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Why is the recovery weak or in trouble?

Governmental actions in short are the reason that recovery is restrained
and the recession is made longer and worse.

(1) Stimulus package that is not really a stimulus package but rather a pork barrel and expansion of government that will (a) extract needed capital from the private sector that creates jobs, (b) allocate scarce resources based upon political interest rather than economic viability, and (c) delay funds getting into the market. Therefore, when the government jobs are over there will be a lack of private jobs hence another stimulus package and then another.

(2) The push to increase taxes on the most productive and bailout the least productive will retard and reduce economic activity.

(3) The push to move ahead with “cap-and-trade” under which the government would set limits on carbon emissions by power plants, factories, and other installations. This action raises the cost of energy. Raising the cost of energy will create a drag on economic activity.

While interest in global warming is waning, the propaganda continues to intensify. It is difficult to understand how usually intelligent people are so invested in such an irrational movement that must unravel as the truth is sought.

(4) The push to make labor cost higher (card check legislation) in relationship to other economic factors. In a recession prices normally drop allowing investment to occur with lower risk. However, when labor does not adjust and their costs remain high economic activity will be lower and investors will avoid the use of labor ---- therefore unemployment.

(5) The push to appease labor unions with protectionism (like forbidding Mexican trucks) and “American” only content in contracts will diminish economic activity and further restrict investment and new jobs. Mexico has already retaliated with a much greater cost to the US than the jobs of some 95 truck drivers.

(6) The push to restrict government contracts to only union work forces and prevailing wage contracts will limit job development and economic activity.

Who will this hurt the most? It will hurt those at the bottom of the economic ladder --- the young and poor. There is no exception to this Law of Economics!

From Wexford Bob ---- March 2009

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