Do They Understand?

I wonder if liberals really understand the economy and the driving forces that actually create wealth.

We continue to hear from Washington how the government feels they are the best avenue for fixing the ills of the economy and society. They continue to push their programs and spend our tax dollars. (A big chunk of it is wasteful spending in my opinion.)

Adam Smith, who is considered the father of capitalism (even through that term did not exist until after his death), wrote two major works on economic theory. His premises revolutionized thinking about what drives the economy and even society.

He successfully made the case that individuals in the their desire to make a profit is what creates wealth (and jobs). Through the centuries since then, we have seen the evidence from countries that have followed this premise grow into the super powers of the world. Those who did not embrace it became 2nd and 3rd tier countries in the world.

This administration continues to make policy moves away from Adam Smith's theories. As a result, they continue to handcuff business and the economy. Some of the continuing challenges with the economy include:

• The credit markets are still virtually frozen. This is preventing banks from loaning money for purchases and working capital. This hinders businesses from being able to operate in a normal fashion.
• Taxes, unnecessary regulation, and other costs are being considered by Washington to add more burdens to businesses. This will increase the cost to manufacture and will ultimately be passed along as a cost to the consumer.
• Increased tax burden is a deterrent to people investing. If you penalize people for investing in businesses, they will move their money (capital) to places where it will not be taxed as heavily.
• Increased government spending (at deficit levels) will create future tax burdens to pay for the debt and weakens the dollar against other currencies.
• The depressed stock market is a deterrent to new companies from making initial public offerings to raise capital. This is used to expand and growth (especially when you consider job creation).
• The decreased values in stocks and the reduction in dividends (due to decreased earnings and cash concerns) effects individuals and their spending.

The administration campaigned on a centrist platform for domestic and economic policies. All we have seen is the failed liberal ideals of years past. It is just tax and spend policy that handcuffs real growth. The only growth in this approach is in government bureaucracy.

Someone sent a video to me recently of President Obama trying to explain investing. It is from 2007 in the early days of his Presidential campaign. It is rather sad when you listen to it and think about his education and position (even as a Senator).

When will liberals understand? I am not sure. Conservatives need to continue to voice their opinions and concerns about the direction the liberal agenda is taking our country.