Today President Obama addressed a group of people who represent the most historically successful and significant businesses in America. Insurance providers, car manufacturers, and home goods producers gathered together to hear what changes President Obama has in store for the United States economy. This is not just a question large business owners are wondering about. It is a vital question every American wants answered.
President Obama begins his speech by discussing our current situation and reminding his audience that despite the recent hardship they have previously managed to find common ground. But President Obama does not dwell on the past or linger on the mistakes that led to the current recession, he quickly moves on. Painting a bright future he says, "we need an economy where we generate more jobs here at home... We need to invest and nurture the industries of the future, and we need to train our workers to compete for those jobs." The "we" used in the previous sentence sets the tone for the remainder of the speech. In what could be a reference to High School Musical President Obama says, "we are all in this together." High School Musical presents a rosy world where despite personal differences people decide to help their competitor reach his or her goals. In the end, everyone in the musical is happy with the outcome, because they worked together.
Unfortunately, economic principles do not allow the government and private businesses to work together as successfully as the actors in High School Musical. President Obama upholds previous government projects such as social security, unemployment insurance, and agricultural research as ways in which the government has acted as a catalyst for private business. He wants to continue in this vein by increasing government spending on education, infrastructure, and innovation. At the same time he wants to prevent an "entitlement state" and encourage the growth of businesses. The problem is that the money for all of these different projects has to come from somewhere. If the government is borrowing money for its projects, then businesses are not borrowing that money. One type of spending replaces the other. Mises illustrated this point by referring to the government building a hospital; "the government, appearing on the market as a buyer, replaces the individual citizen" (Mises 57). Instead of borrowing the money, the federal government could raise taxes. But if the government is spending the money, then why earn it in the first place?
Later in the speech President Obama presents ways to revitalize business in the United States. He suggests a tax credit for small businesses that higher new workers and a tax incentive for large businesses to create new factories. This initially sounds like a good idea. Who does not want more employment? The problem is that offering incentives is expensive, and once again the money has to come from somewhere. There is a third way government can come up with money and that is simply to print it. A significant amount of money has already been printed during the Obama administration, because printing money is a way for the government to spend without directly taxing the citizens. However after a period of time printing extra currency leads to inflation and eventually a loss of confidence in the currency. Even in the case of printing money politicians are deciding where the money is to be spent. In addition, with the current uncertainty in the market companies do not need more factories. As of late production has significantly slowed, because people are buying fewer goods. If people are not buying a good, companies cannot make a profit, so why would they want to incur the expense of building an extra factory?
Finally, President Obama addresses the need for "consolidated supervision of all institutions that could pose a risk to the system." He only means to increase government oversight of financial institutions at this time, but in the future if it looks like other types of businesses "pose a risk" there is apparently no reason the government should not step in there as well. Once businesses are overseen by the government, they are more inclined to pander to government bodies and less likely to respect the consumer. As Mises concisely stated the issue, "the government wants to interfere in order to force businessmen to conduct their affairs in a different way than they would have chosen if they had obeyed only the consumers. Thus, all measures of interventionism by the government are directed toward restricting the supremacy of consumers" (Mises 40). When governments regulate business, consumers lose power and voluntary exchange is no longer completely voluntary.
President Obama brings up several other topics in his speech including affordable healthcare, free trade, and energy conservation. President Obama says he will continue to work on trade agreements with foreign nations and will look for ways to lower the deficit. These are all problems that deserve to be discussed in detail, yet all I have time to say here is that if President Obama can accomplish everything he is promising to accomplish while keeping the federal government within its means, he may truly be a miracle worker.
References:
President Barack Obama. "Remarks by the President to the Business Roundtable Quarterly Meeting." 24 February 2010. Web.
Ludwig von Mises. Economic Policy: Thoughts for Today and Tomorrow. Auburn, Alabama: Ludwig von Mises Institute, 2006. Web.
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