddy
products. Had General Motors had been allowed to die a natural death, something
better would have replaced it. Volkswagen after World War II was practically
worthless, it rose up like a phoenix from its ashes and became a major auto
producer. As in other WWII cases of renewed technology strength and enthusiasm,
VW first had to be reduced to ashes. That’s the way nature works.
The Government fooled with nature by encouraging
sorry mortgages, resulting in fat cat corporations “too big to fail” teetering
on the edge of oblivion. It was a concocted artificial problem. So the
Government threw around a trillion dollars, so we have an artificial solution
to an artificial problem. It’s not working.
AIG was “too big to fail,” we
heard. Its layers of top management and partnership with quasi government
mortgage companies had swollen it into a monster too fat to rise and walk. Its
failure would have had an impact world-wide and it would have hurt. But after
disintegration the pieces have a way of coming back together into new and
efficient companies. But we have to allow a top heavy beast to collapse.
Apparently most of the stimulus
money went to banks. How productive is two entities swapping money? Not very.
They are like an old story of two little boys, one with a lemonade stand and
the other across the street with a popcorn stand. They had only a nickel
between them. So the lemonade boy bought popcorn all day and the popcorn boy
bought lemonade, trading their single nickel. After running out of the products
their moms had so generously provided, each boy reports that he made a dollar.
Each bought the other’s product with the same nickel. They produced nothing,
used up their stock, and while crossing the street, they lost their only nickel
to a bully who claimed to be a tax collector charging 10 per cent of net profit.
They were short five cents and would be subject to late fees and interest.
While the banks got the money, the
workers got laid off; small businesses had to cut benefits and reduce
workforce. Business that produces wealth is hurting, while those who trade
money prosper.
The economic stimulus behaves like a
morphine addict: feel good now, hurt later. (When Heroin was first introduced
it was hailed as a cure for morphine addiction.) The economic stimulus has not
increased productivity. Rather it is the narcotic that keeps recipients going
back for more and has decreased output of real goods.
The Government can keep on printing more
money, but it only makes the addiction worse.
Bureaucracies and politicians don’t produce, they consume. They may take
our money and give some of it back, and we feel good temporarily. But the money
we have left is worth less. Inflation is lower than I can remember, but it is
being held up artificially. When the natural order of things begins to come
together, we will see how inflation is the equal opportunity
