Posted on 30 November 2009
Note to Obama: Only Private Sector Creates Wealth, Jobs
By Dan Spelzmann
President Barack Obama has little interest in, understanding of or affection
for free markets, so he fails to understand that the fundamental relationship
between government and the economy is that of parasite to host.
Some functions of government are absolutely essential to a free economy. We
need a sound currency, civil courts to enforce contracts and to provide a
peaceful means of dispute resolution, protection from criminals at home and
enemies abroad. Other functions of government — chiefly those such as Social
Security, Medicare and unemployment insurance that involve the redistribution of
wealth — are supported by large majorities of Americans.
But though government can consume wealth and redistribute wealth, it can’t
create wealth. And unless wealth is created, there is nothing to consume or
redistribute. That’s why — even when government is doing something we all agree
must be done or most of us want to have it do — government is a parasite. All it
has is what it takes from the producers of wealth.
A healthy host can support a lot of parasites. A sickly host cannot. So
whether you like big government or small, you should support what it takes to
keep the private sector robust.
John F. Kennedy, a liberal who wanted to expand the role of government,
understood this. His policies were business friendly.
Barack Obama does not. He thinks he can continue to heap burdens on the
producers of wealth without having it affect the production of wealth.
He’s mistaken.
The unemployment rate reached 10.2 percent this month, more than two
percentage points higher than Mr. Obama’s economic advisers predicted it would
if his $786 billion stimulus bill were passed. The Associated Press, in
reporting Tuesday on disappointing third-quarter economic numbers, noted some
economists expect it to reach 11 percent by next summer. That would be the
highest since the Great Depression.
The stimulus failed chiefly because it was designed more to reward the
president’s political allies than to fight the recession. But the stimulus
failed also because stimulus funds were used to preserve jobs state and local
governments could no longer afford because of falling tax revenues. The private
sector has borne more than 100 percent of the job loss because state and local
governments have added 110,000 jobs, according to an August report by the Nelson
A. Rockefeller Institute of Government.
A job’s a job, right?
Not exactly. Preserving government jobs may deepen the recession because
government workers are not engaged in wealth creation and their salaries must be
paid by people in the private sector who are.
“Basically what you have is your producers in society losing their jobs and
looking for work … and they are likely to face tax increases going forward (to
support government workers),” Brad DeHaven of the CATO Institute told The New
York Times.
State revenues have fallen 8 percent and local government revenues 2.8
percent, the Rockefeller Institute reported earlier this month. This suggests
the government jobs propped up by federal stimulus funds will be lost next year
unless another massive federal subsidy is provided. But with federal tax
collections having fallen 18 percent from October 2008 to October 2009; with the
budget deficit for the last fiscal year reaching $1.84 trillion, roughly triple
what it had been the year before; and with the national debt at a whopping $12
trillion, this would be fiscally dangerous and politically poisonous to do.
Federal government civilian wages averaged $79,197 last year, according to
Free Enterprise Nation, compared to the average private sector employee’s wage
of $49,935. When benefits are included, federal workers have pay packages twice
those of private sector workers, on average.
Workers in the private sector are getting tired of subsidizing government
workers. A Quinnipiac poll of heavily Democratic New Jersey released Tuesday
indicated 75 percent of respondents favor freezing the wages of state workers to
balance the budget, 68 percent want to cut programs and services, 61 percent
want to lay off state workers. Only 23 percent want to raise taxes.
The economy wants to heal itself. But the president keeps heaping burdens
upon it. His job approval has tumbled as Americans recoil from the taxes and
spending proposed in Obamacare and cap and trade, and from the massive debt he’s
piling up.
For the economy to grow, government must shrink. But the president and
Congress are rushing pell mell in the opposite direction.