A Faux Recovery Based on Economic Stimulus

More money! More stimulus! And more borrowing from the future to combat the errors of the past…

President Obama wants another $50 billion, presumably to keep the economy “stimulated.” We “must take these emergency measures…” he wrote in a letter to congressional leaders, or else risk “…massive layoffs of teachers, police and firefighters.”

Are you scared yet, fellow reckoner? Well, you should be, but not because of the reasons Mr. Obama cites. The whole “emergency measure” line reminds your editor of a story; something about a boy and a wolf… It ended with a lot of crying, if we remember correctly.

“That ought to hit ’em where it hurts,” we can almost here the Feds saying. Go for the “safety net” jobs; the ones a free market society supposedly could not support on it’s own.

The government would have us think that if it didn’t pay people to keep the streets clean and the buildings up to fire code, then the nation would descend into a murderous rage of crime and scorching flames. We are supposed to believe that the only thing standing between free citizens and Dante’s Inferno is the vigilance and service of Inner Beltway busybodies. Don’t buy it for a second. If asked whether he would prefer a private contractor coming to his rescue during a bank robbery or a member of Baltimore’s finest, your editor would take the “profiteer” every time. Besides, it’s the state that’s robbing your savings account, not some junkie miscreant down the road.

But back to our topic…

The “recovery,” it seems, is waning…just as the effects of the economic stimulus are fading. Consumer spending is falling, according to the most recent figures. Mortgage defaults are creeping steadily higher. Debts – at both the state and federal level – are ballooning. And the overall jobs situation – not including census “workers” – is worsening.

That all sounds about right to us. After all, dead men don’t walk. The unemployed don’t spend. And even if they did, spending is no way to prosperity anyway. In days or yore, “consumption” was considered a disease. Today, welfare statists consider it to be an unalienable right: “Life, Liberty, The Pursuit of Happiness…and a brand new blender!”

…or something like that.

But even the world’s largest economy can’t prop up a dead man forever, no matter how many kitchen appliance vouchers it bribes its citizens with. This is a Weekend at Bernie’s recovery, in other words, not a Chariots of Fire one. It is simulated at the public’s expense; not stimulated by the private sector’s toils. And that trend – from private wealth production to public wealth destruction – is a worrying one indeed.

As Austrian School luminary, F.A. Hayek, astutely observed: “If government relieves us of the responsibility of living by bailing us out, character will atrophy. The welfare state, however good its intentions of creating material equality, can’t help but make us dependent. That changes the psychology of society.”

If President Obama is not careful, the price of his economic recovery will be enough to send the nation broke(er).

Joel Bowman
for The Daily Reckoning

The Daily Reckoning