28 Jan 2010

Scott Drum on the Liberal Approach to Economics and Obama’s Spending Freeze

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Classmate Scott Drum (a businessman) tries to explain reality to the liberals on our class email list:

Democrats have always had teenager’s approach to household economics. Someone else provides all of the money, and while they may have a vague understanding of how that happens, their primary focus is sparring over how it gets distributed and spent. These issues should be decided by who has the best ideas and who can build the most compelling and emotional stories — but Dad, EVERYONE has a car. It’s not FAIR! Think of all the good things I could do with it! Little thought is given to how it affects Dad’s ability or willingness to bring in more money or what might happen if he were to get sick or lose his job. Because, well, that’s HIS responsibility to us, isn’t it? And if he doesn’t come through, we’ll just scream “I hate you” and tell everyone how mean he is.

Except that in the real world Dad’s interest and ability to keep funding the family is affected by how he’s treated and how the kids spend his money. You simply can’t go on spending sprees, pile up debt, waste money on unproductive pork projects, vilify and punish the very people you’re depending on to produce the money you’re itching to spend. Economic growth and government growth are simply inversely correlated. I know that’s inconvenient, but it’s reality, and eventually people aren’t going to keep lending you more money when you ignore that. The other economic reality is that increasing taxation inhibits growth as well, so the circle of spending and taxing is counterproductive as well. The only way you succeed is with high levels of growth – which requires making it attractive to earn and invest and not spending money on satisfying, but unproductive things. Screaming at Dad, telling him he’s not being fair, and making life difficult for him might make you feel better, but it’s not going to get you where you need to go.

and, mocking the Obama federal spending freeze:

When I opened up my Visa statement, I discovered that my wife had charged a record amount on it last month. “Not to worry,” she told me. “I promise not to spend any more than I did last month – except of course what I have to spend on clothing, restaurants, groceries, home improvements, shoes, things for the kids and travel. My spending on cosmetics and aspirin will be absolutely frozen. Starting a year from now.”

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