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Video: The Forgotten Amendment

In this week's Freedom Minute, CFIF’s Renee Giachino questions what limits exist on the federal government and the importance of state and local sovereignty as envisioned by the Founding Fathers.…[more]

October 24, 2014 • 10:26 am

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Obama’s Real Gaffe Was About the Public Sector Print
By Troy Senik
Thursday, June 14 2012
Only the private sector can create economic growth. The public sector is limited to providing a handful of factors – law and order, infrastructure, etc. – that make that growth possible.

It was the gaffe heard ‘round the world. If Barack Obama’s political adversaries had been allowed to script a moment that laid bare all of the president’s failings as an economic leader, they couldn’t have done much better than the moment last Friday when the Commander-in-Chief, appearing behind the lectern of the White House Briefing Room shortly after the release of a truly dismal jobs report (8.2% unemployment and a middling 69,000 jobs created), announced that “the private sector is doing fine.”

Particularly in the midst of an election season, the most damaging gaffes are those that reinforce a pre-existing narrative about a candidate’s shortcomings. Just as Mitt Romney’s February statement that he was “not concerned about the very poor” gave sustenance to the stereotype of the Republican candidate as a heartless patrician, Obama’s verbal misstep amplified the notion of the president as an out-of-touch economic illiterate. So swift and intense was the damage that the president had to summon reporters to the Oval Office within hours to clarify.

The real gaffe, however, wasn’t the “private sector” line. Had Obama given that phrasing a moment’s consideration, he surely would have thought better of it. Rather, the most troubling aspect was the sentence that followed: “Where we’re seeing weaknesses in our economy have to do with state and local government -- oftentimes, cuts initiated by governors or mayors who are not getting the kind of help that they have in the past from the federal government and who don’t have the same kind of flexibility as the federal government in dealing with fewer revenues coming in.”

In case you’re wondering, “the same kind of flexibility” refers to the ability to run up debt as far as the eye can see.

There’s a fundamental misunderstanding of basic economics here; one that’s shared by the vast majority of Democrats in Washington. Obama is operating on the implicit notion that there are two sectors of the economy – public and private – that each needs to grow in order to ensure the return of healthy growth. This mindset fails to grasp an essential distinction: The private sector is a positive good; the public sector a necessary evil.

Republicans have become fond in recent years of saying “government doesn’t create jobs.” It’s a true enough sentiment, but one that doesn’t make sense to the economic layman. If the state is cutting a check to a crossing guard or a DMV clerk, isn’t that creating a job?

What conservatives really mean is that government doesn’t create wealth. When voluntary transactions occur in the private sector, both parties are made better off. You’ll only pay $10 for a pizza if you value the food more than the money. And the pizza maker will only agree to the sale if the money is more valuable to him than the effort and resources that went into making it. As a result, both are better off and the wealth of each – one in terms of money, one in terms of resources – has been expanded.

Government doesn’t work that way. It’s only through the state confiscating private sector wealth in the form of taxation that it can afford to pay state employees. In certain cases – police officers and fire fighters for example – that’s necessary to provide public services that generally require government provision. But in many other cases – paying a Department of the Interior staffer $115,000 a year to update Facebook or an FHFA intern nearly $50,000 a year, for instance – the result is a net drain on the economy.

Obama and his fellow liberals desperately need to rediscover the fact that public employment should only exist to the extent that it represents public service – that is, to the degree that it provides vital goods and services that otherwise wouldn’t be provided by the free market. And even the most revered government workers, such as teachers and public safety officers, should only have a job when they are (A) necessary and (B) effective.  In the private sector, a bad worker loses his job and an overstretched firm lets excessive employees go. Contra the president, keeping these same inefficient workers employed in the public sector is actually a net drain on the economy.

Only the private sector can create economic growth. The public sector is limited to providing a handful of factors – law and order, infrastructure, etc. – that make that growth possible. Until President Obama learns that lesson, he should expect similarly dismal economic numbers to continue arriving on his desk on a monthly basis.

Question of the Week   
Voters in how many states will be asked in the November 2014 mid-term elections to accept or reject state-wide ballot measures to legalize the recreational use of marijuana?
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"In an effort to keep the public calm, the CDC pretended to know more about Ebola than it actually does.First, the CDC insisted that Ebola is very difficult to transmit from person to person. But, that is clearly not true. This particular Ebola strain appears to be more infectious than others. ...Second, the CDC insisted that Ebola is not airborne. That is probably mostly true, but it may not be entirely…[more]
 
 
—Alex Berezow, RealClearScience Founding Editor and USA TODAY's Board of Contributors Member
— Alex Berezow, RealClearScience Founding Editor and USA TODAY's Board of Contributors Member
 
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Thinking only about voting procedures and requirements in your state, how much confidence do you have that voter fraud will be kept to a minimum in the 2014 midterm elections?