The Federal Reserve is reporting that American families have about the same net worth under the Obama administration that they had 20 years ago when George H.W. Bush occupied the White House.
The Fed’s findings, which are contained in its latest Survey of Consumer Finances, found that the median wealth for families plunged by 39 percent to $77,300 in 2010 — down from $126,400 in 2007.
After adjusting for inflation, the Fed’s report indicates that Americans are no better off than they were years before the start of the dot-com bubble, the housing bubble, 9/11 or the Iraqi War. Net worth is the value of assets like homes, bank accounts and stocks, minus debts like mortgages and credit cards.
These numbers illustrate the overall stagnation of a boom-bust economy. The reason we have a boom-bust economy is because government keeps shifting wealth from those who produce it to those who destroy it: Politicians and their programs. This is done directly, through taxes, but also indirectly—through deficit spending, raising the national debt and the indirect costs of regulation.
Imagine if this trend continues. America will be about as wealthy in 2050 or 2075 as it was in 1992. Imagine if this had happened in the previous centuries. For example, contrast the country between 1800—when Thomas Jefferson won election to the White House—and 1900. During this time, American wealth and the prosperity of the Western world grew at rates never before seen in human history.
If America continues not to grow—or to, at best, come out even because of the continuous boom-bust cycles created by government intervention in the economy—then there will be no such contrast between 1992 and 2092. Maybe you don’t care, because you don’t expect to be alive in 2092. But the lack of economic growth will affect us in the years leading up to that point, as well.
Of course, this depressing scenario assumes we continue to have boom and bust cycles. In other words, it assumes that things will go up and down so much (as they have since 1992) that we’ll be more or less the same twenty years down the road. But on our current course, there is no boom on the horizon. Under the big spending, Big Government growth polices of both our political parties, we have only two choices: Keep raising the national debt and deficit, or substantially increase taxes. But both of these things will only hamper growth even more.
In the bleak future that the defensive Obama has laid out for us, there is deficit spending and ultimately devaluation of the currency as far as the eye can see. To date, nobody has presented an alternative to Obama’s gloomy vision, because nobody wants to state the obvious truth: That government cannot keep financing all the things it does. Entitlement programs such as Medicare and Social Security are popular. Or, more precisely, Americans have become too dependent on them to let them go. But we cannot continue financing the government we have and still be a growing economy.
A big part of the depreciation we’re seeing is due to the fact that people’s homes have decreased in value—and the values of those homes are continuing to go down, with no real end in sight. The conventional wisdom is that this is ‘Bush’s fault.’ But Obama has done nothing to contribute to any reversal of this trend. And the collapse of the housing market was caused primarily by Big Government’s regulations, which encouraged government-backed lenders to loan billions to people who could not afford houses. This was the policy of both the Bush and Clinton administrations, and under Obama we’re getting even more government regulation and subsidization. None of this is solving anything, and it’s clearly only making matters worse.
The only solution? It’s obvious. Reverse course and move towards a free market. Move towards the limited government policies which enabled tremendous growth in the nineteenth century and, to a lesser extent, in the twentieth century. America’s first century was mostly progress, with the occasional short-lived economic panic. America’s second century was a combination of boom and bust. America’s third century, so far, is one big bust. The true “progressives” are those who want to expand free markets, private property and individual rights. Hope and change should refer to prosperity and growth, not the stagnation and decline we continue to see.
Obama supporters can scream all they want that it’s ‘Bush’s fault.’ It’s actually Big Government’s fault. Big Government includes Obama, Clinton, and all the administrations and Congresses who thwarted our private economy in the decades prior.
The strangulation of the private economy has finally reached its climax. We’re out of gas, and we’re out of money. We’re no longer growing. It didn’t have to be so, and it doesn’t have to remain this way. But sooner or later America will need a leader to help us face the truth, assuming most Americans are willing to hear it.