Sunday, February 13, 2011

Something is missing?

Our President is telling us to improve the economy that we, as a nation, have to invest in transportation infrastructure maintenance and high speed railways. Now all this is well and good but I see employment problems it doesn't address. Making work for the construction industries doesn't get the multi-millions of unemployed jobs unless they become tradesmen through retraining.

Can't you just see all the unemployed traveling by high speed rails from one end of the country to the other in search of jobs that aren't there. That is, after the 20 years+ it takes to construct such a facility. Furthermore, our country is not compact like Europe or Japan, it is dispersed, not concentrated in cities. So what incentive is there for people to seek transportation by trains when even in the highly populated North-East coast corridor Amtrak needs government subsidies to exist.

Worse yet, Infrastructure doesn't address the root problem affecting our economy which is that we are no longer a nation that produces things people spend money for. Our country has changed from a producer of goods to a purchaser of goods along with a user of services. Our balance of trade demonstrates that we are not creating what the world wants. The industrial base that allowed us to win WWII is pretty much extinct, our manufacturing base has moved outside our borders.

The sad fact is that our government really doesn't understand what makes our economy functional. Somehow the notion has taken root in Washington that if feel-good projects like alternative energy and "green" projects are stimulated by government fiat that all will be well. Unfortunately, the government is a dollar short and a day late when it comes to the enterprise department. It's free enterprise that visualizes and develops new markets because of entrepreneurs who see a profit potential.

Other than in wartime, the government's role should be to stand aside and foster economic growth by stimulating innovation. This is necessarily done by encouraging investment rather than taxation of available assets for social welfare and transfer payments. Neither of these result in economic growth, only further dependence on government largess. For lack of a better term, what is needed is tough love, not a benevolent government.