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Archive for January 25th, 2012

Why Obamanomics Will Fail

By Jerry A. Kane

Obamanomics is a Marxist-based redistributionist economic philosophy that sees the federal government playing the role of the great equalizer, i.e., “tax the rich, feed the poor til there are no rich no more.”

“We can either settle for a country where a shrinking number of people do really well, while a growing number … barely get by. Or we can restore an economy where everyone gets a fair shot, everyone does their fair share, and everyone plays by the same set of rules.”—Obama, State of the Union Address January 24, 2012

Obama seems to be saying that it is the duty of the federal government to even the playing field and force people to contribute to society to the best their ability and consume from society in proportion their needs, or as Marx coined, “From each according to his ability, to each according to his need.”

Obama’s State of the Union brings to mind the story of the economics professor who claimed that he had never failed a single student, but he had failed an entire class once because it had insisted that Obamanomics would work if given the chance.

So the professor decided he would do an experiment with the class on Obamanomics. “All grades will be averaged and everyone will receive the same grade, so no one will fail, and no one will receive an A,” said the professor. (To attach the students with the consequences, the professor substituted grades for money.)

After the first test, the grades were averaged and all the students received a B. The students who studied hard were upset, but those who studied little or not at all were happy. When the second test rolled around, the students who had studied little studied even less, and those who had studied hard decided that they would take the free ride and studied little.

The average of the second test was a D, and no one was happy. After the third test, the average was an F. With each ensuing test, the class average decreased, but the bickering, blame, and name-calling among the students increased; and no one was willing to study for the benefit of anyone else.

When their final grades were posted, they all failed.

“If you look into the sources of poverty, you will find that most of them are derived from … wrong-headed government policies.”—Milton Friedman

In his final lecture, the professor pointed out that Obamanomics would also ultimately fail because when the reward for success is great, the effort to succeed is great, but when incentive is replaced by a handout, success goes with it. It’s that simple, the virtue of selfishness Ayn Rand called it.

“The world runs on individuals pursing their self-interest. The great achievements of civilization have not come from government bureaucrats. … there is no alternative way so far discovered of improving the lot of ordinary people that can hold a candle to the productive activities that are unleashed by a free enterprise system.”—Milton Friedman

In a nutshell the professor’s experiment proved that:

  1. You can’t make the poor rich by making the rich poor.
  2. For one person to get something for nothing, another person must work for nothing.
  3. The government cannot give anything to anybody unless it first takes it from somebody else.
  4. Wealth can’t be multiplied by dividing it.
  5. When half of the people believe that they do not have to work because the other half will provide for them, the providers will eventually lose all desire to work, and that becomes the death knell for any nation.

“A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world’s greatest civilizations has been 200 years.”Author unknown

After flunking the 2008 midterm, Americans must pass the final this November or else the whole country fails.


Milton Friedman: Why soaking the rich won’t work. 4:06 Video

 

 Milton Friedman – Greed 2:24 Video

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