The alchemist (II)
Obama believes (like all neo-socialists ) that bigger budgets will bring growth and create new jobs. But this is a fallacy.
Imagine that in the middle of World War II Winston Churchill had presented a comprehensive tax reform to the British public and used all his power to pass it in Parliament. The people would have been outraged that the prime minister had time for such a marginal issue during such a fateful war.
Granted, the 2008 world economic crisis wasn't as fateful as the war against Hitler, but it was fateful enough. So the question is, where did U.S. President Barack Obama find time to deal with health reform during such a critical world crisis?
He found time because he is an ideologist who came to power with the intention of changing fundamental social and economic values. Obama does not believe in a capitalistic-competitive market economy but wants to move the United States over to a social-democratic economy. Instead of a state with a small budget, low taxes and freedom of business activity, he wants a state with a huge budget, large deficit, high taxes and stifling regulation, to the verge of nationalization. He wants an administration involved in details, colliding headlong with free enterprise.
Let there be no misunderstanding. Health reform had to be done, but not in a crisis year. It should only have been carried out after the economy had recovered and was on its way to growth and decreased unemployment.
Obama came to power with defined plans that did not take into consideration the economy's objective situation. Had he been elected president in 2007, a year of abundance and growth, he would have wanted to increase budgets and redistribute income. And this is exactly what he said when he was elected during a period of recession and unemployment after the great crisis of 2008.
When he ran for the presidency, he promised to restore the color to Americans' cheeks, put the economy on a course of rapid growth and reduce unemployment. He promised that his $800 billion stimulus plan would create 3.5 million new jobs. But the exact opposite happened. The enormous spending led to an enormous budget deficit of some $1.4 trillion (10 percent of the U.S. gross domestic product ), which led to a plummeting dollar, inflation fears, expectations of tax increases and general uncertainty. Add to this the new regulations that harm the financial sector's profitability and you'll understand why business in America has entered a deep bunker, scaling back activity and firing workers.
Obama believes (like all neo-socialists ) that bigger budgets will bring growth and create new jobs. But this is a fallacy. Government doesn't create jobs. Government must reduce spending, lower taxes and streamline bureaucracy to leave more resources for the private sector so it will build another factory and another business - increasing productive employment.
Thus, the moment Obama increased government spending the economy encountered heavy deficits and Americans started feeling insecure. Unemployment soared to 9.6 percent, exceeding 10 percent in the South. Millions of Americans have lost their homes, whose values plunged vis-a-vis the mortgages taken out. No wonder the Democrats suffered an overwhelming defeat in the midterm elections.
The United States grew and became a power due to the capitalist system, which is the basis for realizing the American dream. Obama came and changed direction. He was sure the Americans would applaud him. But the midterm elections are saying to him: Stop, think again, we don't want to become a social-democratic state. We don't want a big, all-knowing government. We believe in a small government that leaves the main wealth in the public's hands.
On the day he was inaugurated, January 20, 2009, I wrote here that Obama's economic way was wrong and he was bound to throw the U.S. economy into another crisis. I also wrote he thinks he's an alchemist who can heal the economy's ills with no cutbacks or pain, but this is impossible.
The problem is that Obama is still certain he has found the philosopher's stone and that he can turn lead into gold.