This election, there are basically two solutions on offer to revive our economy:
- The Democrats believe they can inflate their way through falling demand and job loss into prosperity;
- The Republicans think that only small business can create new products, demand and jobs quickly enough to prevent a depression.
The average voter is not a rocket scientist. But then, given NASA’s dwindling budget, that’s probably a good thing – or even more of us would be out of work. The average voter does recognize that in two years the Democrats have bailed out the car companies, the insurance companies and the Wall Street bankers – all to no avail on Main Street, where people are looking for work.
To pay for all these bailouts, the Democrats have already reached down through the cracker barrel into indentured servitude for our grandchildren, when the tax bill will be attached to their birth certificates. The Wall Street Fat Cats thank you for your service, and for protecting their bonuses during these tough times. The auto industry executives likewise salute you for protecting them in time of trouble. And the union bosses thank you – for letting their members continue building cars that no one can buy – which enables the unions to continue collecting political-action dues so they can buy more Democratic congressional votes to enact further bailouts. (“Do it for the children!”)
Fresh from their bailout success – “Thank you for your service and sacrifice, Main Street” – the Democrats are now advocating another centrally planned, central-banker-administered bailout. The Federal Reserve will buy even more toxic assets from the big banks and put the money into the economy! More money – more demand.
“Good!” you say?
Not exactly. We will have to pay back the money – with interest. That should reach down to our grandchildren’s grandchildren – provided the former can actually afford to have any of the latter.
In the meantime – at least this is what the central planners and central bankers are banking on – all those inflationary dollars will stimulate demand. Whoopie! Boom times are back!
There’s only one problem. Demand is not stimulated through inflation’s price increases and the accompanying higher tax burden. (“But everyone’s making more money now. We must all pay our fair share!”) America is now mortgaged out to the seventh son of the seventh son. Yet Wall Street is happy. The Democrats are happy. And the hope-and-change bus rolls on down the road. Just pay no attention to the great economic Oz behind the curtain.
The other question is, are the Republicans right? Can small business save Main Street and those of us who live there?
Small business can’t compete against established big businesses. So they are forced to innovate. And the failure rate is high. But the cost of most small-business failure is minuscule – at least by business standards – and certainly by Wall Street bailout standards.
Small businesses that grow, however, hire people – quickly. And people who have jobs buy things – provided government doesn’t take all their earnings in taxes.
So there is the key. Demand precedes jobs.
No one in business hires people to produce products and services that are not being bought. Products and services that are flying off the shelves because people want them create more jobs. Very quickly.
I no longer have any faith in government to fix anything. But I still have faith in Main Street America and the people who live there. That would be you, my fellow Americans. We’re not dead. Just indentured. Get out of our way. We’ll fix it.