Obama Should Be Promoting Self Reliance, Not Another Stimulus

Imagine President Obama addressing the nation on prime-time television and saying, "The government has done enough to bail out the economy. You're all on your own now."

He very well could. The total federal commitment to fiscal stimulus, corporate rescues, homeowner relief, and various other bailouts is nearly $10 trillion (that's $10,000,000,000,000) over who knows how many years. You'd think that might be enough. But the economy is still lousy, unemployment is soaring, and Vice President Joe Biden now says the Obamanauts "misread how bad the economy was" when planning their recovery package earlier this year.

Biden wasn't just flapping his restless mouth. By issuing a quasi mea culpa on the economy, he was starting an official discussion about another round of stimulus spending, which would actually be the third in this recession. (Remember George Bush's $150 billion worth of tax rebates in 2008?) It's obvious that the economy still needs help, and it's the government's job, more or less, to aid its citizens. But there's one kind of stimulus that Obama and virtually every other politician have completely avoided so far: a plea for greater self-reliance.

The government has the power to contain the damage from an economic meltdown. It can help people in need. We've even learned that the government can run entire industries—for a while. But no government can create a vital economy. There have been plenty of deep downturns in America's economic history, and the nation has always rebounded thanks to industrious people working like hell to improve their lives and find better ways to get things done. Bailouts are a relatively new phenomenon, with mixed results at best. Personal determination has a much better track record.

There are plenty of factors that could suppress our economic growth for years. Overcoming them will require relentless innovation, which is an overused and poorly understood word. We tend to think of innovation as massively expensive laboratory projects that lead to new cancer drugs or complex software. But it can also be something as simple as a home-built website, a new community group, or a simple observation that saves your company a couple of steps and a few bucks.

People who innovate don't wait for other people to solve problems. They tackle problems themselves. Many Americans are doing this right now: trying to start their own small business after getting laid off, using the Internet to reach people in different ways, staying up late trying to think of ways their company or their family can save money and stay solvent a little longer.

But are there enough? I have my doubts. Stimulus spending may ultimately be helpful, but it has also sent the message that it's the job of government, not citizens, to solve economic problems. A lot of people who live in dying manufacturing towns probably need to move to areas with more jobs, but there's not much sign of that. The prevailing economic question seems to be when Americans will stop this damned saving and start buying multiple cars and TVs again. Obama has dampened expectations of a quick economic recovery, but he hasn't asked Americans to re-examine their overconsumption or accept privations while spending their time or money to better themselves.

There are other ways to promote smart economics. "The general message should be 'You need to redouble your efforts to be more competitive,' " says Mauro Guillen of the University of Pennsylvania's Wharton School.

People need to invest more in their own future. Instead of buying stuff at the mall, spend the money on evening classes. Learn a language or skills you don't have. Join debates in your town on the right way to spend education money.

Those kinds of steps are necessary not just to reboot the American economy but to take on other nations like India and China where many people work harder, score higher on tests, and expect less for their efforts than we do. We feel entitled to a high standard of living, but we're not. And we'll lose it if Americans get in the habit of waiting for somebody else to solve their problems. We're already losing it, in fact, thanks to a thrashing recession that's leveling out our lifestyles.

Obama probably knows this, but he doesn't want to become the national nag and end up a one-termer like Jimmy Carter, the last president who tried to pester Americans about personal responsibility. It's easier to spend more money than challenge people to change their behavior. Maybe it will even work. Oh ... how ... stimulating.

Disclosure: no positions

Comments

[CautiousInv...:]

Interesting line of thought Rick but not one likely to be quickly embraced by the administration.

In the interest of interposing itself in every dimension of our lives, government will quickly assert that it is capable of redressing each problem that surfaces on the political landscape.

Whatever it might say, government really does not want too much individual initiative, ambition, self reliance and accountability as that would leave too much in the hands of individuals, reducing the role of government.

The other big problem with placing responsibility with the individual is that it will lead to wide disparities in economic outcomes which is at odds with a utopian vision "equal outcomes" and economic justice.

Jul 10 10:01 AM

[Neil459:]

This government counts on controlling perception through lies and evading reality through lies. They will have unlimited authority until one or both are exposed in a way that common people will understand. "You have to take responsibility" is not something common people will accept or understand.

So the issue is how to expose the manipulation of perception and coverup of reality by the government whose only goal is additional power.

With the media in the tank for the government its a difficult road to traverse.

Jul 10 10:24 AM

[Bob 123:]

Now that we bailed out the crooks with a trillion taxpayer dollars, the one's who nearly destroyed the financial world with their unabashed greed and avarice -- time to say to the sheep "sorry -- but you should be more self-reliant".
What a laugh. I guess self-reliance doesn't apply to the banksters and wall street crowd who did this and for the most part got away with their platinum parachutes, just the Joe's losing their jobs and their homes.
Classic blame the victim twaddle.

