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The Economy Is Worse Than [Even The Wall Street Journal] Think[s]

2011/06/10

The Economy Is Worse Than You Think

Quoth Martin Feldstein:

The policies of the Obama administration have led to the weak condition of the American economy. Growth during the coming year will be subpar at best, leaving high or rising levels of unemployment and underemployment.

The drop in GDP growth to just 1.8% in the first quarter of 2011, from 3.1% in the final quarter of last year, understates the extent of the decline. Two-thirds of that 1.8% went into business inventories rather than sales to consumers or other final buyers. This means that final sales growth was at an annual rate of just 0.6% and the actual quarterly increase was just 0.15%—dangerously close to no rise at all. A sustained expansion cannot be built on inventory investment. It takes final sales to induce businesses to hire and to invest.

The picture is even gloomier if we look in more detail…

…and the details “ain’t pretty” (as a friend says.)  The entire article is worth one’s time (we heartily recommend reading it in full.) Yet there be details missed, mate, missed even by the intrepid Mr. Feldstein.

What of regulations?  For starters, entrepreneurs and business executives want to know the regulatory burdens they will face.  Doubt about the rules of play is a substantive impediment to business investment. One can not construct (let alone execute) a responsible business plan in a climate (cough) of regulatory fluxion, not with arbitrary and onerous rules constantly being laid down by ever expanding and multiplying compliance-hungry government agencies.

Who can reasonably predict, for example, what the per-employee cost of mandated health-care and similar “benefits” will be when extant regulations are literally thousands of pages long, spread across multiple Bureaus in various Agencies while proposed rules are still being written?  Certainty of cost and risk is impossible.

Then there’s the threat of international treaties and “agreements” that will transcend our Constitutional legal framework, thereby adding whole new layers of taxes payable to unaccountable elites while simultaneously adding vast new restrictions on corporate and personal behavior and choices.

Beyond the looming regulatory nightmares lies doubt about the moral fate of the West itself:

  • Datum: The administration now wants information on the private political donations of corporate executives of firms applying for government contracts.
  • Datum: A married Democratic Congressman who had sent a pornographic image to an underage girl refuses to resign his office.
  • Datum: The administration raped long-established bankruptcy law to favor unions and campaign supporters during the defaults of General Motors and Chrysler.

No business can prosper without a shred of confidence that a businessman can make a decision and know that the government will respect his privacy and honor it’s legal limits on power. As power corrupts and the corrupted gain power the whole civilized game is in doubt – for business relies upon certainty and trust, in the beginning and in the end.  The present economy sees little of either.

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3 Comments leave one →
  1. ccoffer permalink
    2011/06/12 14:34

    And it’s all by design. At this point, only the tragically stupid and the grotesquely dishonest claim that this worthless shit nugget and his corrupt acolytes are at all interested in making life in America better for anyone but themselves.

  2. 2011/06/12 14:54

    It is indeed by design.
    Time to unwind the FED; Cancel membership in the UN; Get rid of the “progressive income tax.”

  3. ccoffer permalink
    2011/06/12 16:13

    How about this?

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