The medicine we will be denied

To get out of this economic sickness we can take certain medicines that will probably get us back on our feet.† Or we can take certain drugs that probably will not.† Medicines that will not make us better quickly.† Chances are we will take the latter.

There are medicines that revive economies.† We know they do.† We have seen them work here and in dozens of countries.† They are called tax cuts.† Tax cuts for entrepreneurs and smaller businesses. And relief from regulations.

There are other medicines that may stabilize economies.† But try as they may, they do not do a good job at getting the patient out of bed and back to work. These are higher taxes and heavy regulation.

Obviously our economy is sick.† Various folks blame unregulated capitalism for this.† They call for more regulations on that capitalism.† They are in no mood to cut regulations.† They are in no mood to cut taxes to reward capitalists.

Understandable.† We DO need more regulation.† Our financial universe has grown so quickly.† Regulations have not kept up with the new players and their tools.† But while we need more regulation there, we could do with a lot less regulation elsewhere.† We are not going to get less.† Not when the country is in the mood it is in.† And so that is one medicine we will be denied.



We are not likely to get tax cuts either.† We donít feel like offering rewards to the capitalists we are convinced got us into this mess. So those are more medicines we will be denied.

We are likely to get more handouts to consumers.† This medicine has not done much for economies that are sick.† We are likely to get more bridges and roads and sewer systems.† We will get more government spending that is supposed to "create" jobs.† Sorry, but such projects have a poor history.

The problem is obvious.† In order to spend money on such programs government has to have money.† It gets it from whom?† From the folks who might have invested in new ventures.† From the folks who might have invested in expansion of their business.

If government takes money from them it clearly keeps them from creating jobs.† So it snuffs out jobs by taking the money from the entrepreneurs.† It uses that money to create jobs with its big programs.† Trouble is, that sort of job creation is very slow.

A faster way to create the jobs is to let the entrepreneurs keep the money.† Better yet, lighten the tax load on them.† So they can make money more easily when they do what they do best - create and grow ventures.

But, as I wrote above, we are in no mood to do this.† We are in a mood to punish entrepreneurs, capitalists.† We are in a mood to build sewer systems.† We are in a mood to tie cowboy capitalists down with new regulations.† To take the cowboy out of cowboy capitalism.

And government believes it knows how to create jobs faster than entrepreneurs do.† This is why our candidates promised to spend tens of billions in alternate energy projects that would create millions of new jobs.

Government figures it knows best.

Well, politicians had more to do with building the house of cards that has collapsed than any other player.† They figured they knew how to run the mortgage industry better than bankers did.† They forced, forced bankers to make subprime mortgages to people who barely had a pulse.† Then they forced Fannie Mae and Freddie Mac to trade in those mortgages. Those two companies created bonds against the morgages.† They were low quality bonds.† The companies said they were high quality bonds because the government stood behind them.

They got traded around the world.† When someone found out how lousy they were the house of cards collapsed around our ears.

In other words, government played a huge role in getting us into this mess.† More government is not a great medicine for getting us out.

From Tom ... as in Morgan.††††††††††††††††††

For more columns and for Tomís radio shows (and to write to Tom): tomasinmorgan.com.

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