Fiscal Policy: May 2010 Archives

Right here. Thanks, CBO, for finally telling us what we already knew. The deficit will grow as a result of covering more Americans and non-Americans with Nancy Obamareid Care. Good heavens! There's a reason these sorts of massive bill shouldn't be rushed through.
It's bad when the folks running the government here in the US choose to ignore what's happening in other socialist countries (something they're trying very hard to turn the US in to) in regards to what occurs when the socialist system runs out of other people's money to pay for all the services and entitlements the system put into place.

Greece is merely the latest example of that, where the government can no longer support all those people they've made dependent upon the state for everything. The proles are upset now that the Greek government is broke and is putting austerity programs into effect, cutting budgets with a meat ax and doing likewise with entitlements (pensions, health care, unemployment, graft, corruption, and a whole host of other things that go along with a socialist state).

When the proles found out that the nanny state could no longer pay for all those neat things they were used to getting for 'free', they revolted, rioting in the streets and burning a bank (or two or three). It is somewhat reminiscent of the collapse of the ultimate socialist state, the Soviet Union, when the biggest socialist experiment in history came to an end after 74 years because their economy collapsed, mostly because of their economic model was seriously flawed (We pretend to work and they pretend to pay us). Unfortunately Greece followed a similar model and we can all see how that's worked out.

Now Greece expects the rest of the EU (and the US) to bail them out of the economic problems of their own making. Frankly, I don't think anyone should bail them out because they won't learn anything if we do. All a bailout will do is delay the inevitable: another request/demand for another bailout later. Greece will have no real incentive to fix their economic problems if they know the EU and/or the US will come to their rescue. All it will do is make them as dependent on us as their people have become dependent on them. They'll still be using other people's money to fund their bankrupt policies. It will be a vicious cycle that will merely prolong the pain.

It's a scenario we could easily fall into if we follow the same path. But we'll have no recourse but to bite the bullet and discard socialism as the failed experiment it is because there will be no one out there capable of bailing us out. Greece is an object lesson that far too many in Washington are ignoring as much as possible because it goes against everything they've been indoctrinated to believe. Heaven forbid if their utopian vision should be proven to be nothing more than a pipe dream.
Back in June 2008, I predicted the Law of Unintended Consequences would assert itself in regards to the increase of the minimum wage.

Time has proven me right.

A sign of those unintended consequences can be seen in a memo from an employer to his employees, explaining why he's cut back on their hours across the board even though he wishes he could give them all the hours they'd like.

This is yet another example of how government intervention in the economy has a negative effect that far outweighs any possible positive effect that was used as the justification for such an intervention. Something as simple as raising the minimum wage 40% over three years can turn a money-making business into a money-losing business in very short order. I don't know of any business (other than government) that can absorb a 40% increase in labor costs and not suffer the consequences.

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