Friday, January 8, 2016

No Growth Hits the Limousine Crowd

The wealthy liberals are now seeing the fruits of their no-growth economic policies.  Even the stock market has finally begun to pay attention to the lack of growth in the western economies. 

While the pundits continue to drone on about China, the Fed and the oil market, the truth is we live in an over-regulated world.  That creates two related problems: 1) it is incredibly difficult to start a new business or to expand an existing business; 2) dislocations like the current fallout from the energy industry take forecver to effect transition of the unused resources to other purposes.  Both of these problems create enormous economic waste.

Lets do some simple arithmetic.  If an economy grows at a two percent rate for seven years, it will have 15 percent more GDP at the end of seven years than it had at the beginning.  If that same economy grew at four percent, the increase in GDP would be 31.5.  Subtracting one from the other, our economy would be 16.5 percent larger today, if we had the average growth rate since World War II.  16.5 percent of $ 18 trillion is almost $ 3 trillion.

So, the true cost of Obama economic policies is 16.5 percent of our GDP by this point, or almost $ 3 trillion.

So, all of these arbitrary regulations and Dodd-Frank type legislation have real-world costs.  Now the rich are beginning to help pay the cost with a weakened stock market.  The middle class has been paying the cost for the past seven years and will continue to suffer as long as this regulatory regime remains in place.

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