Economic Outlook: The Mismanagement of the United States Economy

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The mismanagement of the United States economy falls equally on our country's economists and politicians.

Learn about the mismanagement of the United States economy and why our economists and politicians share guilt in causing these problems.

The Mismanagement of the United States Economy

Regular readers of this column know that it has repeatedly
pinned today’s terrifying inflation, steady erosion of
social values, and most of the other ills which now plague
the world squarely on the fuzzy-brained,
give-everybody-everything politicians and economists who
have so drastically mismanaged the planet’s economy since
the end of World War II.

And, for a long time, it did about as much good as
hollerin’ down a rain barrel. But the tide is beginning to
turn! All of a sudden, in fact, it seems that
everyone — from U.S. Senate staffer to liberal college
professor to ghetto resident — is beginning to understand how
we all got into the fix we’re now in . . . is beginning to
understand that mushrooming Big Government — and the
pinheaded bureaucrats which staff it — is the cause of
(and in no way a solution for) the problems we currently
face. Some evidence: “I don’t really think government can
do much about inflation,” said Little Jimmy Carter back in
the spring in answer to a newsman’s question. Well, maybe
our President really is that naive (after all, he did say
he’d never tell us a lie) . . . but Business Week magazine
isn’t. The periodical’s May 22, 1978 issue — in
fact — was built around a hard-hitting cover story
(“The Great Government Inflation Machine”) that laid the
cards out on the table where even a barefoot boy from
Georgia could see them. Some quotes:

“Anyone who is not at least mildly panicked about the
inflation outlook for the U.S. does not recognize the
seriousness of the situation . . . . The grim fact is that
the country is caught in the grip of the worst, most
prolonged, and most pernicious inflation in its history.
Inflation has reached the point where it is destroying the
nation’s efforts to achieve solid economic growth, is
wrecking the financial markets, and is blasting the
retirement hopes of everyone over 65 years of age . . . . And
this is happening because of — not in spite
of — the way that the democratic decision-making
process works in Washington . . . . The real villain is the
federal government which has been running huge deficits for
years.

“For a decade and a half, the U.S. has pursued seductive,
self-deluding economic policies . . . . Instead of
contributing to the well-being of the nation, these
policies have generated a disastrous rise in costs and
prices that strains the fabric of American society and
threatens to paralyze the American economy. If President
Carter plunges ahead on the same course, he will risk not
just a painful inflation and a subsequent depression but a
breakdown in the whole economic and political structure of
the country.”

Are taxes starting to get you down? Do you sometimes feel
that the government now asks too much? Does it frequently
seem that all those federal taxes, state taxes, county
taxes, sales taxes, inventory taxes, excise taxes, property
taxes, social security taxes, and all the other taxes that
you now “voluntarily” pay . . . add up to an intolerable
burden?

You’re not alone. Senate staffer Paul Craig Roberts has
done a little homework on the subject and — in a recent
issue of Harper’s Magazine — stated: “In relative terms
our position today is worse than that of a medieval serf,
who owed the state one-third of his working time. In 1976
government had a claim to 42% of the U.S. national income.”

Mr. Roberts also explained why the criminals in Washington
love to blather on so much about “tax reform to help the
poor” and why the same miscreants always pretend to “fight”
inflation while secretly doing everything in their power to
encourage it. “Tax reform to help the poor is easy,” says
Roberts. “The poor don’t pay any taxes. And inflation is a
boon for our free-spending politicians because it pushes
citizens into higher tax brackets faster than their incomes
rise. A 10% rate of inflation, for instance, produces a
16.5% revenue gain for the government.”

And if you’ve sorta halfway suspected that the cost of
everything you’ve bought in the last few years has
skyrocketed — at least in part — because of a
sudden overload of wasteful and counterproductive drones in
Washington . . . you’re absolutely right. The Center for
the Study of American Business at Washington University in
St. Louis has released a report which says that the
combined budgets of just the federal government’s 41
regulatory agencies have mushroomed from $2.24 billion (in
fiscal 1974) to a projected $4.82 billion (for fiscal
1979).

