In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom…
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Image of the Day: More Economic Freedom = Higher Standard of Living

In last week's Liberty Update, we highlighted the Heritage Foundation's 2022 Index of Economic Freedom, which shows that Joe Biden has dragged the U.S. down to 22nd, our lowest rank ever (we placed 4th in the first Index in 1995, and climbed back up from 18th to 12th under President Trump).  As we noted, among the Index's invaluable metrics is how it demonstrates the objective correlation between more economic freedom and higher citizen standards of living, which this graphic illustrates:

 …[more]

May 19, 2022 • 12:53 PM

Liberty Update

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Obama’s Economic Debacle Print
By Quin Hillyer
Thursday, June 02 2011
Almost every root of the current economic distress – the longest post-WWII recession on record – stretches down to rotten government policy.

Major news outlets are suddenly all agog because the vaunted Obama economic recovery not only never was much of a recovery at all, but also seems to be disappearing. “We are on the verge of a great Great Depression!” screams Drudge’s massive headline in red. The Wall Street Journal reports the bad news that the private-sector economy added only 38,000 jobs last month. The Washington Post announces that “U.S. economic recovery is faltering.”  CNBC says Wall Street is “baffled.” 

The only thing that should be baffling is why anybody at all is surprised.

This is what happens when government becomes too big, too intrusive, too debt-ridden and too unpredictable. Almost every root of the current economic distress – the longest post-WWII recession on record – stretches down to rotten government policy. The reasoned compassion of Jack Kemp’s promotion of home ownership was shifted by the Clinton Administration into forced lending practices. Fannie Mae and Freddie Mac, while paying exorbitant salaries and bonuses to Clinton cronies, ran amuck. Lending standards were eviscerated at government’s behest.

Meanwhile, the government got financial regulation exactly backwards. Government should let markets for real goods and services run largely unfettered while protecting the unit of exchange for those goods and services, namely money or its equivalents. Instead, government imposed heavy regulatory burdens on productive businesses and investors alike while destabilizing money itself.

It did the first – hampering goods and services – via the dreadful, over-regulatory Sarbanes-Oxley Act.

It did the second (undermining money, the unit of exchange) by effectively encouraging financial institutions to create fiat money from thin air. It did so initially by eliminating the Glass-Steagall banking restrictions (a move, in macroeconomic terms, with both drawbacks and advantages) and then by letting the newly hybrid institutions run wild by refusing to rein in the derivatives market. Money changers temporarily soared while the real economy suffered, until the whole edifice crashed down because it was built on nothing real.

On other fronts, restrictions on fossil-fuels exploration and development led to high prices in 2007-8 and again this year, causing panic in addition to more definable economic distortions. Multitudinous, burdensome regulations deterred the building both of new oil refineries and new nuclear power plants for three full decades. Absurd subsidies for corn-based ethanol, which actually do more environmental harm than good, combined with tariffs on imported cane-based ethanol (despite its real ecological benefits), cause market inefficiencies (and some engine damage) while catalyzing grain shortages that drive up food prices across the board and exacerbate Third World famines.

The Consumer Product Safety Improvement Act of 2008, bad enough as written, has been implemented with such radical abandon that small businesses and charities have been hobbled nationwide.

Other regulatory agencies have run amuck under President Obama, adding horrendous compliance costs without appreciably improving health, safety, or efficiency. This is especially true on environmental matters, where unrealistic “air quality” standards, implemented beyond the proper bounds of executive authority, leave enterprises coughing and spluttering.

The Federal Reserve Board forced interest rates artificially low for years at the beginning of the previous decade, helping spur a housing bubble, then burst the bubble by over-correcting through pushing rates high for too long. All along, a decade of “weak dollar” policies and practices (which encompass many more elements then merely interest-rate manipulation) have sent commodity prices skyrocketing, threatened the dollar’s standing as the world’s reserve currency and left American voters and investors alike worried that too much of our debt is owned abroad.

Tax policy also is a mess, with U.S. corporate income taxes the highest in the entire developed world. No wonder so many jobs are outsourced. Then there are the bailouts and government buyouts that create extravagant moral hazard, undermine the property rights of secured creditors and erode confidence in the ordinary workings of bankruptcy law.

All of that, and more, comes on top of the worst economic dislocations of all, namely those caused by out-of-control federal spending. Pork that doesn’t feed anyone. Stimulus that doesn’t stimulate. Aid that aids only the functionaries distributing it. “Shovel-ready” claims that amount to shoveling nothing more than (verbal) manure.  Meanwhile, government debt piles up to astronomical, unsustainable levels – crowding out private sector investment, scaring ordinary citizens so much that consumer confidence takes a nosedive, freezing the extension of credit even by banks that are otherwise flush and putting outrageously immoral burdens on, yes, our children and grandchildren.

Government interventions in the economy, except to set the most fundamental rules of the game through firm but unobtrusive outer limits of acceptable behavior, cause more economic distress than all the “greed” on Wall Street, cubed. It is not trite, but instead true, to say the American economy will thrive again only once government gets the sam-hell out of the way.

Quiz Question   
When did Memorial Day officially become a federal holiday?
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Notable Quote   
 
"Florida Gov. Ron DeSantis and U.S. Sen. Marco Rubio are pushing back against a Biden administration plan to give the World Health Organization authority to dictate global lockdowns and mandates, superseding U.S. and state laws.According to an amendment to a treaty likely to be approved this week by representatives of 194 countries, sovereign nations would be required to fund and participate in a…[more]
 
 
—Bethany Blankley, The Center Square
— Bethany Blankley, The Center Square
 
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Should any U.S. government agency have a function called the "Disinformation Governance Board" (See Homeland Security, Department of)?