We’re in the midst of the longest recession since World War II. It’s been 21 months since the economy officially tanked and yet policy makers seem unwilling to admit their favourite policy prescriptioon–Keynsian stimulus spending–just isn’t working.
As Peter Ferrara explains in today’s Wall Street Journal, it’s crazy to talk about a “second stimulus” We’re already on the third stimulus, at least. The first began under George Bush in February 2008. The next was passed the following February. And the best the politicians can show for their effort is a slow down in our economic decline.
Meanwhile, the fiscally restrained European countries, France and Germany, saw growth return in the second quarter of this year. This defied all the predictions that the US would be the first out of the recession because it was the first in. It also made a mockery of those who thought the French and Germans weren’t doing enough to fight the recession.
So what should we do?
U.S. economic recovery and a permanent reduction in unemployment will only come from private, job-creating investment. Nothing in the Obama economic recovery program, or in the Bush 2008 program, helps with that.
Producing long-term economic growth will require a fundamental change in economic policies—lower, not higher, tax rates; reliable, low-cost energy supplies, not higher energy costs through cap and trade; and not unreliable alternative energy surviving only on costly taxpayer subsidies.
Unfortunately, Mr. Obama seems to be wedded to his political talking points, and his ideological blinders seem to be permanently affixed. So don’t expect any policy changes. Expect an eventual return to 1970s-style economic results instead.
That’s not very hopeful. But it may be the scary truth. Recall that the first time policy makers tried to fight an economic downturn with Keynesian policies, the recession continued for years and was eventually named The Great Depression.