Robert Reich comments on the current economic situation:

Regardless of your ideological stripe, you’ve got to see that when consumers and businesses stop spending and investing, there’s only entity left to step into the breach. It’s government.

This is like saying that if you won’t jump into the pit, we’ll just push you. 

When the government spends money, it spends taxpayer money.  With regard to the current economic situation, it is money that taxpayers have already decided not to spend.  They’ve made that decision because, as Reich himself notes, “they’re perilously in debt and worried about keeping their jobs.”

If government then steps into the breach, politicians are overruling your decision about whether or not your money should be spent—and on credit, by the way.  Keep in mind that you knew you couldn’t afford it.  Reich knows it, too.  He acknowledges:

From the standpoint of any particular individual, paying down debts or saving may be smart behavior — even commendable. But what’s intelligent for an individual does not necessarily translate into what’s good for the economy as a whole. The only way to get businesses to create or preserve jobs is through additional spending.

But it is also true that what’s good for the economy as a whole is not necessarily intelligent for the individuals the politicians want to put on the line.  Reich, like so many others, is advocating that we prop up our house of cards and keep pretending it is sturdy.  I would much rather he allow me to figure out whether or not I can afford to be a part of the scheme.  Of course, this kind of conservative viewpoint may sound very unrealistic and overly selfish.  After all, there’s the whole Keynesian paradox of thrift to think about.  There are a lot of people counting on me to buy things with money I don’t have.

In other words, the economy is too big for us to afford having it jeopardized by what is good for us individuals.

But not long ago, it was Reich who said:

[I]f a company is too big to fail, maybe – just maybe – it’s too big, period.

 

It strikes me as remarkably inconsistent that Mr. Reich would not be willing to level this same criticism at government.  But consider the point made by another (albeit less famous) economist:

Imagine, it was in 1900 that the US government only taxed us at a 2.5% rate. Then, after each successive war, the government has found it necessary to boost its take of economy to today, where including Obama’s bailout, I estimate the federal government ALONE will take 30% of GDP in 2009.

If the goal of Reich, the President, and the other big spenders in Congress is simply “to create or preserve jobs here in America,” then maybe we can start by reevaluating how that tax money that is already collected could be better spent.  We could certainly consider limiting the salaries of federal employees (as was proposed with corporate executives) and spread the wealth that the federal government is already distributing, rather than printing and/or borrowing ever more money.

It would be an inspiration if President Obama himself would take the lead and forgo his $400,000 salary, his $50,000 expense account, and his $100,000 nontaxable travel account.  That would pay for a dozen jobs like mine right there.  And it would also put Barack Obama in pretty impressive company: George Washington is the only president to have refused his salary, and John Kennedy gave his to charity.  (confirm at Wikipedia)

Set the example, Mr. President.  Until then, regardless of my ideological stripe, I just don’t see how I could take your (or Mr. Reich’s) populist rhetoric seriously.

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