With elections looming this November, the economy continues to stagger along as lifelessly as ever. The last time we had elections, President Obama was able to ride the publicâ€™s general outrage, in large part generated by the poor economy, to victory.
But two years later, the change voters hoped for hasnâ€™t occurred. The economy is now worse than when Obama was inaugurated, with unemployment higher, incomes lower and future prospects bleaker.
Obama hasnâ€™t failed due to lack of effort; heâ€™s certainly tried.
But heâ€™s failed for the same reason most politicians fail to improve the economy; itâ€™s really hard for one person or small group of people to manage an entire economy efficiently.
Iâ€™ve always found it strange that we trust the same politicians who incompetently handle foreign wars and domestic disasters such as the oil spill and hurricane Katrina with the power to centrally guide our economy. Running an economy is a task way above the pay grade and intelligence level of our elected officials.
Weâ€™ve given both parties a chance to deal with the economic mess of the past three years. The Republicans had the first shot in 2008 with TARP, otherwise known as the â€œLetâ€™s give taxpayer money to bankers who helped create the mess and hope something good happens.â€ This failed for obvious reasons.
The voters had enough of the Republican plans and gave Democrats a chance. The Democrats have thus far produced a stimulus that failed to stimulate anything other than the surging national debt. Obama gravely warned America that if his stimulus plan wasnâ€™t passed, unemployment might rise above, gasp!, 8 percent.
We passed his misguided effort and have been rewarded with an unemployment rate of 10 percent in return for trusting his word.
In short, neither party will, or is even capable of, fixing the economic mess. We have plenty of evidence over the years that shows that government intervention just plain doesnâ€™t work.
In the 1970s, for example, both Richard Nixon, a Republican, and Jimmy Carter, a Democrat, tried a whole variety of hare-brained schemes during their presidencies that caused both large federal budget deficits and economic pain. In fact, Carterâ€™s policies backfired so terribly that he is perhaps most notable for creating the so-called â€œmisery indexâ€ to measure just how badly the economy was functioning.
More recently, the government has fought each little recession with huge government stimulus efforts. By tinkering with interest rates and tax levels, the government has motivated consumers to keep spending money long after their wallets run empty.
Now consumers arenâ€™t just out of money, theyâ€™ve also maxed out all their credit cards and tapped every dollar of home equity they had. The drivers of our economy over the past 30 years, the upper-middle class consumers, are completely broke.
Thereâ€™s no solution to this problem except time. By fighting each little economic dip as a major crisis, the government set the stage for there to be a truly massive economic decline. Now that the decline has begun, our politicians act increasingly befuddled as their policies continue to fail.
They need to realize that you canâ€™t whip a dead horse. Savings are the lifeblood of an economy, and previous government policy successfully urged consumers to waste all their savings on disposable goods rather than making investments in our economy.
Instead of letting the savings level in our country rise, which is the needed fix, the government is still trying to motivate consumers to spend money with schemes such as cash-for-clunkers and the new home-buyer credit.
The best policy for the government at this point is to get out of the way. They caused the recession, and despite wasting trillions of taxpayer dollars fighting the recession, theyâ€™ve failed to fix it.
Unfortunately, both parties seem intent on continuing to try to tinker with the economy. The Republicans are passionately fighting to save Bushâ€™s dubious tax cuts while Democrats are promising us that, if re-elected, they will continue to squander more taxpayer money on additional ineffective stimulus.
Hopefully whichever party we elect will realize itâ€™s not smart enough to run an economy and will instead let the market work. Otherwise, with the economy still in recession in 2012, weâ€™ll get to have the same discussion on how our politicians have failed to fix the economy.
Ian Bezek is a senior economics major. His column appears Wednesdays in the Collegian. Letters and feedback can be sent to firstname.lastname@example.org.