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:


May 19, 2022 • 12:53 PM

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Barack Obama – the Rooster Who Claimed Credit for the Economic Sunrise Print
By Timothy H. Lee
Wednesday, September 30 2009
Barack Obama and his apologists now conveniently claim credit for stabilization of the downturn, as if the downturn would have otherwise continued into perpetuity. In this way, he is like the proverbial rooster who claims credit for the sunrise.

Quick:  Think of the last American economic recession, or even depression, from which we didn’t recover. 

Obviously, no such example exists. 

Our capitalist, free-market economic system has created more prosperity and human innovation than any other economic system ever conceived or implemented by humanity.  The tradeoff, of course, is that market economies encounter occasional downturns, but to paraphrase Winston Churchill, “it’s the worst economic system ever created – except for all of the others.” 

By way of comparison, socialist economies are relatively immune from these cyclical downturns, but only at the catastrophic cost of miserable levels of wealth and human comfort.  One need only recall the food shortages in the former Soviet Union, or the 1950s-era automobiles decaying on the streets of Havana, Cuba, to conceptualize that tradeoff.  The simple fact is that although economic downturns naturally occur in a market economy, economic recoveries also occur naturally and lead to ever-increasing levels of prosperity and growth. 

Unless, of course, government unwisely interferes and stifles that natural recovery process. 

For example, the misguided efforts by Herbert Hoover and Franklin Roosevelt to engage in trade protectionism, tax increases and greater government regulation only exacerbated and perpetuated the Great Depression.  As a consequence, it lasted longer and created more damage than previous American depressions from which we had recovered naturally. 

Despite these realities, Barack Obama and his apologists now conveniently claim credit for stabilization of the downturn, as if the downturn would have otherwise continued into perpetuity.  In this way, he is like the proverbial rooster who claims credit for the sunrise. 

The reality, however, is very different and potentially alarming. 

In their essay “The Stimulus Didn’t Work,” economists John F. Cogan, John B. Taylor and Volker Wieland demonstrate that Obama’s scheme failed in its intended purpose.  Six months after his $787 billion proposal passed, they have shown the absence of any “noticeable impact on personal consumption expenditures,” because “temporary changes in income have little effect on consumption.”  They also show that the modest gross domestic product (GDP) stabilization began in the first quarter of 2009, before the “stimulus” bill took effect. 

They further note that subsequent stabilization between the first and second quarters of 2009 was primarily due to defense spending that was not part of Obama’s $787 billion behemoth. 

Their study, of course, confirms what Americans had already begun to realize when unemployment rose to 9.7%, despite Obama’s confident promise that it would top out at 8% if his “stimulus” bill passed. 

Notwithstanding these realities, one of the more visible signs of economic stabilization to which Obama points is the stock market, which has surged 46% since its March depths.  But it is sobering to realize that every previous market recovery of that extent occurred during the 1930s or 1970s, periods of prolonged malaise.  The market rallied 48% between 1929 and 1930, it nearly tripled between 1932 and 1933 and it rose 76% in 1974. 

Economists’ consensus is that GDP growth will slow in the fourth quarter due to a “sugar high” effect of third quarter GDP growth.  This is a troubling sign, because growth at this point in an economic cycle (the recession began in late 2007) should be far more robust and prospective. 

The Federal Reserve will likely raise interest rates fairly soon to avoid runaway inflation following Obama’s reckless spending, which will dampen economic growth.  Additionally, consumer confidence unexpectedly dropped this week, as did durable goods orders.  This is a troubling sign, because “people want to be optimistic and want to be positive,” as noted by analyst Kent Croft of the Croft Value Fund.  Further, business starts, which are a signal of future economic optimism, have fallen more steeply than in previous recessions. 

Even more ominously, however, Obama’s broader fiscal irresponsibility may be stealing future economic growth. 

After all, the trillions of dollars that he has spent or plans to spend must come from either higher taxes, even more borrowing, printing of money or some combination thereof.  None of these options is a recipe for economic growth, but rather acts as a deadweight. 

Wreaking further havoc, Obama and the Pelosi-Reid Congress stand poised to drastically increase taxes (whether by foolishly allowing the 2003 tax cuts to expire, through carbon cap-and-tax legislation, healthcare taxes, etc.), regulatory burdens, the stranglehold of Big Labor, trade protectionism and unprecedented deficit spending.  

Accordingly, far from claiming undeserved glory for the economy’s natural stabilization tendency, Barack Obama should stop and consider the potentially catastrophic damage his policies will inflict upon future prosperity. 

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When did Memorial Day officially become a federal holiday?
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—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)?