Saturday, May 28, 2011

It's About the People Not The Budget

The government budget is not the source of the nation's wealth.

Adam Smith pegged this one two centuries ago. The wealth of the nation has a lot more to do with what the people are doing than with what the government is doing.

Yes, there was prosperity in the Clinton years. This prosperity had absolutely nothing to do with the government.

Clinton had the fortune of being president during the height of the productivity of the baby boom. We had just had a clear victory in Desert Storm. Clinton inherited the tale end of the PC revolution. I spent $2,000 every two years to buy a new computer. My current computer is a 2003 model that will last another several years.

Clinton reigned during the internet boom when companies were bowling over each other to be the first online.

Clinton benefited from the absolute height of the telecom revolution. People, accustomed to a dollar a minute, would rush to providers offering thirty cents a minute long distance and would rush to the streets at the thought of a dime a minute call.

I was extremely angry at Clinton and the Fed. It was clear to me in the '90s that the loose monetary policies were flooding the market that would undermine our tech sector.

To cap off the Clinton years, Al Gore used his legendary scare tactics to convince the world that Y2K was an apocalypse of biblical order. Companies flooded the market with capital to avoid the scare.

The bad money and false demand created during the Clinton years chased out the good money and the whole tech sector blew up in the dot bust.

I agree that Bush was bad for the economy. A tax cut without a corresponding spending cut was poison.

The prosperity of the computer and internet revolutions was the result of computers, the internet and cell phones that appeared on the market. The computer revolution was not the result of the government's budget.

If there is anyone in the tea party or Republican party interested in restoring prosperity, they should look at what people are doing before dissecting the budget.

No comments: