Government Spending: The European Experiment

I subscribe to Financial Advisor Roger L. Merrill's (CLU, ChFC, CRPS) newsletter and he recently provided this insightful insight into the false notion that government spending is good for the economy and that Europe is a good role model. It isn't and they arent. The proof is a comparison between Utah and Europe. Utah is the best managed because we are disciplined and frugal. Europe is a mess because you can't spend your way into prosperity. Utah is the example to follow. Investment Perspective "Thoughts on today's markets and economic trends"

Government Spending: The European Experiment Belief in Government Spending European politicians believe fervently that government spending and government jobs actually do create wealth. They are not alone in this belief. Many leading politicians here in the United States firmly believe it too, and use the 'multiplier effect' to support their position. 'Multipliers' - which show how much a dollar of government spending will boost GDP - are used to support government spending. Believers in the 'multiplier effect' argue that $1 spent extending unemployment benefits would increase GDP by $1.63, and $1 for infrastructure would add $1.59 to GDP. Supply Siders To a supply-sider, the talk of multipliers is ridiculous; however, proving that the 'multipliers' do not exist is problematic. There are so many moving parts in an economy that it is impossible to prove a multiplier does or does not exist by looking at short-term economic trends. The European Experiment The good news for those who are serious about finding an answer is that we do have a long-term experiment. It's called Europe. Europe has been the Economic Petri Dish for experiments in the 'multiplier' theory. And the results are spectacularly bad. Despite government spending of nearly 50% of GDP, European economies have been a mess. Unemployment, living standards and overall economic growth have lagged significantly. Between 1980 and 2008, unemployment rates in Europe rose well above unemployment in the US. Only recently, as the US has massively expanded the size of its government, have these unemployment rates converged again. Now, all of them are at very high levels. 'Happiness,' A Truer Measure Faced with these facts, what did European politicians do? They started talking about "happiness." They argued that growth rates and jobs were not the important measures of economic success...happiness was. And for a long time they got away with it. As long as they could borrow and make people happy, it worked. Unhappy Results Today, Europe is not growing...and it's not happy, either. The most disappointed person in the world is the 54-year old Italian or Greek who thought they were about to retire to a happy, upper-middle-class, worry-free existence. But there is no Santa Claus. The European welfare state is dead. European politicians and economists have borrowed just about everything they can and they have no more room in the back of closets or under the rug to hide or sweep government spending and debt. They can't devalue their currency and inflate to make things look better, they can't fool the bond markets anymore and the only people left who believe that they can possibly spend their way out of this are teaching in American classrooms. The Way Out There are only two ways out. Austerity - spend less than you take in and use the difference to pay down debt. Or default - like Greece. The stand-up thing to do is austerity. You borrowed the money, you should repay it. None of this is a surprise, or at least it shouldn't be. The USA Question The obvious question at this point is whether or not the US has reached this point? The answer is, "not yet." Government spending in the US is hurting growth, but underlying productivity is still able to create new wealth. Entrepreneurs are pulling a very heavy wagon, but they are still making progress. The US is still ten years away from facing the kinds of problems so prevalent in Europe. There is still time to avert disaster in the US. (taken from The Economic Antidote 11/30/2011)

Oldroyd announces run for State House

Today I announced my intention to seek the Republican nomination to serve in the Utah State House of Representatives for the new Legislative district 48 (representing E Lindon, NE Orem, and N Provo).

We are entering a critical time in America; we face significant financial challenges and attacks on our moral foundation. How we address these will determine what kind of a future we share with our children.

We need courageous conservatives willing to tackle these issues even in the face of criticism. Securing a bright future requires a vigilant defense of the Constitution and the family.

I am running because protecting our values and the right to secure prosperity and freedom is worth fighting for.

Utah is strong thanks to a generation of conservative ideals. But a bright future is not certain, and threats and attacks are always present.

We know liberty flourishes when the free market is allowed to operate unfettered by excessive regulations and government intrusion. I will fight to promote fiscal responsibility and accountability in government. We cannot let Washington's liberal spending habits take hold in the Beehive State.

Instead we must decrease Utah's dependency on a broken federal system. Government dependency is a recipe for destruction. I will fight to defend the Constitution by rejecting the tendency to view government as the solution to all our problems and instead pulling government back to unleash the wonders of our free market.

I am Pro-Life, and will fight to ensure Utah is doing all it can to protect the life of the unborn. The most vulnerable in our society need champions to protect them. As a pro-life advocate, you can count on me to ensure we give every life a fighting chance. Life is a gift from God and government’s role is to protect life and promote individual responsibility. I will fight the use of taxpayer funds that in any way harms the family unit or promotes any so-called family planning agenda.

I am a Pro-Business champion. Attracting new businesses is a priority. As we grow the economic pie our priority must be to fight for our existing local business heroes. As a pro-business champion, you can count on me to fight for a vibrant environment for all.

I am Pro-Education. As the father to six children in our public education system, I will work to find efficiencies at the Department of education level so that every dollar possible makes it to the classroom. Ensuring a good education is also one reason I will join others in holding the Federal government accountable for failing to abide by the charter agreement when we became a state. The education of our children is worth this battle.

I ask you to join me, because together we can defend the Constitution and protect the family, decrease dependency on and increase accountability of government, protect freedom by increasing fiscal responsibility, and improve the education of our children by making sure each dollar is used properly.

Over the coming weeks and months I look forward to sharing with you more about my background and experience. I'll be scheduling events and launching a website and Facebook page. In the meanwhile you can learn more by calling me directly at 801-404-8635 or emailing me anytime at Taylor@Tayloroldroyd.com

Thanks,

Taylor

p.s. Make sure to add 7pm March 15^th to your calendar so you can attend this year’s Republican neighborhood caucuses.