Friday, May 2, 2008

Rebate economics

Because I've got a large family -- five of my six children are under 16 -- I'll be getting a hefty rebate check from Uncle Sam, but that's not going to fix the economy. The "stimulus" merely adds to the federal budget deficit, and the ballooning deficit is a big part of the problem.

Michelle Malkin observes:
The solution to the problem of too many people borrowing money and spending beyond their means -- charging their credit cards up the wazoo, buying more house than they can afford, etc., etc., etc. -- is not to borrow more money for a one-time rebate that encourages them to spend more to produce a short-term, feel-good boost to the economy.
America's current economic woes won't be fixed by such measures. Bad monetary policy at the Fed and bad fiscal policy in Washington are the chief culprits. Underlying this, however, is the looming disaster of Social Security and Medicare -- entitlements that impose massive liabilities on taxpayers, but do nothing to generate economic growth. In fact, by siphoning cash from the pockets of young workers and funneling it into the pockets of the elderly, Social Security and Medicare function to prevent capital formation, and capital formation is essential to growth.

But you have to understand economics to get that argument, and the overwhelming majority of Americans don't understand economics. The president has an MBA from Harvard, so one presumes he understands economics, but if he's ever tried to explain these things to the American people, I don't remember.

When Bush was pushing Social Security reform in 2005, he obsessively chattered about private accounts, yet I don't recall that he ever tried to explain why the accumulation of private wealth is a good thing. Ultimately, arguments for economic freedom fail, unless one is willing to contrast the morality of the market versus the immorality of the alternatives.

I'll be glad to take my immoral tax rebate (which is not actually a rebate, but rather an ill-disguised welfare payment) and use it to pay bills. No "stimulus" will result from that, but why should I care? I don't get paid to worry about the economy, and the people who do get paid to worry about it have been screwing things up, so why should I cooperate with their plan?

UPDATE: Just noticed Michelle's link to, and this video:

Since moving from Georgia to Maryland in 1997, we've rented. The real estate market in the D.C. area was already ludicrously inflated before the "bubble," and there has never been any prospect that I could buy a house here on a journalist's salary.

Part of economic common sense is being able to recognize when you can't afford something. I don't have a boat or an SUV, either, but unlike boats and SUVs, some people apparently have the idea that home ownership is an entitlement, a right. Thus we have all kinds of government programs intended to ensure that everybody can buy a house -- even if they obviously can't afford a house.

So I have zero sympathy for idiots who got themselves upside-down on ARMs and then cry: "We're losing our house!" No, ma'am, you're not. It's not your house, it's the bank's house, and the bank is just taking back what is rightfully theirs. Stop whining and start paying rent.

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