Austerity vs. Spending

Ever since John Maynard Keynes published his “General Theory of Employment, Interest and Money,” liberals have been enamored with the concept that governments can deficit-spend to stimulate aggregate demand and thus spend an economy into prosperity. FDR used Keynes’ theory to justify most of the New Deal, spending in the name of “priming the pump.”

But the dirty little secret of the New Deal and deficit spending is that it delayed economic recovery more than a decade and it crushes economic growth and recovery.

When governments spend more than they collect they must do one of three things: (1) raise taxes, (2) print money, or (3) borrow money.

All three ultimately result in delayed increases in taxes upon future generations. Decreasing the disposable income of future generations is theft. It is theft of the most despicable kind; theft from the defenseless and unrepresented.

Milton Friedman pointed out that when people spend other people’s money on other people (which is what governments do), they do not care about the quality of the product or service and they do not care about the price.

The consequences of such action are waste (Solyndra), fraud (Pigford case), and failure (TARP). It is time for Americans to demand fiscal sanity.

We need to change the debate. We are not engaged in a God-driven morality play.

Yes, people were greedy, and yes people spent and borrowed, much too much.

But neither Adam Smith’s, nor God’s “invisible hand” has smitten us down, nor will some invisible hand now lift us up.

We built too many houses, we financed them too liberally, and we let too many “money traders” get out of control. Big bettors bet on the “big roll” in ways hard to understand, hard to justify and impossible to sustain. For many, it was great fun while it lasted, but it was the work of men. We are not being punished from on high, nor are those being most “punished” necessarily the ones that “deserve it” the most to a significant extent, it is to the contrary.

Further, our national economy is not like a personal family’s budget. If we trim our family budget, we don’t put a grocery store or a restaurant out of business. But in our national economy, one person’s spending becomes another person’s income. We either help each other up, or we pull each other down.

For the sake of those in need now, and to rebuild our legacy for the future, let’s prime the pump. God helps those who help themselves.