WHY USING GOVERNMENT TO JUMP-START THE ECONOMY NEVER WORKS
Last Friday (11/09), President Obama said, "We can't just cut our way to prosperity. If we are serious about reducing the deficit, we have to combine spending cuts with revenue -- and that means asking the wealthiest Americans to pay a little more in taxes."
Mr. President, with all due respect, you continue to be wrong on both assertions.
The president and many of his Keynesian supporters believe that the reason we are having slow growth and very little job creation is because of a lack of sufficient demand. This is why they passed their $833 billion stimulus bill and have promoted other big-spending projects.
These endeavors have not worked -- and will not work -- because they have misdiagnosed the problem. The real problem is malinvestment.
An excellent explanation of specifically how financial regulations misallocate resources, reduce the level of investment, undermine good management practices and increase the risk to the entire financial system can be found in a new book by John A. Allison, former chairman and CEO of BB&T (the ninth-largest financial company in the United States), entitled "The Financial Crisis and the Free Market Cure: Why Pure Capitalism is the World Economy's Only Hope".
