Friday, December 11, 2009

How to Not Create Jobs

The government has undertaken programs to keep people in homes and cars that they cannot afford, fictitiously propping up GDP numbers. It has bailed out failing enterprises; abrogated contractual obligations; created make-work, politically oriented, and naturally often fraudulent and wasteful public-works projects; and increased the money supply at an unprecedented rate, easing the Federal Reserve–controlled interest rate to a ridiculous 0 percent. Our representatives have done all of this while vastly expanding a national debt that was already egregious.

All of these policies prevent any sort of recovery. They are designed to stop markets from reflecting reality, and to continue the distortions already created by government tinkering. History seems to be repeating itself, with Obama following Hoover and FDR's favorite anti-Depression prescriptions.

There are major costs to these programs. Government has (and continues to) prolong the downturn by effectively jamming the gears of the markets. It has also created a major moral hazard by bailing out failed companies, hurting those successful companies who have been forced to subsidize the failed ones, and preventing entrepreneurs from putting the assets (now being tied up in unprofitable businesses) to better use.

- From Barack Obama Ensures a Long Depression by Benjamin Weingarten

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