America on the brink of economic suicide

Shifting of power to government and costs to small businesses and middle class workers is a formula for economic suicide. Photo: Associated Press

WASHINGTON, October 6, 2013 — Events of the last week are a strong reminder that the United States has charted a course for economic suicide.

We have come to this point by abandoning our capitalist, free market principles and allowing government to take over more and more of our economy. With the implementation of Obamacare we have reached and passed the tipping point; our dependence upon government has become so great that we are vulnerable to great harm from changes in policy over which we have no control. Government can now make or break any business or plunge us all into poverty through incompetence or dubious political motivations.

SEE RELATED: Back pay backlash: Should federal workers really get shutdown pay?

In 2012 we were already at a critical point: The yearly budget of the government had reached 20 percent of the nation’s Gross Domestic Product. As the implementation of the Affordable Care Act proceeds, the healthcare industry, which comprises almost 20 percent more of the economy, will come more and more under government control. This puts us at a higher level of government control of the economy than almost any other  European nation, including some which have socialist governments.

The government shutdown has raised awareness of this problem. So far the effects have been relatively mild, but as Mort Zuckerman, of US News and World Report, observed, “we are in a terribly vulnerable position as an economy and as a country right now, but particularly as an economy. If this thing goes on for too long we could really plunge the economy into a much, much worse place.”

In most cases the response is that we have to end the shutdown and fully fund government to avoid this crisis. This is the wrong reaction. The more fundamental concern should be to ask what is wrong with our nation that we have come to the point where the government is so large and so pervasive that a very limited shutdown of a fraction of its operations is an existential threat.

This nation was founded on the principle of free markets and minimal government. For most of its history, through the end of the 19th century, the size of government was never a threat. The federal government was lean and had limited areas of interest, providing essential services of national defense, foreign policy, judicial services and maintaining infrastructure.

SEE RELATED: Shutdown lowdown: House OKs paid vacation for furloughed Feds

The explosion of government since the beginning of the 20th century has been unhealthy for our nation. It has come at the expense of free enterprise and economic diversity. It has been a major force in reducing upward mobility and increasing the gap between the rich and the poor. It has created a growing culture of dependency. It has increased the risk and reduced the profitability of the small businesses which provide 52 percent of all employment in the nation and 67 percent of job growth, as well as accounting for about half of our total economy. That share has rapidly declined in the past decade to an all-time low of about 42 percent today.

Obamacare will be particularly devastating to small businesses and the workers they employ. As it expands the role of government, it will correspondingly lead to a decline in the profitability of small businesses that have been the vital core of our economy. As they decline, we will all suffer through economic stagnation and reduced national productivity.

Our only hope to return America to a position of world economic leadership and national prosperity is to reverse this trend. We must shrink government and end our culture of dependency. Our new priority must be to put business first and government last.

The administration has inadvertently shown us the way on this. It is not coincidental that the areas of government they shut down most completely and declared “non-essential” are exactly the ones that we could do away with permanently: agencies which could be privatized or simply shut down entirely.

SEE RELATED: American Cemetery at Omaha Beach closed due to shutdown

At the top of the list and almost completely shut down are the FCC, NASA, the National Science Foundation and the Department of Housing and Urban Development, all with more than 95 percent of their employees sent home. Every one of these agencies could be shut down and their functions fulfilled by private businesses (NASA), charities (NSF and HUD) or non-governmental agencies (FCC).

The next tier of non-essential agencies, that had more than 90 percent of their workers sent home, could also be eliminated as government operations, starting with the EPA, the Department of Education and the SEC. The work of the EPA ought to be done by the states. The Department of Education ought not even exist and just duplicates and interferes with state and local education programs. Securities should be traded in a free market and the SEC should have no responsibilities except prosecuting fraud, and thus should become part of the Department of Justice.

In fact, none of the agencies which had more than 50 percent of their operations shut down should continue to exist as government agencies. They can all be privatized, handed over to the states or just abolished. This is obviously not what President Obama wanted to tell us with his choice of what to consider “non-essential,” but the message is clear nonetheless.

Federal workers who would lose their jobs can keep the same jobs at those agencies which are privatized, or find new jobs in private industry in an economy less hampered by a voracious and all-consuming government.

Given the peril on whose brink our nation seems to hover, Obama and Majority Leader Reid might want to spend less time obdurately defending the massive government expansion of Obamacare and more time figuring out how to cut spending to a sustainable level.

The shift of power and control to government with the costs put on the backs of a shrinking number of small businesses and middle-class workers is a formula for economic suicide.

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Dave Nalle

Dave Nalle has been writing political analysis since the 1980s for newspapers, magazines and now online journals. He is currently Execitive Director of the Center for Foreign Policy Priorities, is on the board of the Coalition to Reduce Spending, and served four years as National Chairman of the Republican Liberty Caucus.

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