Friday, June 11, 2010

It's Not Different This Time, Mr. Obama et al...

During the twenty or so years I invested money for large corporations and wealthy individuals, the pundits would frequently look at some piece of economic data or a particular company's earnings and declare doomsday claiming, "it's different this time." In the early 1990's, an influential economist friend of mine made a widely received and compelling argument that America's best days were behind it and the most we could expect was 1-2% growth in perpetuity. He was upbeat though his prognosis was glum. What more could we expect? We'd had a good run.

A few short years later the economy re-accelerated into strong growth and productivity increased dramatically. The stock market followed suit and continued the bull market ignited by the Reagan tax cuts in the 1980's.

What my economist friend viewed as a permanent problem was solved in the capital markets in ways that he could not have predicted at that time. The Reagan tax cuts continued to fuel private sector growth. Innovation and investment were rewarded. Money that had been poured into the no-growth public sector was freed up to create jobs in the private sector. The economic growth that temporarily stalled in the early 90's causing the experts to predict America's decline, was merely a pause in one of longest periods of prosperity in modern American history. Private industry was regrouping, recalibrating and on the verge of another surge in growth. Technology had improved productivity so dramatically the downturn was merely a breather before another strong acceleration.

In short: It wasn't different this time. America, when left to her own devices, should never be counted out.

President Obama is fond of predicting our decline. He uses words like unsustainable and redistribution and fair share. He does not speak of growth or innovation. Rather, he shares a philosophy, long since proven wrong, that was espoused by Franklin Delano Roosevelt in a speech he gave in San Francisco in 1932 when he declared, " our last frontier" had long since been reached. It was time for the "princes of property," the wealthy, to share their resources. Growth would not provide for the poor; only redistribution could (Shlaes 135).

Like FDR, Obama who has no experience building or growing anything other than government, cannot believe in the private sector. Cannot acknowledge that American ingenuity has always, and when left unfettered will again, solve problems and create wealth.

Our last frontier was not reached in 1932 nor has it been reached today. Make no mistake, Obama's economic policies have and will continue to inflict great damage. But that great American spirit will eventually dig us out and set us on the right track again.

No comments:

Post a Comment