Friday, July 31, 2009

Negative Economic Growth is the Right Direction?

Everyone in the media seems thrilled at today's news that the American economy was only one percent negative in the Second Quarter (April, May & June).

ABC News quotes Obama as declaring that "the economy is heading in the right direction."

If negative growth is the right direction, then he is a bigger enemy of capitalism than I had feared.

Can we put those visions of sugar plum fairies aside for a moment?

Sure, there is no one who would rather we wallow in recession, or worse, longer than necessary. But we have to be realistic. The old saw that "saying so doesn't make it so" applies here.

The president and his cronies want you to think that we've turned the corner. He desperately needs some good news to turn his poll numbers which I suspect are the only numbers he really cares about anyway.

First of all, we have to trust the government to give us good data on Gross Domestic Product (GDP). That's difficult to do in the short run. In fact, considering that the government has revised older economic data to make the recession look worse while Bush was president, I suspect that the statistics are being massaged for political effect.

What cannot be massaged is the impact on people's lives. There are millions more out of work today than on January 20, and even Obama admits that more people will lose their jobs before large scale hirings begin.

As far as the stock market goes, the Dow is on the upside in large measure because on June 8 Citigroup and Government Motors (GM) were kicked off and replaced with Travelers and Cisco Systems. That's a handy trick I'm going to remember the next time I'm having a bad golf outing. I'll just replace some of the bad hole numbers with better ones.

Yes, we are in a rally but it seems to be one of "hope" rather than substance. With all the new deficit spending, can our economy rebound? And if we nationalize health care, will it ever rebound?

I talked to a guy the other day whose new stockbroker was telling him how wonderful things will be in just a couple of years when the Dow hits 15,000. Say what? "I don't give advice," I told him. "But if it were my money, I dunno. Not all eggs in the same basket, I guess. And lots of prayer."

I think I can get away with saying that without being accused of giving market advice.

This was before I learned that President Obama's leftist Science Czar, John Holdren, is a big believer, not only in Zero Population Growth, but in Zero Economic Growth. That ought to spice up the administrative meetings at the White House.
Holdren, who is now President Obama’s top adviser on science and technology policy, wrote in the 1970s that it would be “entirely logical” to cap the Gross National Product--the total productivity of the American economy.

“It is by now abundantly clear that the GNP cannot grow forever. Why should it?” Holdren asked in a 1977 college science textbook he co-wrote with Paul R. Ehrlich and Anne H. Ehrlich, titled “Ecoscience: Population, Resources, Environment.”

“Why should we not strive for zero economic growth (ZEG) as well as zero population growth?”

The pertinent chapter, “Changing American Institutions,” discusses what the authors perceived as problems in America’s social mores, government, and economic system, which they say makes it “the leader in humanity’s reckless exploitation of Earth.”

The United States, they argued, should focus on limiting the amount of physical product produced and in circulation.

Again, it would be “entirely logical,” Holdren and the Ehrlichs wrote, “to set limits on the amount of product a nation needs and then strive to reduce the amount of work required to produce such a product (and, we might add, to see that the product is much more equitably distributed that it is today).”
If a nation were attempting to implement Zero Economic Growth as policy, could it do any better than the current administration?

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