President Obama–Stop “Helping” Us!

[courtesy Google Images]

The New York Times

 “President Obama this week will seek to force American businesses to pay more overtime to millions of workers, the latest move by his administration to confront corporations that have had soaring profits even as wages have stagnated.

“On Thursday, the president will direct the Labor Department to revamp its regulations to require overtime pay for several million additional fast-food managers, loan officers, computer technicians and others whom many businesses currently classify as “executive or professional” employees to avoid paying them overtime, according to White House officials briefed on the announcement.”

The rationale for this increase is probably the belief that if people’s incomes rise, they spend more and theoretically stimulate the economy.

But, on the other hand, if corporate labor costs rise, either corporate profits fall and/or prices go up.  If prices rise, the economy tends to slow.

So what will happen?  By raising some employee’s incomes, will we stimulate or slow the economy?

Answer:  That’s the wrong question.

Of course, raising or lowering any individual’s income makes a difference to that individual.  But, one way or another, Obama’s plan to raise the income for some corporate employees will be achieved by lowering the incomes of other corporate employees and/or raising costs for consumers.  It’s like squeezing a balloon.  We can make the balloon bulge larger at one end if we squeeze the other end smaller.

But in the end, we still have the same amount of air in the balloon.

The only way we can really stimulate our “balloon” economy is by increasing the amount of “air” in the balloon.

From a national or economic perspective, it doesn’t make any difference if we raise some employees’ incomes by lowering other employees’ incomes.  We still have the same sized “balloon”—the same total income for the entire economy.

I recognize that there may be a moral obligation to redistribute wealth so as to favor the poor at the expense of the rich.  But I also recognize that the primary solution to economic problems is not to simply increase some people’s incomes at the expense of other people.

The solution is to increase productively so there’s more “air” in the economic balloon.

The fundamental problem is not that some people are paid too much and others are paid too little.  The fundamental problem is that we don’t produce enough goods and services to allow everyone to have a decent income.

If so, then who/what is the biggest cause for our stagnate or declining productivity?

A:  Government

Last year, I reported on a study by two economists who calculated that American productivity was being crushed by government regulations.  Their study concluded that if today’s level of government regulation was the same as in A.D. 1949, the median income per household would rise from $53,000 (today) to over $300,000.

In other words, government regulations have reduced your potential income by about 80% over the past 65 years.   In the name of “regulation,” government has prevented our “balloon” economy from growing as large as it might’ve.

So, let’s just suppose that the “several million additional fast-food managers, loan officers, computer technicians and others” (who President Obama proposes to help by raising overtime pay) were living in an economy that was regulated at the same level as A.D. 1949.  They wouldn’t need Obama’s assistance.  They might already be earning four times as much as they’re currently paid.

In truth, we want a lot of the regulation government has enacted. Our food and drinking water needs to be pure.  Our automobiles need to be manufactured so as to be safe to drive.

So, if we had to choose . . . if we could choose . . . I’d bet that Americans might vote to keep, say, half of the existing governmental regulations.  But I’ll also bet that Americans would vote to eliminate the other half of today’s regulations.

If the regulatory burden were cut by half, and if the two economists’ study on the effect of government regulations is true, then we might expect our incomes to be at least double what we currently earn.

How many problems do Americans have that couldn’t be solved if their incomes were doubled?  Not many.

Implication:  If President Obama really wants to raise Americans’ incomes, if he really wants to “stimulate” the economy, all he needs to do is cut government regulations by half.  Do that, and this economy will roar like a lion.

But does President Obama really want to raise Americans’ incomes?  Does he really want to “stimulate” the economy?

Obama’s actions—and those of the past few presidential administrations and congresses—suggest that their real objective is not increased American wealth or a stronger economy.  Instead, their objectives appear to be increased power for the government and diminished wealth and fewer rights for the American people.

Want to help the economy, Mr. President?  Get off our backs.   If we don’t have to carry you and all the other parasites who populate our bureaucracies, if we don’t have to be restricted in our own freedoms to ensure the prosperity of major multi-national corporations, financial institutions that are “too big to fail,” and the New World Order—we can support ourselves just fine.

Our nation and our individual prosperity is being destroyed by our own, unlimited government.  If anyone wants a chance at rising prosperity and the American Dream, they’d better grab hold of the fundamental idea of the Constitution of the United States:  LIMITED government.

Put the constitutional limits back on government, and our incomes can once again become the envy of the world.

On the other hand, if we allow government to keep growing in power and regulatory breadth, I will guarantee that 90% of the American people are headed into an impoverished, third-world future.