Barack Obama is right. Our current economic system is untenable, unworkable and unsustainable. There can be little doubt he believes this and the courses of action he is prescribing for our nation remove all doubt. And he is right—we must change.  We must fundamentally transform this country.

The more I think about the country I’ve known since childhood, the more I’m not sure we can even be called capitalist. There is definitely a free-enterprise component to our economy, but our markets have not been really free for some time. My eyes have beenopened as of late and I believe the America we think we know is an illusion, an illusion that is about to be overtaken by reality.

America today is not the America our Founders envisioned. Although we profess to be a capitalist economy with a free-market, free-enterprise system, we have spent the last one-hundred years perverting that system through government intervention. With the start of the Progressive Movement in the early 1900s, the Federal Government began making “adjustments” to our economy, influencing supply and demand, redistributing wealth, enhancing or removing competitive advantages, mandating production methods, setting labor costs, influencing locations of factories, directing investment strategies, etc. Through regulation, legislation, taxation, subsidies, tax credits, labor relations rules and trade agreements, the politicians have learned to force the free-market wherever they want it to go.

Through tax credits and subsidies, Government can incentivize production in one area of our economy at the expense of another. If they want more corn than cotton, subsidies are allotted to make it happen. If they want to keep prices high to “help” farmers, they give them subsidies for acreage not planted, reducing supply and driving up prices.

If Government wants to reduce oil consumption, they tightened environmental regulations, restrict new exploration and raise taxes. If they do not want new nuclear power plants, they reject applications for construction permits or mandate an impossibly complex long-term and expensive environmental impact study. If Government wants you out of that SUV, they raise gas taxes or tax you directly for the “luxury” of a large vehicle. If they want to see corn used for fuel instead of food, they offer subsidies and tax credits to make unprofitable ethanol plants feasible, all the while driving up the price of food.

The Government created the real estate market bubble. When new home sales are desired, they offered tax credits to buyers. In the name of social justice, Government wanted to see the poor living in $200,000 homes, so they eased lending requirements, lowered interest rates and then directed Fannie and Freddie (two Government-sponsored enterprises) to buy up the bad mortgages. This drove up demand for homes, and with limited supply, prices sky-rocketed. Since prices were soaring, home builders raced to fill the void, building more homes at inflated prices, more than normal market forces could sustain. People mortgaged $400,000 cracker boxes and flipped them six weeks later for $500,000—but they were still cracker boxes. It was a Government-sponsored house of cards.

If the Government wants a forty year old man to make more money delivering pizzas (because there is honor in all work, right?) they force a higher minimum wage on employers, forcing them to pay more than the work is worth and passing the costs on to their customers. In the process, the high school kid loses the job he or she needs to save for college.

Did you know that many union labor rates are tied to multiples of the minimum wage? Did you know that not only does the guy delivering pizza get a raise, but the $30/hour union man may get a raise as well on his next contract? Who do you think pays for that raise?

If the Government doesn’t like the eating or drinking habits of its people, they put taxes on certain foods and drinks to keep you from buying them. Sugared-soft drink taxes are the new rage, while in some cities trans-fats are outlawed and salt is being considered for regulation.

When the Government wants the public to buy new cars, they subsidized the sale to the tune of $3500-4500 with taxpayers’ dollars.(Cash for Clunkers)

When the Government wants you driving a GM car, they call Toyota to Capitol Hill to testify before Congress and the Media on its accelerator problems, while GM quietly recalls 3 million vehicles for faulty power steering.

Today the Federal Government owns 30% of the land in the United States. This is a huge resource that the Government can deny to the public, or rent at what rates and for what purposes they deem fit. Large tracts of this land contain untapped natural gas and oil fields and the largest shale oil deposits in the world. I’m not just talking about national parks and military bases, either. The Feds own 95% of the land mass of
Nevada—trespassers will be prosecuted.

Finally, can anyone guess why medical costs are so high in this country? A key reason is the Government has pretty much, through regulation of the healthcare and health insurance industry, removed the relationship between the customer and the service provider. Most healthcare bills today are paid by third party insurance companies or the Government through Medicare and Medicaid. The patient doesn’t care what the cost of his treatment is as long as it’s covered by someone else. And of course, the insurance companies have to continue to jack up their rates to customers to cover the shortfalls paid to care providers by the Government.

The bottom line is the capitalist, free-market system in this country is an illusion. We are not yet socialists, just very marginal, corrupted capitalists. The price we pay for any given product is generally a result of either intentional, direct Government interference, or the indirect, unintentional consequences of Government ineptitude.

Next time you shop for groceries, or raid your local big-box retailer, or pump gas on the way to work, or pay your mortgage, or pay your utility bills, or buy insurance, or buy a car, or pick up a six pack of beer, a pack of cigarettes or a bottle of Coca Cola, consider why they cost what they do. I challenge you to find items the Government doesn’t regulate through some means. I’m sure there are some, but fewer than you think.

Every Government intrusion in the free market, every Government policy that limits or forces our choices, is a strike against our personal liberties. This is not about politics. It’s about control and both parties are culpable. This is about the role of Government in our lives. It’s about stopping the continual social-engineering, the loss of our freedoms and the redistribution of our earnings to others. We cannot just turn back the clock ten years, twenty years or even fifty. We’ve been on the wrong track for nearly 100 years.

We have to transform our nation into the vision of our Founders, with true free-enterprise and free-markets. We have to let companies compete and succeed or fail on their own merits. We’ve got to stop the radical expansion of Government. We have to let Americans be Americans, act like Americans, work like Americans, worship like Americans and live and die as Americans with full understanding we must face all the risks and uncertainties of life. We are a meritocracy and we will not succeed as a nation until we embrace that simple fact.

JC

www.jimclonts.com