"The Problem with Socialism is that you Eventually Run Out of Other People's Money"

The title of this blog posts is one of the best quotes from Margaret Thatcher. The market economy is far more efficient than government at allocating resources and identifying investments in a cost-effective manner. When government grows as a percent of GDP it crowds out the true engine of American society -- entrepreneurs -- to the detriment of future economic growth.

The forthcoming cover story for the February 16, 2009 edition of Newsweek declares "We Are All Socialists Now." Key passage:

Whether we like it or not—or even whether many people have thought much about it or not—the numbers clearly suggest that we are headed in a more European direction. A decade ago U.S. government spending was 34.3 percent of GDP, compared with 48.2 percent in the euro zone—a roughly 14-point gap, according to the Organization for Economic Cooperation and Development. In 2010 U.S. spending is expected to be 39.9 percent of GDP, compared with 47.1 percent in the euro zone—a gap of less than 8 points. As entitlement spending rises over the next decade, we will become even more French.

This is an extremely alarming trend. Politicians, in my experience and perspective, are far more concerned being viewed as "doing something" to address perceived problems than actually solving them. An incredible amount of money is wasted and misallocated by government bureaucrats. When firms fail they go out of business. When firms stop being competitive they lose market share to competitors. Entrepreneurs and businesses thus have powerful incentives to continually look to innovate, increase productivity and seek creativity ideas and solutions. The largest incentive for government bureaucrats is to protect their turf and budgets.

Furthermore, these figures only add to my firm belief George W. Bush was by far the worst President in the history of our republic. Beyond that fact that he did not produce one significant piece of legislation in regards to public policy (Medicare Part D? the education bill? Please...) his assault on liberty was simply stunning:

1. Iraq. If misleading the public and resorting to fear tactics to drive our nation into a war of choice was not bad enough, this misadventure saddled our nation with an incredible debt that only adds to our future massive financial liabilities with the retirement of the baby boom generation.

2. The Patriot Act.

3. Implicitly condoning torture as an acceptable interrogation tactic.

4. Allowing government to grow as a percent of the economy PRIOR to the financial meltdown:
5. Failure to prevent the extent of the financial meltdown. As 43 claimed he was a man who favored less government and the virtues of free trade (despite the steel tariffs in his first administration, allowing the Democratic Party to push Fannie and Freddie to take increased risk with the goal of increasing the home ownership rate, etc.). Consequentially, the ideology that he claimed to adhere to, and aided by his incredibly high disapproval ratings, has has led many to question the virtues of the free market and provided greater credence to the belief that government can and should "solve" people's problems.

edit: Per an op-ed from John Taylor, professor of economics at Stanford and originated of The Taylor Rule:

My research shows that government actions and interventions -- not any inherent failure or instability of the private economy -- caused, prolonged and dramatically worsened the crisis.

6. Bailouts. The government had to prevent the complete meltdown of the financial sector. However, the rush to approve TARP and the failure to have any kind of transparency was simply stunning.

7. Failure to reform long-term entitlement spending.

I'm probably missing a few more. So much for 43's belief that "the advance of liberty is the path to both a safer and better world."