There are highly exaggerated expectations about Barack Obama as president. Millions actually think that the seas will part and that the sun will shine every day. They are in for a shock and a psychological crash after the euphoria of the election. All those liberals who were experiencing their once-in-a-decade bout of happiness and optimism now will quickly slide back into their customary depression and rage, and for good reason.
They say there’s only one chance to make a good first impression, and in the two days following Obama’s unsmiling acceptance speech in Chicago (where was that crowd of 1 million that the media predicted?) the stock market tumbled 486.01 points on Wednesday, November 5 – the biggest post-election drop ever – and 443.48 points on Thursday, November 6. If that’s our first impression of the confidence inspired by a President Obama, then God save us all.
The media tried to cover for Obama as they will do every day until he dies. They said that the bad stock market is “baked into the Wall Street pie”.
But Obama was supposed to be uplifting and confidence-inspiring, was he not? He was supposed to represent “change”? At least the markets could have given him a token lift. But they didn’t. They tanked. This is telling and this is what conservatives have warned about. No confidence in a far-left figure.
In the minds of the liberal left and the media, of course, Obama inspires confidence. But in the real world, where hard work creates products, wealth, profits and jobs, there is not much. This is the world inhabited by the 58 million ‘little people’ who voted against Obama, like Joe the Plumber.
Obama has a tough road ahead because the American economy is in a major realignment and needs a business-friendly climate to adapt. And looking at Obama’s past, it is not encouraging. He has an F rating from the National Taxpayers Union. His home state of Illinois is heavily Democrat and 45th in job creation out of the 50 states while Massachusetts, with its 90% Democrat legislature, is one of 5 states doing worse.
Meanwhile Obama has promised to raise federal taxes on businesses on top of the second highest federal corporate tax rate in the world (35%) after Japan. This already is causing, and will further cause, job-creating business to relocate to places with lower rates, including… get this… Europe.
Hasn’t Obama learned the 1st Law of Economics: That when you tax something there will be less of it, and when you subsidize something there will be more of it? This is like the law of gravity. So if you tax business more you will have less commerce and fewer jobs.
But that 1st Law certainly was not mentioned in the books Obama read growing up like *Rules for Radicals *by Saul Alinsky.
Meanwhile Obama promised a middle-class tax ‘cut’. If he doesn’t outright cancel it – the most likely outcome – what will really be a tax ‘credit’ next April 15 was said during the campaign to be set at a mere $500 for each taxpayer. But here’s the hitch: That will happen as long as there’s a $500 ‘subsidy’ to the 50 million people who pay no federal income taxes at all. In today’s world that $500 is not a big wad of cash. It is not going to transform anyone’s life like a better job or a permanent job would.
Yet that money is going to come out of the pockets of business and The Evil Rich whose wealth concentrations in banks, stocks, bonds and other investment instruments provide the crucial capital that business needs to expand. And when rich people spend their money, it creates jobs too in homebuilding, vacation resorts, expensive cars etc. When George HW Bush signed into law a luxury tax on yachts in 1990, it cost 25,000 jobs in the yacht-building industry. The tax was repealed in 1993.
So all in all, it appears that Obama’s policies will be directed not at creating new wealth by cutting business taxes and encouraging enterprise, but at creating more poverty by subsidizing poorer people while drawing crucial investment capital out of business.
On Friday, November 7, Obama met with his circle of economic advisers. This included people like Google CEO Eric Schmidt, Time-Warner chairman Richard Parsons and investor Warren Buffett along with government and education officials. He even included the mayor of Los Angeles, Antonio Villaraigosa. What the heck was he doing there?!
So what is wrong with this picture?
First, Google is an information company. Time-Warner is a media firm. Buffett is an investor who plays the markets. Government officials are government officials. (Why was a left-wing political figure like Villaraigosa in a meeting about the economy, particularly coming from a city that is getting routinely poorer by taxing and spending itself into hardship?) And education officials are overwhelmingly leftists who favor wealth redistribution.
Who is missing from this equation?
How about CEOs of steel manufacturers, home builders, pharmaceutical companies and energy production facilities? How about an assortment of small-businesspeople from Oregon, Iowa and Maryland? Or executives of regional employers and mid-sized manufacturing firms? Because these are the people and the companies that actually create the nation’s wealth.
Because wealth is created not by shifting information around (Google), playing the markets (Buffett), publishing magazines (Parsons) or dreaming up theories in faculty lounges, but by taking resources from nature and giving them value by turning them into products that people want and need like electricity, furniture, cars and lamps.
That is why America was so rich 50 years ago. With Europe and Japan ruined in the 1940s and 1950s as a result of World War II, America was manufacturing 50% of the world’s finished goods. Today with globalization, that number is 22%. That is why the middle class is shrinking. Today America has the richer and richer Googles and Hollywoods and Warren Buffetts of the world, yet our nation is getting poorer because there are more and more socialist obstacles to wealth creation like enviro laws, taxes, bureaucracy and regulation.
Obama even had in his economic pow-wow David Bonior, a far-left, pro-tax, pro-union former Democrat congressman from Michigan; and Jennifer Granholm, the present pro-tax, pro-union governor of Michigan, the state with the worst economy in America after decades of extremist union demands gutted the auto industry.
Michigan’s unemployment rate today is 9% and more than 1 million people have left the state over the last 10 years. Yet Granholm keeps ramming through tax increases and big-government job-training programs, further sapping the state’s economy, while belligerent union activists in 2006 actually scared one company away, Toyota, which wanted to build a non-union engine plant in Michigan.
Barack Obama sees manufacturing as the realm of conservatives and Republicans who are willing to work hard and get their hands dirty, while Obama’s media and university friends sit around their newsrooms and faculty lounges criticizing everything except their own non-productive selves. Meanwhile Oprah Winfrey sits on her couch accumulating billions babbling in front of a TV camera.
How much wealth does Winfrey actually create?
Zero. She lives off the overall wealth of the nation. She is an entertainer.
If you want to open a wealth-creating factory, coal mine or nuclear power plant today in America, you will face endless opposition from environmentalists, bureaucrats, unions, anti-growth obstructionists and intellectuals. If you want to start a newspaper or TV station or magazine preaching environmental purity and socialist redistribution of the wealth, nobody would have any legal grounds to oppose it. Obama’s allies are in the camp of the latter.
And that is the real crisis that America faces today.
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