ThoughtRogue:  Considering America’s now rampant economic illiteracy and widespread ignorance of history and philosophy, I wonder whether we’re now past the tipping point and the American Dream is doomed?  You’ll notice that every policy decision that our beloved, alleged President makes is to further impoverish Americans – to make them wonderfully dependent, EQUALLY impoverished.

Two excellent books that lay a rock-solid foundation in economics is Henry Hazlitt’s famous Economics in One Lesson, and Basic Economics by Thomas Sowell.  Both explain economics to the layperson, without the use of formulas, with expert precision, allowing the reader to easily dissect for themselves the plethora of economic fallacies they are bombarded with daily.  These should be required reading of all students – not to mention of all politicians especially.

Turning the American economy around is really simple:

• Reduce the taxation monstrosity
• Reduce government spending even more
• Reduce onerous regulations and restrictions
• Reduce bloated, unconstitutional programs and bureaucracies
• Reduce the shackles on individual work and innovation

But, what has the Usurper-in-Chief accomplished and/or supported at every turn?

• Increased Taxes – net jobs killer and wealth destroyer.
• Gigantic Bailouts – net jobs killer and wealth destroyer.
• Increasing Federal Spending and Debt – net jobs killer and wealth destroyer.
• Repeal of Bush Tax Cuts – net jobs killer and wealth destroyer.
• More Money and Power to Unions, Lobbyists, and Government – net jobs killer and wealth destroyer.
• The ‘Cap and Trade’ Energy Bill Boondoggle – net jobs killer and wealth destroyer.
• Support for an Ever-Increasing Minimum Wage – net jobs killer and wealth destroyer.
• The Mass Amnesty of Tens of Millions of Illegal Aliens – net jobs killer and wealth destroyer.
• The Takeover of the Medical and Insurance Industries – net jobs killer and wealth destroyer.
• The National Socialization of Banking, GM, Mortgages, Education.. – net jobs killer and wealth destroyer.

Why Big Government Doesn’t Work

by DOCTOR ZERO, HotAir.com

A person living entirely on their own produces very little, beyond the bare minimum necessities of survival. He has no real “wealth” – no surplus production, to spend on discretionary endeavors. He has few real options in life, beyond daily survival. His moments of real choice come when he gets lucky. An exceptionally fortunate hunt might feed him for a few days, and give him some precious leisure time. Otherwise, he does what he must do, and rarely has time to think about what he could do. Some people enjoy living this way, but most do not.

The situation improves somewhat in a small, voluntary collective: a partnership with a trusted friend, or a small family living on its own. Their combined efforts produce more surplus food, and they can address the necessities of life with less individual effort. They may develop skills and talents that prove valuable to each other. Some people are content to live this way, with a small and isolated family that maintains very little contact with the rest of humanity – but, again, most are not.

When families begin cooperating with each other, production and wealth explode. Communities generate tremendous amounts of surplus production, and commerce allows people access to goods and services they could never produce themselves. The amount of time required to deal with personal survival dwindles away to virtually nothing. Doubtless the reader works hard at his or her job, but your job probably has very little to do with feeding or clothing yourself, or defending yourself from predators. Instead, you produce goods and services that would be unimaginable to a more primitive society – could you explain your job to someone from the tenth century A.D.? In exchange, you earn money, which you spend to purchase what you need – and, more importantly, what you want. Even the poorest member of an advanced society has options.

An advanced society requires a method for allocating its huge amount of surplus production, and meeting the basic needs of its members. There are two general mechanisms for doing this: commerce and government. Every society uses a mixture of these methods. Even the most totalitarian government has a black market, and even the most free-wheeling capitalist society will have a government. Attempts to artificially engineer a society without either commerce or government are doomed to failure, because they will form spontaneously, no matter how strictly they are forbidden.

