The tool chest

I have no argument with people who believe that socialism works. If hundreds of years of world history could not convince them, who am I? I also have no argument with people who believe that Obama is not a socialist. If last three years of his actions and rhetoric could not convince them, I am not going to waste my breath. All I will say is that with these economic conditions, their chickens are coming home to roost. I am talking to the rest of the folks.

I do believe that the economy is headed for another recession and may very well be right in the middle of one as we speak. For it to be officially classified as recession we need to have two quarters of negative growth i.e. shrinking GDP. Unfortunately we will pass that test with flying colors in my opinion. And here is the reason.

President Obama and by extension his entire administration has a tool chest. That tool chest has a whole bunch of tools that are very capable of wealth distribution. However there is nothing in the tool chest to create wealth. All his socialist tools are very blunt instruments to enable growth of any kind. Let’s take an example. There is one set of knowledge that is required to drill the ground and dig gold. (let’s call it wealth creation). Then there is another set of means required to distribute the gold that is dug, equitably amongst the stake holders. Capitalism accomplishes the first mandate rather well and it leaves the second part(equitable distribution) to  the premise of  - to each according to his own ability, which while may not be perfect, does create enough to go around for everyone, even those that were just pushing the carts and digging where they were told to dig by those that put capital at risk and found the mine and organized and managed the entire enterprise.  Socialism as exemplified by Mr. Obama figures out oh so slick ways to attempt to distribute the gold in a more “just manner’. However as has been proven by thousands of years of history, when government attempts such exercise invariably due to the cumbersome size and something called constituents the just distribution exercise falls way short of its mandate and becomes a grabbing game by the loudest constituents or those that are most aligned to the administration.(Refer to the spate of stimulus that we have had and it’s effect on Job creation)

So where does this leave USA under this administration. Well, by that analogy the administration has no tools to spur growth. Low taxes, fewer regulations are an antithesis to this administration. Therefore the Gold digging enterprise has come to a halt and what is left is the quote unquote redistribution of the gold that was dug in the past. That creates a vicious cycle of more taxes and more debt because the “just distribution” promises benefits to the aligned constituents that just cannot be met because there is no more gold coming out of the ground.

The only way this logjam can be broken in the context of the American situation today is that this president is let go.