Sunday, November 23, 2008

There something amazing about SIMPLICITY

I am a common man. I would be lying to say I have a full understanding of economics, but I have taken several classes that were required for my degree i.e. Macroeconomics, Microeconomics, History of Economic Thought etc. I repeat--I am not an expert but I always like to apply "common sense" to all situations. This application of "common sense" I find lacking in many of the Economic discussions taken place.

First, lets take a look at these proposed bailout packages, and ask a few common sense questions.

1-Have the markets responded? The short answer NO

2- Why have they not responded? Well there just is not a short answer for this question.

Claysinsanity believes the main reason is because markets do not respond well to government intervention. This is because the government has shown time and time again how ineffectively they act. THIS IS BY DESIGN. Most of our founding fathers were scared of a large federal government, which is evident when reading through our Constitution. This fear was offset by a system we all know as checks and balances. Ronald Regan stated that the American revolution was the first of its kind. Every other revolution traded one dictator for another, but our founding fathers understood that to keep a republic intact, it is necessary to restrict the government internally, and restrictions lead to inefficiency. These inefficiencies or restrictions give the governed people freedoms which are not otherwise present.

The market in a Capitalist society is driven by efficiency. To put in extremely layman's terms, people invest in good businesses. Therefore, poorly ran business SCARES investors. What we have on Wall St at this point is several poorly ran businesses which are going to an inefficient source for help. This is the ultimate "double whammy." And has many investors "sitting this one out." With the combination of the above mentioned and the proposed tax increases by the future administration--WHO CAN BLAME THEM?

So what should be the governments role in the economic system? I thought you would never ask. I hope that everyone reading can see the hypocrisy in a government that is 10 trillion dollars in debt looking down their noses at a management team who has ran outstanding companies (such as the automobile industry) in the ground.

Now I could be wrong, but I believe the biblical principal of remove the plank out of thine own eye applies here. The government needs to reign in its spending, operate "their business" at a surplus and begin to pay down this national debt. By reigning in their spending--I mean cut taxes for everyone. This will ultimately give more money to consumers and investors for them to consume and invest, and drive this economy from the bottom up. The problem now in American households is the folks don't have enough money, so give it to them. Not by borrowing from China, but by allowing the public to keep more of its earnings. It just seems simple!!!


Biased Girl said...

Sometimes I think the illusion of "complexity" is used to keep people from asking too many questions. I know nothing is quite as simple as it seems, but usually they aren't nearly as complicated either.

Clay said...

You have a good point it seems that the complexity stance may be used many times to keep the common man out of the discussion.

RightKlik said...

Government intervention always makes economic problems worse. ALWAYS. Politicians think they have the power to control the economy because the have the power to control so many other things, but they have no power over the laws of economics. They might as well be trying to rewrite the laws of physics.

BoufMom9 said...

God forbid our congress learn from past mistakes! Sheesh!