Government and commerce don’t just co-exist in an uneasy truce. They need each other. Commerce, the free exchange of money for goods and services, produces wealth through choice. Remember the example of the man living alone: the poverty of his existence comes from his lack of choices. The value of money flows from the way it allows consumers to express their choices. For a simple illustration of this principle, compare a ten-dollar restaurant gift certificate to a ten-dollar bill. The ten dollar bill is more valuable than the gift certificate, because you have more choice in how to spend it. A government increases the wealth of its citizens by providing security – stable currency, secure borders, protection from criminals, respect for property rights, and legally enforceable contracts, to name a few of government’s duties. This has the effect of increasing the citizens’ wealth, by increasing the choices available to them. A ten-dollar bill has more value in a large, lawful city than on a tiny island where few goods are available, or a den of thieves where nothing can be bought with confidence.

Consider the example of the impoverished loner versus the citizen of a prosperous society again. The citizens’ money represents wealth, thanks to his many choices, but it represents something else of enormous value: extra time. The loner spends most of his waking hours staying alive, and seeing to his minimal needs. The wealthy citizen spends almost no time on these things – he uses it for economically productive work, self-improvement, and leisure. A ten-dollar bill will purchase you a shirt that you probably don’t know how to make yourself… and even if you had the knowledge, it would most likely take you longer to make the shirt than it takes you to earn ten dollars.

Government allocates wealth through top-down commands, imposed by force. There would be no need for massive tax and spending bills if everyone was freely choosing to spend their money the way the government wants them to. Capitalism has priorities, while government has imperatives. Capitalists fulfill their ambitions through competition, which increases the choices available to consumers. The ambitions of the working class lead them to work harder, and engage in increasingly valuable and productive labor, to earn a better living for themselves and their families. This system is not perfect – there will always be people who try hard but don’t get ahead, and people who don’t make a very productive contribution to society – but over the long run, and measured against a population of millions, free market commerce will tend to produce increased choices, improved technology, and greater value through competition.

Government fulfills its ambitions through compulsion, which reduces choice. Sometimes compulsion is necessary – you can’t fund national defense by passing around a collection plate. When government exceeds the minimal functions necessary to provide stability and security, and begins interfering in the economy for the benefit of certain constituencies, by definition it reduces the overall choices available to its citizens. It doesn’t matter if the government’s intentions are noble – every law it passes to redistribute wealth inevitably reduces wealth, because it reduces choice.

In an economy dominated by the government, the ruling class fulfills its ambitions by serving faithful constituencies at the expense of others. It tries to address its failures by increasing control, which reduces wealth even further, in a downward spiral. It’s not in the nature of government to abandon failed programs, because if government was intelligent and morally superior enough to assert control over a situation in the first place, it will not see the logic in surrendering that control to inferior free-willed citizens. Instead, it will redouble its efforts.

In this environment, the citizens can best fulfill their ambitions by joining favored constituencies if possible, and becoming adept at petitioning the government for greater benefits. This tends to be more successful than working hard, as there is little competition in a state-run economy for the most skilled and productive workers. There are always exceptions – people who give 100% effort out of compassion, personal drive, or a religious calling. There will be politicians who are truly selfless, and sincerely wish to act as wise stewards for the resources of society. Exceptional people cannot be relied upon to power a society of millions. In the long run, and projected over a vast population, the incentives of a government-dominated economy produce stagnation, and strife between warring groups of citizens, who can only gain more benefits at each others’ expense.

That is why Big Government never works. It can’t address conflicting priorities efficiently. The ambitions of its masters are best served by catering to the demands of small, energetic groups, or big corporations who wish to compromise its rightful duty to ensure free trade. Its citizens are not rewarded for exceptional effort, or taking great risks. Worst of all, every single action it takes destroys the very wealth needed to improve the lives of its citizens. Big Government pounds on every problem with a hammer that crumbles in its hands.

ThoughtRogue:  Gee, some lessons in economics that even a Congressman might be able to understand.  Maybe.  Perhaps not.. never mind.

Yet Another Washington Flop in the Making

Obamacare will be one of many federal failures.

By Deroy Murdock, National Review Online

Don't Tread on US!

As the health-care reform debate roars on, Uncle Sam resembles a restless college senior who is flunking economics, finance, and management. Despite a report card full of Fs, he suddenly announces: “I want to go to medical school!”