“This is a direct measure of the rising intervention of
government in the economy,” stated Murray L. Weidenbaum,
the center’s director, in a Wall Street Journal interview.
“These expenditures represent a growth rate that is
unsurpassed by the federal budget as a whole, the
population, the gross national product, or any other
applicable basis for comparison.

“Furthermore, our overriding concern isn’t just the $4.82
billion that the federal government will spend on
regulation in 1979 . . . but the costs that business will
then incur as it complies with those regulations. Our
studies indicate that there’s about a 20-to-1 multiplier
effect involved. Which means that government regulatory
actions in 1979 could easily cost business close to $100
billion. And that extra $100 billion, of course, will
ultimately be passed on to the consumer.”

And how does all that government regulation hit the
consumer (you) in the pocketbook? One example: The U.S.
Labor Department estimates that licensed workers of one
kind or another now make up an in credible 25% of the
employed labor force in some states. “But that’s good,” you
may say. “It guarantees that I’ll have a qualified,
competent person to turn to when I need a critical job
done. It means the work will be handled in a professional
manner. It means I won’t be overcharged.”

Think again. Business Week reports that — after two
years of analyzing 31 occupations ranging from embalmers to
real-estate brokers — economists at the University of
Tennessee in Knoxville have concluded: “The more stringent
the licensing requirements, the lower the quantity and
quality of service consumers receive. Licensing produces a
‘Cadillac effect’ by providing high-quality service for
high — income consumers. But those on low incomes, who
cannot afford to pay the higher price, are forced to go
without service, do it themselves, or rely on low-priced,
unlicensed ‘quacks’.”

More specifically, the study found that consumers are
forced to do their own plumbing far more often in states
with stricter licensing . . . that houses stay on the market
longer in states with more stringent real estate licensing
requirements . . . that the seven states with the strictest
rules for the licensing of electricians have up to 10 times
more accidental electrocutions than the national average.

Furthermore, another study — run by Stuart Dorsey of
Western Illinois University — has demonstrated that
occupational licensing (which requires written as well as
practical tests) discriminates against minorities and the
poor. (Blacks fail barber and cosmetologist written exams
40% more often than whites, and high school dropouts
fail 15% more often than high school graduates.)

Whether you love these results or hate them, there’s one
thing that’s hard to deny: Here is yet another example of
your tax dollars being used against you to increase the
prices you pay for everyday items and services, lower the
quality of those items and services . . . and isolate you
from the opportunity and upward mobility that the free
enterprise system is supposed to make available.

And whatever happened to all those sinister professors who
were supposed to be subverting the U.S. free enterprise
system from secure tenured teaching positions on college
campuses across the land? Maybe they never existed in the
first place . . . or, if they did, they must have had a
dramatic change of heart.

A national survey conducted for the Chronicle of Higher
Education found that a full 81 % of all the college
professors in the country agree that “the private business
system in the U.S., for all its flaws, works better than
any other system devised for advanced industrial society” . . .
that “the growth of government in the U.S. now poses a
threat to the freedom and opportunity for individual
initiative of the citizenry” . . . and that “economic
growth, not redistribution, should be the primary objective
of American economic policy”.

Another surprise. If you think the traditionally liberal
teaching establishment is swinging to the right, you ain’t
heard nothin’ yet: So is the ghetto! A poll of the poor,
down-and-out residents of New York City’s notorious
southwest Bronx — for instance — has revealed that they
favor tougher welfare regulations by a 77 to 16% majority
. . . stricter sentences for looters by 95 to 2% . . .
restitution of the death penalty by 66 to 29% . . . heavier
punishment of juvenile offenders by 89 to 7% . . . and an
80 to 16% majority like the idea of making welfare
recipients earn their “paychecks” by cleaning New York
City’s filthy streets.

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