Liberty Gazette

Obama and McCain have good ideas: Can we afford them?

Posted in Editorial by libertygazette on October 14, 2008

The candidates have been going back and forth over who is to blame for the economy. It reminds me of two children who have broken a window playing ball. The first says the other is guilty for pitching the ball. The second blames the other for hitting the ball too hard. I believe that I can speak for the tax payer in saying; we don’t care who carries more blame. Rather, we want to know who is going to fix it. Let’s look at the fixes and see how they play out and how much these solutions might cost us.

At first glance it may be impossible to tell the two candidates apart. Certainty persists that Obama and McCain differ in their fundamental economic philosophies. The difference is embodied in the way they see the ‘engine’ that drives the economy. Without getting into deep theories of economics, these differences root themselves in the populist verses the aristocratic models. Here is the layman’s explanation.

Obama is populist in his economic theories. He believes that the worker is the engine that drives the economy. This theory has certain merits. The worker makes up the largest portion of the American population. A worker is defined as a person who retains full-time employment for a majority of the year. The worker also receives most of their sustenance from the labor they produce. The theory goes something like this: When the worker is happy, they produce and are more likely to spend money in the economy. When the worker produces, the employer will profit. When the employer profits, the employer will reinvest. When employer reinvests, jobs are created. This cycle continues into infinity.

Under ideal circumstances, this is a fantastic model. Unfortunately, government is a blood thirsty beast. This is how it all eventually goes wrong. In an attempt the make the worker ‘happy’, the government does the only thing a doting government can do. It creates more programs.

These programs are, by nature, inefficient, cumbersome, and often misguided. With a massive price tag, the programs threaten to strangle the worker in taxes. Because of their bureaucratic nature, they soon are not capable of fulfilling the assistance for which they were intentioned. The populist leader is reluctant to hang the heavy burned of the programs on the neck of the worker, who is no longer benefiting. So, the populist leader taxes the industry which employs the worker.

The additional taxes weigh down the employer who can no longer hire more workers. Job growth slows. The employer makes less profit for lack of a supply of new consumers. Eventually, the employer lays-off the worker. Taxes no longer flow to the programs, starving them out. Programs are cut.

The cutting of programs relieves the tax burden on the worker and the employer. This fresh start begins the cycle over again. It is a cycle that need not be felt by any of us.

Solution: Help the worker with well thought-out regulation and strong infrastructure –forget about the programs (free giveaways). Often, the programs are socialist in nature, punishing success and coddling sloth.

If Obama can develop infrastructure and avoid bureaucratic programs, He may be able to lead us out of this crisis.

McCain is an aristocrat. His wife is worth tens of billions. Though the two have file separate tax returns and they have a prenuptial protecting her wealth, they are married. She is filthy rich. Argue the point if you like. He is filthy rich. It is not a bad thing. The fact is that his wealth does shape his economic philosophies though. The aristocratic model has merits too. It goes something like this.

The aristocracy is the engine of the economy in this model. They have the wealth to invest in new industry. The commoner certainly don’t. Because they have been successful, they are most prepared to succeed in the future. In order to afford the aristocracy the greatest opportunity for success, they must have the least burden on their wealth. The more money they have, the more they will invest. The more they invest, the more industry grows. The more industry grows, the more jobs are created. The more jobs are created, the more consumers are willing to spend. The more consumers are willing to spend, the more money the aristocracy has to reinvest. The cycle continues into infinity.

Under ideal circumstances, this model works. Unfortunately, aristocrats are greedy. They are not assured to respect the role of the commoner in the system. The aristocrat uses consolidates money and power to control policy makers. The policy makers are then made to deregulate at the expense of the commoner. Wages are cut to allow for greater profit margins. Corners are cut in production at the expense of safety, environment, labor burden, and quality control. The commoner is trampled and no longer consumes. The reduced consumption shrinks the economy. The aristocrats become over-extended and fall into ruin.

With a market no long controlled by a few tycoons, entrepreneurs can compete. Competition creates new industries and the economy rebounds. This too is a cycle that need not be felt.

Solution: We must have well developed regulation to foster competition. We cannot depend on the wealthy to allow their wealth to trickle down into the economy. These aristocrats have earned their wealth; but, they must be made to pay their fair share. They must also be held at bay while entrepreneurs are allowed to develop new industry.

As citizens, we must police these two philosophies. Though they both have their merits, they both can go very wrong. The only element that can make the difference is the vigilance of the lovers of liberty. Regardless of who wins the election, we have our job cut our for us. Let us keep them in line.

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