Why Free Market Economics Will Save America
June 21st, 2011When President Obama took office, the country was experiencing an economic crisis. Keeping up with the old Keynesian economic tradition, the President, as well as many members of Congress, held the belief that government intervention was the only way to get the economy going again. Therefore, Congress passed over $2 trillion in stimulus funds and TARP funds for failing banks, as well as the $600 billion quantitative easing program by the Federal Reserve. The idea behind these funds was that they would create jobs, stabilize banks, and let credit flow to those who needed it. Also, Congress authorized nearly $220 billion in tax credits and homebuyer assistance programs to save a rapidly deteriorating housing market.
Unfortunately, these programs have done nothing more than raise the deficit, and put America’s perfect credit rating in jeopardy. Unemployment remains above 9%, despite assurances that these funds would keep it below 8%, and the housing market is now in total free-fall. It is clear that the trillions of taxpayer dollars spent to stimulate the economy have not worked, so what will?
On his website, Professor Antony Davies of Duquesne University explains how free market practices are better for the economy than government stimulus, and also dispels the notion that increasing the tax rates would increase tax revenue (). Davies also discusses the unintended consequences of government intervention in the market, especially with regards to price controls.