Similarly, Pres. Barack Obama stood before a joint session of Congress Wednesday night and re-embraced a government option for health insurance. As he explained, “Sometimes government has to step in to help deliver” on the promise that “hard work and responsibility should be rewarded by some measure of security and fair play.”

Alas, too often when Washington steps in, failing grades follow.

• Medicare, the Great Society’s shining jewel, is a battered gem. Its hospitals program already bleeds ruby-red ink. “Medicare Part A again will spend more in benefits than it receives in revenues” this fiscal year, observes Heritage Foundation analyst Bob Moffitt. Its Trust Fund is an accounting fiction, but even that fantasy disappears in eight years, with depletion in 2017. Even worse, Heritage’s Brian Riedl calculates that between 2009 and 2083 Medicare’s budget will zoom from 3.1 percent to 14.8 percent of Gross Domestic Product. Its unfunded liabilities (promises backed by campaign balloons instead of cash) equal $36.3 trillion.
• Social Security, the New Deal’s cornerstone, is as cutting edge as a 78 RPM record. In 2016, barely six years away, it will begin paying more in pension checks than it collects in payroll taxes. Congress then will be unable to use Social Security’s surplus like a ShamWow to absorb red ink. Social Security’s unfunded obligations equal $17.5 trillion — again not financed by anything but congressional speeches.
• Fannie Mae and Freddie Mac: These two government options in the home-mortgage arena are widely considered the twin jet engines that flew the economy into a hillside. These were supposed to be money-making, quasi-private companies, with no federal involvement beyond an implicit guarantee that government would cover their losses. Emboldened by this cozy federal safety net, these enterprises embarked upon financial acrobatics they otherwise might have avoided. Rather than generate profits between 2009 and 2019, the Congressional Budget Office estimates, Fannie and Freddie will cost taxpayers $389 billion.
• The Hope for Homeowners program began last October 1. Congress gave it a hefty $300 billion to help some 400,000 homeowners avoid foreclosure. According to an August 10 Newsday editorial, “It has produced exactly one refinanced loan.” One down, 399,999 to go.
• “UPS and FedEx are doing just fine, right?” Obama asked in August. “It’s the Post Office that’s always having problems.” Yes, indeed. Its two-year fiscal deficit approaches $8 billion. It has pried some 60,000 mailboxes off of America’s streets, the Lexington Institute reports. It also is weighing the cancellation of Saturday services. Even as e-mail, digitally attached documents, and online banking decrease demand for first-class snail mail, the Post Office keeps hiking the cost of stamps. What sort of business actually raises prices while customers walk away?
• The Internal Revenue Code is like John Donne’s poetry: It means something different to everyone. Perhaps flummoxed by its 67,000 pages, even IRS advisers offer conflicting answers to identical questions. But today’s U.S. Tax Code will be a triumph of window-like clarity compared with the U.S. Health Code that Obamacare would trigger. Just wait until every medical lobby — from the American Stethoscope Council to the National Tongue Depressor League — hikes up Capitol Hill to demand exemptions, loopholes, and subsidies.
• Although Washington already owns 54 percent of the square mileage west of the Rockies, it obsessively purchases new acreage. More than on private property, land-use restrictions on federal soil often prevent thinning of foliage. Flames frequently follow.

“Most western wildfires burn federal land,” William Welch wrote in September 9’s USA Today. To date this year, 123,554 private acres burned in California, versus 271,000 federal acres.

Rather than inaugurate a frivolous, bottomless government option for health care, Washington should launch a “private option” for nearly every federal activity outside the Pentagon.

TR:  A little ‘palate cleanser’ here to start your week off on the right note.  Puts you in the feel-good “Wayback Machine” doesn’t it?

ThoughtRogue:  Can’t you just wait for Obamacare to be implemented?!  Think DMV crossed with Amtrak.

Obamacare Likely to Emulate Post Office

By Lowell Ponte

Undocumented Joker

“UPS and FedEx are doin’ just fine,” President Barack Obama told his carefully selected audience of supporters at Tuesday’s mock town hall meeting in New Hampshire.

“It’s the post office that’s always having problems.”

Obama intended his comparison to show that a government entity can compete with private companies without destroying them, just as he claims a government health insurance company could provide healthy competition to improve private insurers.

