So says Mike Whitney, a “well respected freelance writer living in Washington state, interested in politics and economics from a libertarian perspective.”
After discussing the housing bubble, capital consumption, and much else, Whitney concludes that prosperity will be restored only if we all start using things up: “America’s consumer culture is in full-retreat. The slowdown is here. It is now. We are likely to see the sharpest decline in consumer spending in US history. Bush’s $150 billion will be too little too late.”
More: “America’s place in the world has been guaranteed not by what it produces but by what it consumes. The American consumer has been the locomotive that drives the global economy. Now that engine has been derailed by the reckless monetary policies of the Fed and by shortsighted financial innovation. When equity bubbles collapse; everybody pays. Demand for goods and services diminishes, unemployment soars, banks fold, and the economy stalls. That’s when governments have to step in and provide programs and resources that keep people working and sustain business activity. Otherwise there will be anarchy. Middle class people are ill-suited for life under a freeway overpass. They need a helping hand from government. Big government. Good-bye, Reagan. Hello, F.D.R.”
“The Bush stimulus plan is a drop in the bucket. It’ll take much, much more. And, we’re not holding our breath for a New Deal from George Walker Bush.”
(Thanks to Floy Lilley.)
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If he’s a libertarian, I’d hate to see what a socialist is saying (of course, he does live in Washington state).
I love these types who can’t think of anything to do accept create more government. You want to “create” more capital and less anarchy? Cutting a trillion dollars out of the Federal budget would be a good start.
It is saddening to read writing such as Mr. Whitney’s that contains so much economic nonsense. But what is even more disheartening is that Mr. Whitney’s analysis and policy prescriptions are just what the large majority of the economics profession is offering.
Unfortunately for economic science, former President Nixon was close to the truth when he stated “We are all Keynesians now.â€
It is true — and totally laughable — that most economists believe that (politics in the process aside) they could create a perfect “stimulus” package that isn’t that much different from what will end up being passed. They will bicker amongst each other that “I would have done a larger rebate” or “I would have added more food stamps” or “I would have extended unemployment benefits longer”… but it is all the same crap… and it is professed by virtually all so-called economists.
What is sad about Mr. Whiteny’s analysis is his utter ignorance of economics, expressed with evident smugness: “What we need is government. Big government.”
Of course, economics is the study of the implications of scarcity–of the fact that we have unending needs that can be fullfilled only through production. Consumption doesn’t yield prosperity, nor does it somehow mysteriously “grease the wheels of commerce”, nor does it “boost” production activity. Consumption simply uses up a small portion–the “final” product–of that which has been produced.
Says Law reveals that production inexorably creates it own demand. And as George Reisman has carefully explained in his book “Capitialism”, the largest portion of productive activity is devoted to turning out “producer goods”–stuff produced for subsequent sale. Consider the market value of a can of beans displayed on a super- market shelf. Compare this value with the sum of the value of all the pro-rated productive processes necessary to producing the final product–from extracting mineral ore and smelting to producing steel, and farm machinery, making fuel and fertilizer employed in farming, trucks to haul them, and staff to account for them.
What we need is more production, which requires more saving and fewer legal hurdles–taxes, regulations– to productive activity. As always, the situation calls for smaller government. Much….much…. smaller.
And much less smugness from nihilists who are contemptuous of knowlege.
This just leads me to ask a question…
How are we losing this battle?
Economics is so simple, logical, moral and ethical. How can the people out there still believe that the Federal Government must fix the “problem” by once again ‘robbing Peter to pay Peter?’
It’s truths are evident, but I wouldn’t say simple. They require a good deal of deductive reasoning, and conceptual integration, as well as sustained thinking. It does not help that we have all sorts of spin doctors (mostly Keynesian) peddling their snakeoil.
Reading the rest of the article there you don’t really get the hint that he would come to such a shocking conclusion. After several paragraphs about how the government has driven us into such a mess, the answer is… (hands… anyone?) Sad that this passes for a logical argument (over and over). There oughta be a law
Actually, there is such law. It’s the law of diminishing returns.
In the former Soviet Union, the government was in charge of solving every problem. We all know what that lead to.
Let’s hope no country has to go through that again in order to learn that government should be small and limited.
You know, if you think about it, he’s right. We do need bigger government. We need much bigger government. It needs to be so big that it can’t sustain itself and collapses in upon itself. Once that happens, we can get to work on rebuilding our country. I for one hope that Hillary wins and tries to become the next FDR. I trust that she can do the job of destroying a free-market economy better than most.
What so few bring up:
All these subsidies are to be paid for with what?
I sent him an email basically questioning why he would want another FDR. He sent the following response:
“Hi Erik, we agree about cheap credit and the Fed But I do believe that government has a role when people are down-and-out thanks mike I am voting for ron paul though ”
He’s voting for Ron Paul after an article saying we need another FDR? That might be the most inconsistent action he could take. I wonder if the guy is seeing a psychiatrist.
Maybe another FDR wouldn’t be a terrible idea though. If we got a couple of those then the whole system might break down in 10-15 years instead of 40-50 and then we could start over. I seriously doubt we’re going to fix what we have.
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