It is now 2 pm Friday, and the Dow Jones Industrial Average is down another 100 points, to under 6,500. (Until fairly recently this would have been a problem mainly for rich guys; nowadays, however, anyone with a 401K or other sort of retirement package depends vitally on the stock market.) Since the inauguration of our new president, it has fallen more than 20%, which qualifies as a brand new bear market of his very own. President Obama has said that the economy and the success or failure of economic policy cannot be judged by the fits and starts of the markets. And it is true that on a day-to-day basis, stock traders will often behave like a bunch of elderly spinsters in an old house full of bats.
However, by now Obama has gotten his stimulus bill passed, and has had ample opportunity to lay out his program, and the markets have signaled grave reservations by tanking without hesitation or letup. What we have seen since his inauguration is anything but the gyrations caused by uncertainty, but rather, a thundering vote of no confidence.
It is obvious that the markets have gotten a good look at Obama’s road map and do not like the direction it is taking us. The stimulus is nearly $800 billion thrown at everything and nothing, sure only to enlarge government in ways and areas that will plague us far into the future. The money thrown at the banking industry has not produced discernible results and there has been no policy laid out to solve those problems. We now have a trillion and a half dollar deficit, and the president promises additional enormous expenditures to address climate change — at a time when there is less consensus than ever that it is caused by man-made CO2 — and government takeover of health care, a project dubious in every area except the sure increase in expense and downgrade in quality. He promises to pay for this by increasing taxes on business and the wealthy as if that money were sitting idle like the hoard in Scrooge McDuck’s vault. In fact, it represents the resources that fuel economic activity and growth, fund employment old and new, and seed new and expanding wealth.
The notion that government, in hard times, can wrest additional trillions of dollars from the private sector on an ongoing basis rests on the faith that government can put them to better, wiser, and more efficient use than the private enterprises and people who generated them in the first place. Who can believe such a thing? What evidence supports such delusion?
This recession has been compared to the Great Depression of the Thirties, come to think of it, one which was also deepened and lengthened by destructive government meddling. In fact, it does not appear (sparing what additional medicaments Obama may apply) to be as serious as the downturn of the early ‘80s, which turned around into a nearly uninterrupted boom for nearly two decades. What was the main economic stimulus the federal government, under Reagan, applied to that economy?