Budget battles

Barack Obama ushered in his job creation scheme by threatening us with another Great Depression. He promised that resurrecting Keynesian policies would keep the sky from falling and unemployment rates from creeping above 8 percent. Two years of stimulating the labor market has kept the number of jobless Americans in the 9-10 percent range.

I have been explaining from the beginning why the plan cannot work. When the failure of the stimulus and the discontent of the people became evident, I also noted how our spendthrift government could have turned its expected defeat in the midterm election into an advantage for the purpose of reelecting its "progressive" president. And now we see how California Democrat and House Minority Leader Nancy Pelosi has coined the slogan "Show us the jobs!" during the current budget battles, a catchy phrase that her troops will likely chant ad nauseam until November 2012.

At the beginning of the stimulus experiment, my neo-Marxist friends were reminding me that unemployment is something that the capitalist system needs in order to function, that capitalism has a natural historical tendency to produce surplus labor. As Karl Marx wrote in 1867: "Capitalism forms an industrial reserve army . . . it . . . creates a mass of human material always ready for exploitation." Thus, the only cure for unemployment is socialism.

New York Times columnist Paul Krugman and other Keynesians did not want to give up on capitalism yet and so they argued that we need much more spending to feel its beneficial effects. While Warren Buffett was comparing the stimulus to "taking half a tablet of Viagra," I was trying to explain that expanding the government to cope with recessions is as prudent as treating the effects of alcoholism with heroin-it may feel good for a while, but it paves the way for the vicious cycle we know too well from the 1970s.

There is no easy way out of the trap for those who want to restore fiscal sanity in Washington. Telling the American people, once and for all, that it is not the government's job to create jobs is a good start though. Politicians and bureaucrats do not create prosperity. Let Congress fix the broken rules, simplify the tax codes, and get out of the way.

EDITOR'S NOTE: Part 3 (". . . And the ugly") of Alex's three-part series on President Obama's State of the Union address will be posted next Tuesday.