New regulation not the answer

The economy is collapsing and despite Obama’s claims to the contrary, the government cannot get us out of this. The problem is that government spending does not add any real value to the economy. All the government can do is to “redistribute the wealth.” And redistribution does nothing to expand or create new wealth… That is why communism has failed everywhere it has been tried.

Only the private sector creates new wealth. And new wealth is the only way we can increase jobs and reduce our debt. It is very simple. The government is already spending more than it takes in, so adding more government jobs to reduce unemployment can only be accomplished by increasing the debt or raising taxes. Taking money from “the rich,” or anyone else, to provide jobs to the unemployed does not expand the economy. What these policies do accomplish is to take more money out of the real wealth producing part of our economy – the private sector.

President Obama is always quick to blame Wall Street, insurance companies, big oil companies, banks or any other private sector business for the problems we face. Don’t get me wrong. I am not a fan of large bureaucratic businesses any more than I am a fan of big government or big unions. But to always blame businesses for our economic woes shows either a disdain for free market capitalism or a woefully ignorant understanding of how it works.

I am a firm believer that a diversified economy of small competitive businesses operating in a free, loosely regulated society will be much more effective at reducing risk and growing our economy. Competitive pressure will weed out weak or overpriced businesses. And making sure consumers have a wide variety of choices will do more than any government program to uncover dishonest and disreputable businesses.

My progressive friends, on the other hand, feel we need more government regulation to eliminate fraud and abuse by greedy private sector businesses. But we have had regulation and it has failed miserably. If regulation was the answer we could have avoided Bernie Madoff, Enron and a few other notable problems. Not all business people are dishonest, greedy or crooked any more than all government bureaucrats are incompetent obstructionists. But all organizations become self-serving at some point, losing site of their original purpose or expanding into areas that they do not truly understand. When businesses do this they usually stumble and fail. When government fails in its mission, there are no consequences.

In the latest example, politicians said we needed to pour massive amounts of money into failed banks and companies like General Motors in order to avoid a complete meltdown of the economy. What would have happened if the businesses that created this mess had actually been forced to follow the law and file for bankruptcy? They would have gone into court and negotiated a plan with creditors, unions and owners to rebuild those companies or sell their assets to someone who could run them more effectively. It is called Chapter 11 bankruptcy and the law was written years ago exactly for this purpose. But today politicians and government bureaucrats don’t believe they can trust these time-tested systems to actually work, so we pursue a policy that further endangers our economic independence.

And where are we today? Unemployment is still over 10 percent so the President held a jobs summit. For all of the talk the economy continues to stumble. Some politicians are calling for a second “stimulus.” Despite its shortcomings and failures the private sector has provided us with the most resilient and productive economy in the world. What we need to do is work to release the power of that economy. Overtaxing and over regulating it is a formula for disaster that will only insure we join the rest of the failed economies of the world.

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