Republicans for months rightly said that the federal government would run our healthcare system “with the compassion of the IRS and . . . the efficiency of the post office. . . .”

Echoing this on Tuesday, Obama seemed to agree that his Democratic health scheme will indeed be like the post office.

Obama spoke only days after the United States Postal Service (USPS) acknowledged that it will end 2009 $7 billion in the red. USPS threatened to close 700 local post offices and curtail Saturday mail deliveries if Congress is slow to boost its taxpayer subsidy.

In the early days of our young republic, jobs as postmasters, clerks, and letter carriers were among the “spoils” political parties doled out to reward its partisan political operatives.

Today the U.S. Postal Service is America’s second- or third-largest employer, providing 786,000 high-paying jobs handed out preferentially to military veterans and especially to politically-favored minorities. Letter-carrier union members are a ready source of cash and campaign shock troops for the Democratic Party.

Liberal Oregon now holds its elections entirely by mail. This effectively gives members of the letter carrier union the power to choose which ballots arrive to be counted. (In most other states, mailed absentee ballots now comprise more than 25 percent of those cast in typical elections.)

Likewise, Obamacare will give politically appointed bureaucrats the power to decide who does or does not get costly life-saving medical treatments.

From its beginning, the deeper purpose of the Postal Service has always been to advance federal government power — controlling development by where it used eminent domain to build “post roads,” monitoring and reading citizen communications, and sending federal government eyes and ears daily to every town and home.

The Postal Service briefly grabbed control of the first public telegraph service in America and even schemed — until politically slapped down — to charge citizens a stamp-like fee for every e-mail they sent in competition with the mails.

E-mail has now replaced nearly a quarter of what used to be mail revenue for USPS. Days before Obama’s comparison, even New York Times business columnist Joe Nocera on Aug. 8 joined the late libertarian saint Lysander Spooner in arguing that government control of the mails should be abolished.

“[A]ll over Europe,” blogged Nocera on Aug. 7, “postal services are being either partially or wholly privatized.” But Obama continues to swim dogmatically against the anti-socialist tide of history.

Read the rest of this entry »

TR:  Don’t you just love the smell of Totalitarianism when you awake each morning?  One of Faux-bama’s biggest lies is “Transparency”.  But as our compatriot Lynda has pointed out, it sure makes it a lot easier to marvel at the Usurper’s New Clothes.  This Marxist tyrant must be stopped in his tracks.  Wake Up, America!!

Obama’s Tone-Deaf Health Campaign

By Dorothy Rabinowitz, WSJ Opinion

Hopenchange - Taking It with a Smile.

It didn’t take chaotic town-hall meetings, raging demonstrators and consequent brooding in various sectors of the media to bring home the truth that the campaign for a health-care bill is, to put it mildly, not going awfully well. It’s not hard now to envision the state of this crusade with just a month or two more of diligent management by the Obama team—think train wreck. It may one day be otherwise in the more perfect world of universal coverage, but for now disabilities like the tone deafness that afflicts this administration from the top down are uninsurable.

Consider former ABC reporter Linda Douglass—now the president’s communications director for health reform—who set about unmasking all the forces out there “always trying to scare people when you try to bring them health insurance reform.” People, she charged, are taking sentences out of context and otherwise working to present a misleading picture of the president’s proposals. One of her key solutions to this problem—her justly famed message encouraging citizens to contact the office at flag@whitehouse.gov if they got an email or other information about health reform “that seems fishy”—set off a riotous flow of online responses. (The word “fishy,” with its police detective tone, would have done the trick all by itself.)

These commentaries, packed with allusions to the secret police, the East German Stasi and Orwell, were mostly furious. Others quite simply hilarious. Ms. Douglass, who now has, in her public appearances, the air of a person consigned to service in a holy order, was not amused.

Neither has she seemed to entertain any second thoughts about the tenor of a message enlisting the public in a program reeking of a White House effort to set Americans against one another—the good Americans protecting the president’s health-care program from the bad Americans fighting it and undermining truth and goodness.

