The Road to Economic Demoralization

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There’s no question that current government policies for taxes, spending, and regulation are causing the U.S. to lose competitiveness in the global race for capital, prosperity, and growth.

What’s particularly galling about Obamanomics is that we may well be losing our competitive edge with Europe. While Europe is ever so slightly moving toward Reagan and Thatcher, the U.S. is shifting toward an overtaxed and overregulated model that smacks of François Mitterrand. That’s something no one should want to tolerate

Heavy government controls at home, along with an income-leveling social policy couched in economic-recovery terms, is no way to run a railroad. At the simple stroke of a computer key, world investment flows to its most hospitable destination. That includes a reliable currency.

But in President Bush’s last year and President Obama’s first, the U.S. has become a less-hospitable destination for global capital. That should worry everybody... [snip]

Higher tax rates undermine the incentive model of growth. At the margin, investment risk and work effort become less rewarding. On top of this, Obama’s regulatory moves toward greater government control of the economy will further drown spirits in a sea of red tape born of bureaucratic officialdom.

Think about this in terms of the threat to nationalize heath care, which is over 15 percent of the economy. Additionally, Washington’s cap-and-trade proposals will essentially nationalize the entire energy sector -- another 15 percent of the economy -- sending long tentacles into every nook of the economy that’s impacted by energy, which is virtually everything... [snip]

Here’s the clincher: Year-to-date, Dow Jones stocks are off 8 percent, while China stocks are up 71 percent. The world index is up 4 percent. Emerging markets are up 25 percent. They’re all beating us. None of this is good.

We’re going the wrong way. That’s why stock markets are not voting for the United States anymore.

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