Marching Behind Europe Toward Cliff's Edge

By Susan Brown
Wednesday, January 11, 2012

Freedom is a two-edged sword, in that it grants us the opportunity to destroy our own destiny should we make wrong choices. But it doesn't have to be that way, should we choose to learn from others' mistakes.

The voice of reason beckons those who are willing to listen: Czech Republic president Vaclav Klaus sounded the warning bell regarding our economy last summer while in Berlin. "With the way your American government has been going," Klaus said, "you might be able to catch up with us - in terms of our problems - very soon."

Klaus was not kidding. Klaus was referring to America's snowballing debt and unbridled spending as compared to the dilemma faced by our European neighbors across the pond. Klaus said much of Europe's demise is due to over-regulation, an out-of-control welfare system, "new and more sophisticated forms of protectionism, and continuously growing legal and regulatory burdens on business."

Sound familiar? Klaus may as well have been describing policies under the current administration, and left unchecked, it would be arrogant for us to expect a better outcome.

Klaus has clout and knows what he's talking about. He earned a doctorate in economics, but it is the degree he earned from the school of hard knocks that carries the most weight. Having survived both the Nazi occupation of Czechoslovakia and later, Soviet communism, Klaus has a comprehensive understanding of good and evil and liberty and suppression; his words should be taken seriously.

During the speech, Klaus blamed Europe's severe economic plight largely on its social democratic system drenched with entitlements that has all but choked the last breath out of the Eurozone's economy. Czech central bank Governor Miroslav Singer concurred in a January 8, 2012 Reuters interview expressing that bailouts have done little to solve problems in Europe, but much to feed them.

Recent history does not bode well for those following the Keynesian economics theory that ramped-up government spending spurs economic growth. Speaking about the deficit spending during the Great Depression in 1939, FDR's Secretary of Treasury Henry Morgenthau, Jr. said, "We have tried spending money. We are spending more than we ever spent before and it does not work." Morgenthau went on to say, "After eight years of this administration we have just as much unemployment as when we started...and an enormous debt to boot." Japan tried the same thing in the 1990's -- to no avail.

Sure, it's tempting to cherry-pick snippets of positive information like the recent drop to 8.5 percent unemployment to make the case that the European bailout prototype viz-a-viz Obama Stimulus bill helped the financial state of our union during a time of crisis. This line of reasoning suggests that a federal program paying someone to tear up a road and then to rebuild it in effect injects cash into the economy, thus creating more jobs. It didn't work during the Great Depression, it didn't work in Japan, it isn't working in Europe, and the wasting of billions of dollars on an ill-conceived Stimulus bill did not spur healthy growth.

House Minority Leader Nancy Pelosi is bent on the myth that the extension of unemployment benefits will miraculously create jobs and stimulate economic growth. I'm tempted to send Ms. Pelosi a beach bucket with a note attached asking her to use the bucket to "bail out" water from the deep end of one of her California constituent's swimming pools and then try to "redistribute" that water to the shallow end of the pool to see if it makes a difference. It won't. Despite popular belief, there is no "Obama Stash" buried in the White House Rose garden, therefore, shuffling around the same money cannot grow the economy.

Left alone, our economy was designed to heal itself overtime, but, unfortunately, without apology or regret, Obama's European-style intervention has muddied the waters and the process - leaving in its wake, the hope that he is limited to one term -- or America may indeed "catch up" with Europe as Klaus so warned.