She intended no such outcome, doubtless. That this former journalist, now a communications director, failed to notice anything amiss in the details of that communiqué is a bit odd but not altogether surprising.

Crusades are busy endeavors, the enlistees in this one, like those in every undertaking of this White House, concerned with just one message. Which is that the Obama administration is in possession of vital answers to ills and inequities that have long afflicted American society (whether Americans know it or not), and that those opposed to those answers and that vision are cynics, or operatives of the powerful vested interests responsible for the plight Americans find themselves in (whether they know it or not), or political enemies bent on destroying the Obama administration.

It shouldn’t have been surprising, either, that the tone of much of the commentary on the town-hall protests was what it was. There was Mark Halperin for one, senior political editor for Time, bouncing off his chair, Sunday, in agitation over all the media coverage of this rowdiness—“a horrible breakdown of our political culture, our media culture” and so “bad for America,” as he told CNN’s Howard Kurtz. “I’m embarrassed about what’s going on, as an American.” The disruptions and coverage thereof distorted serious discussion, he explained. Mark Shields said much the same on Friday’s PBS NewsHour, if with less excitation, pointing out that these events were “not good for the democratic process,” and were a breakdown of civil debate.

There was no such hand-wringing over the decline of civil debate, during, say, election 2004, when cadres of organized demonstrators carrying swastika-adorned pictures of George W. Bush routinely swarmed about, and packed rallies. There was also that other “breakdown of our media culture,” that will dwarf all else as a cause for embarrassment, the town-hall coverage included, for the foreseeable future. That would be, of course, the undisguised worshipful reporting of the candidacy of Barack Obama.

That treatment, or rather its memory—like the adulation of his great mass of voters—has had its effect on this president, and not all to the good. The election over, the warming glow of those armies of supporters gone, his capacity to tolerate criticism and dissent from his policies grows thinner apace. His lectures, explaining his health-care proposals, and why they’ll be good for everybody, are clearly not going down well with his national audience.

This would have to do with the fact that the real Barack Obama—product of the academic left, social reformer with a program, is now before that audience, and what they hear in this lecture about one of the central concerns in their lives—his message freighted with generalities—they are not prepared to buy. They are not prepared to believe that our first most important concern now is health-care reform or all will go under.

The president has a problem. For, despite a great election victory, Mr. Obama, it becomes ever clearer, knows little about Americans. He knows the crowds—he is at home with those. He is a stranger to the country’s heart and character.

He seems unable to grasp what runs counter to its nature. That Americans don’t take well, for instance, to bullying, especially of the moralizing kind, implicit in those speeches on health care for everybody. Neither do they wish to be taken where they don’t know they want to go and being told it’s good for them.

Who would have believed that this politician celebrated, above all, for his eloquence and capacity to connect with voters would end up as president proving so profoundly tone deaf? A great many people is the answer—the same who listened to those speeches of his during the campaign, searching for their meaning.

It took this battle over health care to reveal the bloom coming off this rose, but that was coming. It began with the spectacle of the president, impelled to go abroad to apologize for his nation—repeatedly. It is not, in the end, the demonstrators in those town-hall meetings or the agitations of his political enemies that Mr. Obama should fear. It is the judgment of those Americans who have been sitting quietly in their homes, listening to him.

How Much is That Clunker in the Window?

The parable of the crushed clunker.

ThoughtRogue:  Jonah may have beat me to illustrating the “Broken Window Fallacy” lesson here, but man, did he nail this one on the head.  There’s so much nonsense and ignorance contained in the “wildly successful” Cash for Clunkers “stimulus” program that only a completely ignorant, out-of-touch, out-of-control arrogant Congress could trumpet this boondoggle as a “success” (and add 2 $Billion more as did our RINO Rep. Reichert).  Folks, on net, it is DESTROYING your wealth.  The Cash from Kleptocrats program creates a plethora of new broken windows.  The grand point of this famous economic parable, which eviscerates Obanomics, is that without the hoodlum breaking his window, the baker will buy whatever goods he was going to buy in the first place, AND he has an intact window (retains more wealth!).  But, of course, in C4C, the genius kicker is that the baker’s other out-dated windows (which still have value in a free market) are also broken for his added convenience – so he can replace them with more efficient “green” windows.

