Friday, January 23, 2009

The best government stimulus plan; stand down

from Examiner.com

Ronald Reagan was right when he said the scariest words a person can hear are "I'm from the government, and I'm here to help."

If you hold government action on the economy in check, market cycles are fairly predictable. Low interest rates, falling real estate prices, companies going out of business, leads healthy companies and entrepreneurs to snap up assets on the cheap. Some people take huge losses, while others take advantage of huge opportunities and the new growth cycle begins. That's not happening today. The reason is that government has come to the rescue. In doing so it has caused so much uncertainty in the marketplace that making major investments in new projects and ideas at this point would be irresponsible and dangerous.

Nobody wants to commit sizable amounts of time resources and money into a company or project, only to find out six months later that the government has decided to subsidize a competing company or project. Who wants to hire 1,000 new workers only to find out later that their unemployment insurance has doubled and new benefits have been mandated. You don't want to borrow a lot of money right now and then have to refinance it in an environment of sky-rocketing interest rates due to runaway government debt.

Winners and losers, or at least survivors and non-survivors, are increasingly being selected by a handful of government policy makers rather than by 300 million individual consumers. Believe it or not, the mob is much easier to predict and more efficient at directing resources than any Washington committee, no matter how many degrees they have hanging on the wall.

If the government truly wants to help, they need to stand down. Have some faith in the American people. We can work this out. The road to the next Great Depression is paved with good intentions. Pull over and let us drive for a while.

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