Pyrrhic victories?

After two years of tax rebates, big business bailouts, and "stimulus" spending, the American people are still waiting for some sign that their leaders are capable of using some common sense instead of blindly following the policy prescriptions of a defunct economic theory from the 1930s. Despite the successful enactments of thousands of pages of new bills, Barack Obama's popularity has been washed away to a point that millions of those who stayed at home during the last presidential elections are feeling nostalgia for George W. Bush. While economists are still debating whether life fits the Keynesian model, the negligible impact of the current administration's unprecedented fiscal expansion on the U.S. labor market has left three out of four Americans with serious doubts in the ability of government intervention to nurture the private sector back to health.

After nationalizing a big chunk of our healthcare, the Democrats have managed to redesign the financial sector in a hodgepodge of new rules concerning everything from my ATM card to the multi-billion dollar transactions of Warren Buffet on Wall Street. Sweet talks of "transparency" and "bipartisanship" were forgotten as the administration used all the dirty backstage tricks to push unilaterally on us their agenda for expanding government power over our economic decisions, all with promises of creating a healthier environment for sustainable growth of America's businesses. But so far the private sector is not impressed, refusing to step up to the plate by order from Congress. It may be because, instead of "picking up the slack," government activism has increased uncertainty, making entrepreneurs hesitant to hire and invest. Instead of breaking up the "vicious cycle" of the next Depression as predicted by the latest batch of Keynesian economists, political mismanagement may have produced its own long cycle of market confusion, depressed expectations, and meager growth.

So what does this all mean for the foreseeable future? The usual mix of good news and bad news. Those who intend to follow in the steps of Europe and do something about America's addiction to deficit spending will win some impressive victories in the fall, thus giving those in power the perfect excuse why they have not delivered the goods by November 2012.