By Jonah Goldberg, National Review

Gilded Excrement Award Winner: Cash for Clunkers!

Ce qu’on voit et ce qu’on ne voit pas.

That may exhaust my French-phrase quota for the year, but it’s worth it. The saying is the title of an essay by 19th-century French economist Frédéric Bastiat and means “that which is seen, and that which is not seen.”

Bastiat’s essay is most famous for the “parable of the broken window,” in which a young boy shatters a shopkeeper’s window and, after some initial outrage, the villagers conclude that the rascal helped the local economy. Why?

Because if no one broke windows, window makers would be out of business, and if window makers were out of business, they wouldn’t buy any more bread or shoes, hurting the bakers and cobblers. So the six francs the shopkeeper must spend for a new window is really a boon to the community.

The problem with this argument can be gleaned from the title of Bastiat’s essay. By counting the money the shopkeeper spends to replace a perfectly good window (that which is seen), we ignore the money he might have spent on something else (that which is unseen). The shopkeeper might have instead dropped six francs on new shoes, a book, or a bonus for his assistant. Those who celebrate the broken window as a generator of growth take “no account of that which is not seen.”

Sorry for the long digression, but the parable of the broken window is worth keeping in mind, or perhaps even worth updating to the parable of the crushed clunker.

This parable is more convoluted, but the upshot is that Uncle Sam pays people to destroy their own cars as long as they use the money to buy a new, more expensive car.

As you’ve no doubt heard, the “cash for clunkers” program gives buyers up to $4,500 of taxpayer money toward the purchase of a new car if they trade in their old cars for vehicles with better gas mileage. The old cars, still roadworthy, are then destroyed just like the shopkeeper’s window.

The thinking behind the program is that the car companies need a boost, Michigan needs a boost, the environment needs a boost (through lower emissions), and Americans need help too.

Unsaid, but just as relevant, is that the authors of the government’s mammoth stimulus plan need some proof that something is being stimulated.

The program’s $1 billion funding evaporated in days rather than months as consumers, most of whom had been waiting to trade in their clunkers anyway, lined up for free cash. Washington is now agog with its successful effort to give out free money.

That Washington is shocked by the news that Americans like getting free money shows how thick the Beltway bubble really is.

Like the drunk who only looks for his car keys where the light is good, Washington can only see the economic activity it has created, not the activity it has destroyed.

For starters, who says the smartest thing for people with working cars is to buy new ones? Personal debt is supposed to be a problem, so why not look at this as bribing consumers into taking out car loans they don’t need? Even with the $4,500 subsidy, not all of these customers are going to be paying cash for their new cars. So they’ll be swapping serviceable-but-paid-for cars for nicer cars that are owned by banks.

Besides, maybe some people would be smarter to buy a savings bond or max out their kid’s college fund or — here’s a crazy thought — buy health insurance. But instead they’ve been seduced into spending the equivalent of their six francs on a car they don’t really need.

But, you might say, some buyers surely do need a new car. True. But if they needed a new car, they’d get one anyway, eventually. Indeed, they might already have gotten it, but rationally opted to wait for the program to kick in.

Or maybe they’d have needed to delay the purchase until next year, or buy a cheaper car, possibly even a used car, which will now become more difficult for poor people to find because we are taking all these cheap cars off the market.

But at least under these scenarios, they’d be spending their own money.

Under the government’s program, tax dollars are being diverted to people with cheap cars so they can buy expensive ones. That’s just really inefficient wealth distribution, not wealth creation. But government can see it, and that’s all that counts.

TR:  Omen?  Grand Metaphor?  Prophecy?

ThoughtRogue:  Folks, take a look at the unbelievably sobering graphs below (courtesy of The Wall Street Journal).  Note the following: (1) Obama’s deficit is larger than Bush’s largest by a factor of FOUR – and the Usurper still attempts to shift the blame to others, especially Bush. (2) For the first time EVER, the federal deficit exceeds $1,000,000,000,000.00 (that’s 1 $Trillion in overspending) – and the fiscal year is far from complete. (3) The federal “revenues” have significantly SHRUNK in comparison to last year’s – that’s because business profits are disappearing along with tens of millions of tax-paying jobs. (4) The insatiable federal spending, bars on the right, are displayed on the same scale – and include all the bailout schemes to date.

