Swedish socialist economist Assar Lindbeck is semi-famous for saying that “in many cases rent control appears to be the most efficient technique presently known to destroy a city – except for bombing.” It’s becoming clearer that one of the most efficient ways to destroy the U.S. economy, outside of bombing the country, is to put Joe Biden in the White House.
Economic growth in the third quarter was a meager 2%, the Commerce Department reported Thursday, the most feeble increase of the pandemic recovery. Some economists had forecast a gain closer to 3%, leaving many disappointed. As the Asia Times accurately summed it up, the U.S. “economy ground to a halt.”
The economy grew 33.8% in the third quarter last year, after two straight quarters of GDP losses due to ill-advised lockdown policies. It grew 4.5% in the fourth quarter, and 6.3% in the first quarter of 2021, when Trump economic policies were still in effect. A healthy 6.7% increase followed in the second quarter, but now that Biden’s economic policies have had a few months to stew, the economy looks to have a case of sclerosis.
Blame Biden’s inflation and the supply-chain crisis that has exploded on his sleepy watch. But don’t discount how much the White House and congressional Democrats’ tax-and-spending plans have negatively impacted growth.
One of the more common beliefs among Americans is that a stock market crash caused by greedy investors brought on the Great Depression. But a close look at the history shows that the markets watched, and reacted to, Washington’s actions in the months leading up to Black Tuesday – Oct. 29, 1929.
Washington’s discussions over the spring and summer of that year were focused on trade policy, which eventually produced 1930’s Smoot-Hawley Tariff. The market rallied and fell, as did industrial production, depending on how events were perceived.
“We know that market participants do not wait for a major law to pass, but instead try to anticipate whether or not it will pass and what its effects will be,” economist Alan Reynolds wrote four decades ago in an essay that documented Washington’s missteps on the way to the Depression.
In his book “The Way the World Works,” the late Jude Wanniski tied “the successes of the tariff, and its setbacks, to drops and surges in the stock market,” says historian Larry Schweikart, and argued “that the crucial vote occurred on Oct. 28, 1929, when the tariff bill cleared its final committee hurdle.”
The predictable defensive responses from businesses to the law’s “inescapable tax,” according to Wanniski, were layoffs, raised prices, and cuts in production.
It’s not unreasonable to conclude that current economic players are reacting to the Democrats’ plans to spend more of other peoples’ money than has ever been spent before, as well as the tax hikes that will be needed to fund their job-destroying wealth redistribution schemes. They know the damage that five new entitlement programs, inflated debt, and punitive taxation, will do, and are taking evasive measures.
Thursday’s GDP number needs to be a part, and no small one, either, of the back-and-forth over the Biden-Democrat plans. A stiff slap of reality might even wake up more Democrats than Sens. Joe Manchin and Kyrsten Sinema.
— Written by the I&I Editorial Board