The U.S. economy is only as big as it is at any single point in time. We'll use 100% as the proxy for its size. As the economic pie becomes smaller or larger, it's still 100%.
That 100% is divided between the private and public sectors.
The bigger the private sector is in relation to the 100%, the smaller the public sector and vice versa.
The absolute size of the pie grows as the absolute size of the private sector grows. On the other hand, growth of the public sector's absolute size doesn't result in more pie.
Hence, if we want more pie in total, it has to come from the private sector.
The private sector creates all the the wealth. The public sector only redistributes that wealth.
If the private sector stagnates and the public sector continues to grow, the size of the pie will actually get smaller as resources are withdrawn from the private sector to support growth in the public sector.
That, my fellow Americans, represents the dangerous and negative sum economic impact of growing government in a stagnant economy.
To repeat, 100% of the wealth originates in the private sector. The portion thereof that is sent to the government or public sector for redistribution must be subtracted from the 100% to arrive at the relative percentages for the private and public sectors, respectively.
So if the pie stays the same size but the public sector portion grows, the private sector's piece shrinks. Simple math.
That seems to be beyond the comprehension capability of our president and his political cohorts. Although these are very difficult economic times for American citizens and our economy, the harmful political gamesmanship continues unabated. That's not only sad, but it's dangerous to our nation's future health.
Comes now Senate Democratic majority Leader Harry Reid to join President Obama and Vice President Biden in their combined efforts to continue to grow the size of government. This time the plan is to hire more teachers, firemen and police officers.
Vice President Biden threatens that if we don't hire more firemen and police officers, we won't be safe, and Senate Majority Leader Reid says that only the public sector needs support since private sector employment is "doing just fine." They're actually saying these things with a straight face.
Endorsing the president's proposed $35 billion new "public sector only" stimulus plan, Mr. Reid said this, "It's very clear that private-sector jobs have been doing just fine; it's the public-sector jobs where we've lost huge numbers, and that's what this legislation is all about."
How dumb is that? In any event, you can read Harry Reid's Jobs Math and decide for yourself whether he's confused, lying or mistaken about employment conditions in the public and private sectors. My conclusion is that he's either stupid or believes we are, and most likely the latter.In either case he's dangerous.
The editorial then recites actual facts to refute Reid. It reports that since 2008 public sector employment (federal, state and local) has remained flat at ~21 million while private sector employment has fallen by ~2.5 million people to ~109 million.
Reid tells us that 2.5 million private sector job losses mean "doing just fine" and that no losses in the public sector mean "we've lost huge numbers, and that's what this legislation is all about." Really, Harry?
The editorial then sums up:
"The pace of these state and local cuts have picked up this year, as the federal stimulus spending has declined. But Democrats promised in 2009 that the stimulus would be temporary—to help states get through the recession. State and local governments now have no choice but to cut workers, as they adjust to a new and reduced level of tax revenue thanks to the slow economic recovery.
As for the private jobs market, it's hard to see what Mr. Reid could possibly mean when he says it is "doing just fine." Private nonfarm employers added only 137,000 new jobs in September and 352,000 in the last three months. That's why the overall jobless rate remains an unprecedented 9.1% two years into an ostensible economic recovery.
Going back to 2008, the Labor Department reported 111.822 million employed private workers at the end of 2008. The number plunged during the recession, and as of September of this year overall private employment had climbed back to 109.349 million. But that's still some 2.5 million fewer jobs than in 2008. If this is doing fine, we'd hate to see Mr. Reid's definition of lousy.
What these numbers show is that, contrary to Mr. Reid, the real U.S. jobs problem continues to be in the private economy. If private employers were hiring at the pace they normally do in an economic recovery, we might be doing fine.
In any case, Mr. Reid's latest stimulus proposal isn't intended to help private employers. Its goal is to help state and local government workers, especially teachers, most of whom are unionized and pay dues that can finance Democratic Senate campaigns. The $35 billion would operate as a campaign-finance pass-through account, from Senate Democrats to unions and back to Senate Democrats.
Mr. Reid knows his proposal can't pass the House, and perhaps not even the Senate, so his real agenda is to stage a vote that Republicans will oppose so President Obama can claim on the stump that Democrats are doing something to help create jobs and that Republicans stopped them.
Instead, Mr. Reid's comments yesterday reveal that he and his fellow Democrats inhabit an economic universe in which government is the main engine of job creation. That's how you get a jobs crisis."
In other words, it's only growth in the public sector that matters to the political troika of Obama, Biden and Reid. By supporting unions and public sector employees, they plan to remain in power after the 2012 elections.
In their view, those in the private sector can fend for themselves while supporting the favored public sector with their tax dollars.
That's the obvious game being played, so I say it's time to wake up our fellow Americans.
Playing politics is one thing, but deliberately or recklessly doing long term harm to the economy is quite another. As the government continues to grow as a percentage of the 100%, the private sector will continue to weaken.
That's exactly what Greece and most of Europe have already done to themselves. Their governments are essentially broke, as the public-sector has grown as a percentage of the whole over the years. Now our president wants us to follow them off the big government cliff.
In Greece and much of the rest of Europe, sovereign debt has accumulated to the point where it can't be repaid without draconian steps being taken, and probably not even then. There's still time for us to act.
Effectively, sovereign debt default lies ahead for Greece and perhaps most of the rest of Europe as well. Annual government operating deficits continue as government spending far exceeds tax receipts. And tax receipts remain low because the private part of the economy stays weak. As a result, private sector unemployment rates stays high. It's really that simple. Without adequate private sector growth or draconian public sector spending cuts, and maybe both, going broke is inevitable.
So what does our "leadership" propose to get the U.S. private sector rolling? Hire more public-sector teachers and please their union supporters. Wrong!
While the U.S. president, vice president and senate majority leader are either oblivious or unconcerned about the negative sum game they're playing with America's future, the only hope is the common sense of the American people.
What should be happening? We should be reducing the size of the public sector and focusing on increasing private sector growth. Only when private sector growth resumes at a steady and significant pace can we look forward to a healthy American economy.
It's not about the teachers, folks, nor is it about the other public workers either.
It's about our long term future as a free and prosperous society.
Thanks. Bob.
No comments:
Post a Comment