WARNING:  These audacious, skyrocketing federal deficits do not yet include: (1) The “Cap and Trade” massive tax scheme (largest in American history if it passes the Senate). (2) The Socialized Medicine extravaganza – destroying our superior private health care system, in favor of the rationed ObamaCare “Universal” health care scheme. (3) “Immigration Reform” – aka The Mother of all Amnesty schemes.  And now, Congress is even contemplating another colossal “stimulus” pork-laden spending scheme.

Also, likely to compound this Obama Nirvana, (1) another stock market crash in the next few months. (2) a crisis in commercial real estate. (3) a continually collapsing value of our Dollar, and (4) a debilitating rate of inflation when our economy finally does become able to recover.

Ah, the wonders of Hopenchange!!  Perhaps we should have elected someone who is actually Constitutionally eligible (not to mention competent) for POTUS instead?

Economic Nirvana

This Time, It’s for Real.

By Jerry Bowyer, NRO Financial

"Official" Unemployment Rate

ThoughtRogue: For a real eye-opener, see the real unemployment statistics at ShadowStats.com.  The numbers in the chart above reflect only the amount of applications for Unemployment benefits.  The actual rate of all people out of work is over 20% – and continues to rise!

BuzzCharts spent much of 2003, 2004, and 2005 rebutting the media mantra that the U.S. was experiencing a “jobless recovery.” While unemployment rates bobbed between the upper end of 4 percent and the lower end of 6 percent, the press sang dirges about the “worst job market since Herbert Hoover.” So why is it that nobody seems to mention a “jobless recovery” anymore, especially with the unemployment rate marching toward 10 percent?

The data now confirm that we really are in a jobless recovery. Unemployment just hit 9.5 percent, with few signs of a momentum reversal. And we just passed a historic milestone: Our jobless rate has eclipsed that of France. And why not? American labor policy is rapidly mutating toward the Gallic model of wage floors, heavy unionization, and central planning, while French policy under Sarkozy is inching toward a supply-side formula for growth.

The interesting thing about this jobless recovery is that chainsaw personnel policy isn’t to blame. We’re not firing many people: Terminations have fallen to a fairly moderate level, and monthly layoffs have plunged in the last few months. Initial jobless claims also are falling. The problem is that we’re not hiring many people, either. It’s the Euro-model of non-dynamism — jobs can be neither created nor destroyed.

Meanwhile, we’re starting to hear calls for a second stimulus program. Let’s get the math right first. Under Obama, we just had the second stimulus program, since the first was launched under Bush last year. So we’re now discussing a third stimulus effort, with administration officials sounding the alarm: “The patient’s blood pressure is dropping. We need more leeches, stat!”

Truth is, we’re not mired despite the stimulus plan, but because of it. Entrepreneurs are not mindless beasts who simply expand operations when the government rings the fiscal dinner bell. They know today’s spending explosion will be financed by future tax increases. They know that every government check handed to a social worker, AmeriCorps “volunteer,” or United Auto Worker will be paid for, eventually, by the entrepreneurial and investor class — and they are planning accordingly.

They also know that their unemployment-compensation taxes will rise every time a stimulus plan extends unemployment benefits. Unemployment “comp” is run kind of like an insurance program: Each time one of your ex-employees gets a check, your rates go up. Who other than a community organizer, lobbyist, or solar-panel salesman would hire in an environment like this?

Health care figures in, too. If I’m going to be forced to offer an Obama-designed, gold-plated health-insurance plan to my employees (or face a penalty for each employee not so benefited), every person I hire is a potential long-term health-care liability. This already has begun with the changes to COBRA (a government health-care provision for laid-off employees) in Stimulus II. Wait until Obamacare arrives.

Want Euronomics? Get ready for perpetually high, Euro-style unemployment rates. Want low unemployment rates and robust American-style growth? Bring back the proven model of small government, spending restraint, and low tax rates.