Restoring Economic Common Sense

By:  Dale Weckbacher

Proverbs 3:21b-24

Keep sound wisdom and discretion;

22 So they will be life to your soul

And grace to your neck.

23 Then you will walk safely in your way,

And your foot will not stumble.

24 When you lie down, you will not be afraid;

Yes, you will lie down and your sleep will be sweet.

NKJV

The Book of Proverbs is the Bible’s book of wisdom.  The word wisdom used in Proverbs 3:21b is the Hebrew word hyvwt.  This word implies a sound knowledge and a sound efficient wisdom leading to success.  (1)  In our modern language we might use common sense to define this type of wisdom.  Unfortunately, as I have written earlier, this type of wisdom is sadly lacking in our society today.  This is obvious when we look at how our leaders approached the 2008 economic crash.  We sadly need a restoration of economic common sense.

The popular belief today is that the economy involves Wall Street and the Fed, which sets monetary policy.  Granted these are parts of the economy but they are not the most important part of the economy and stimulating them does little to bring real stimulation to the economy, something that should be obvious after witnessing six years of manipulation of monetary policy and stimulation of Wall Street.  In spite of these attempts to bring about a real economic recovery, millions are not working and have given up looking for work, (2) record numbers are on disability because their unemployment has run out, (3) and millions are dependent on government for their food, evidenced by the increase in individuals on food stamps.  (4)  We have tried six years of failed socialist big government attempts to stimulate the economy giving conservatives an opportunity to roll out a better means of economic stimulus. 

The economy is much more than Wall Street and the Fed.  The economy is what all of us participate in daily.  When we go to a store and make a purchase, we are engaging in an economic transaction.  These companies hire people to insure the successful and efficient completion of our transaction with them.  This includes the people we see at the store but it also includes the people that deliver what we buy to the store, and the administrative staff that insures the business works smoothly and efficiently.  There are also people that work on the assembly line manufacturing the product and those that supply the raw materials that go into making the product we are buying. 

In other words, that hamburger, CD, or clothing you recently purchased created work for many people.  To bring about real economic stimulation, we must increase the quantity and value of these millions of transaction occurring daily in the economy.  However, there are three things hindering the increase and value of these transactions:

1)      High Taxes – Taxes take money out of the hands of private individuals and businesses and transfer it to government.  As we have seen over the last six years and even prior to that, government is inefficient in spending money.  Liberals argue that private sector individuals and businesses will horde their money and thus it is the responsibility of government to tax this excess money and redistribute it so it will be spent and stimulate the economy.  However, the only reason businesses or individuals would horde money is out of fear of incurring loss or losing everything.  In a thriving economy, businesses and individuals either spend their money or invest it, both of which stimulate the economy.  According to Dr. Eamonn Butler writing for the Adam Smith Institute, tax cuts stimulate the economy because they boost business everywhere.  (5)  Government spending targets certain groups and individuals and in order to stimulate these groups, government must take money from other economic sectors.  In other words, government stimulation in one sector means suppression in other sectors so there is no gain and usually an overall loss.

2)      Excessive Regulation – Some regulation or government oversight is necessary just like the need for referees during a sporting event.  The oversight of government in business however, should be limited to insuring contracts are honored, illegal activities are stopped, and fraud does not occur.  However, the regulatory forth branch of government has overstepped these limits.  Government now regulates the water in our toilets, the type of light bulb we can use, and now with Obamacare, government will regulate what kind of health care we can receive.  These regulations cause businesses and individuals to spend money on more expensive light bulbs, toilets that use less water, and more expensive health insurance and health care.  Businesses now must consider the additional health insurance costs they might incur if they expand and need to hire more employees, putting them over the 50-employee limit.  A research paper written by John J. Dawson and John J. Seater concluded, “Regulation’s overall effect on output’s growth rate is negative and substantial.”  (6)

3)      High Government Debt – Just as taxes take money or capital out of the hands of individuals and businesses, excessive government debt takes investment capital that could be invested in the private sector and puts it into the government.  This is because the government must borrow to cover deficits so it does not go into default.  Because lenders do not have money to lend private businesses for expansion, new jobs, jobs that would be created through business expansion, do not occur.  According to Yaron Brook writing for Forbes, it is not spending that stimulates the economy but production.  (7)  To increase production we must first reduce the corporate tax rate so businesses, like Burger King, do not need to invert to avoid excessive taxation but will choose to remain in the United States.  We also must reduce excessive regulations so businesses do not invert to avoid regulations as well.  The government must also balance its budget so it can quit borrowing money that businesses could use to expand production.  Our economy needs the liberation of increased production to put people back to work and get them off food stamps and disability. 

The conservative and Republican message needs to be that we are the ones that will help you get a well-paying job in an expanding private sector.  We are the ones that will put more spending money in your pocket by allowing you to keep more of your paycheck.  We are also the ones that will make it easier for you to start your own business or expand the one you already own. 

Next Wednesday we will look at what message conservatives need to communicate regarding the security of the nation. 

1. Strongs Concordance. Strong's Hebrew Definition for #08454. www.apostolic-churches.net. [Online] Apostolic Churches. [Cited: October 28, 2014.] http://www.apostolic-churches.net/bible/strongs/ref/?stgh=hebrew&stnm=08454.

2. Eggleston, Steve. The shrinking labor force participation rate. hotair.com. [Online] Hot Air, November 12, 2013. [Cited: October 28, 2014.] http://hotair.com/archives/2013/11/12/the-shrinking-labor-force-participation-rate/.

3. Gongloff, Mark. Rise In Disability Rolls Helps Explain An Unemployment Mystery. huffingtonpost.com. [Online] Huff Post Business, May 8, 2012. [Cited: July 18, 2012.] http://www.huffingtonpost.com/2012/05/03/social-security-disability_n_1474621.html.

4. Klein, Philip. CRS report: number of able-bodied adults on food stamps doubled after Obama suspended work requiremen. washingtonexaminer.com. [Online] The Washington Examiner, September 19, 2012. [Cited: October 6, 2012.] http://m.washingtonexaminer.com/report-able-bodied-adults-on-food-stamps-doubled-after-work-requirement-suspended/article/2508430.

5. Butler, Dr. Eamonn. Why tax cuts stimulate the economy. www.adamsmith.org. [Online] Adam Smith Institute, February 1, 2011. [Cited: October 28, 2014.] http://www.adamsmith.org/blog/tax-spending/why-tax-cuts-stimulate-the-economy/.

6. Seater, John J. Dawson and John J. Federal Regulation and Aggregate Economic Growth. www4.ncsu.edu. [Online] January 2013. [Cited: October 28, 2014.] http://www4.ncsu.edu/~jjseater/regulationandgrowth.pdf.

7. Brook, Yaron. To Stimulate The Economy, Liberate It. www.forbes.com. [Online] Forbes, February 14, 2008. [Cited: October 28, 2014.] http://www.forbes.com/2008/02/14/yaron-economy-regulation-oped-cx_ybr_0214yaron.html.