"Suck it up Joe --- though we've outsourced your job and destroyed your pension/401K retirement -- what makes you think you can look to the Gov for any help? Who do you think you are -- Goldman Sachs or AIG or the like? Take some personal responsibility for crissakes! Bailouts are for Banks and Wall Street, but you -- why should your tax dollars do anything for you in the end? We need more military overseas to protect oil company profits -- why should you expect health-care, police and fire protection, access to clean water, roads and bridges that don't fall apart, good schools for your kids, etc, etc. That's commie-pinko-socialist talk."

Jul 10 10:39 AM

[Baboon:]

For that the country needs another government with a different mindset.

Jul 10 11:09 AM

[Pat C:]

I'm with you Bob123 - things have gotta change.

Jul 10 11:46 AM

[Longinvestor:]

""The government has done enough to bail out the economy. You're all on your own now.""
Well, since our government is not a dictatorship, making the government help us is to make us help ourselves in a democratic republic political system.

Jul 10 12:20 PM

[Socialism c...:]

You're sure about that???


On Jul 10 12:20 PM Longinvestor wrote:

> Well, since our government is not a dictatorship

Jul 10 12:44 PM

[Socialism c...:]

The fact that Stimulus I did not work -- illustrated by continued job losses and mounting government budget issues -- makes clear that the Keynesian theory is seriously flawed. Job losses could have been prevented by reducing the cost to the employer for employing; i.e. lower the payroll taxes. Consumer spending could have been boosted by lowering individual income taxes. Government is too large and its tax burden on individuals and business is too huge -- thus we see continued job cuts and the flat-lining of the consumer portion of GDP.

REVERSE COURSE, Washington!!! Your pillaging of the people is counter-productive!

Jul 10 12:49 PM

[Longinvestor:]

Apparently the big bad government tax burden man missed this:
Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
By Eric Martin and Michael Tsang
[Updated July 8,2009]Dec. 29 (Bloomberg) -- There’s more cash available to buy shares than at any time in almost two decades, a sign to some of the most successful investors that equities will rebound after the worst year for U.S. stocks since the Great Depression.
The $8.85 trillion held in cash, bank deposits and money- market funds is equal to 74 percent of the market value of U.S. companies, the highest ratio since 1990, according to

Jul 10 01:36 PM

[Neil459:]

On Jul 10 12:20 PM Longinvestor wrote:
> Well, since our government is not a dictatorship, making the government
> help us is to make us help ourselves in a democratic republic political
> system.

If you think the governments role is to help individual people then we are lost. That is NOT the role of government. Promises to individuals and groups is nothing but payment for votes. You give them power because you THINK they are going to give you something. They never will and you will never catch on. 50 Years we have been fighting poverty. Not solved. Why because if it gets solved there is no democratic party. 50 years we have been fighting racism, not solved. Why, because if it gets solved then no democratic party, no more racist minority organizations and no more favors for minorities. And on and on.

Most people would see a pattern here. Instead you just soak up the propaganda. Go figure.

Jul 10 02:37 PM

[Mr. Morbid:]

Here's a man who knows what he's talking about. Americans do need to be more self-reliant. The key to this country's economic future is right on the other side of the door-Larceny! What we really need right now is for more Americans to say: I'm not going to sit here and cry over the fact that I've sent out over 200 resumes since graduation day and still don't have a job and these massive student loan payments that I'm stuck with because I got stuck in the other sub-prime scam-higher education-are hanging around my neck like an albatross! I'm going to go out and steal what I want from the homes of the wealthy and start kidnapping their beautiful daughters! Think about it, the rich already have the stuff they need, so who cares if their televisions and computers and other gadgets are stolen! Plus, kidnapping can be a very lucrative profession. Sure, not everyone's cut out for hacking off fingers and toes and mailing them to distraught fathers but you have to have the vision! It's time for a paradigm shift in America-time to break ground and develop new synergies in Larceny and Kidnapping! It's all about being willing to give 110%.

Jul 10 02:47 PM

[Boxed Merlot:]

So, market value of US companies stocks= 12T, cash available to buy (additional) shares = 9T. Are you suggesting that the definition of recovery is to add that 9T to the 12T? I suggest the 9T represents usable fruit, some of which the 12T tree / orchard may have produced, but not necessarily. This 9T fruit may likely be consumed, or traded for other more productive (local?) trees / orchards that aren’t as tainted, diseased and infected as this one that has (currently) proven to be unworthy of future investment.


On Jul 10 01:36 PM Longinvestor wrote:

> Apparently the big bad government tax burden man missed this:
> Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
> By Eric Martin and Michael Tsang
> [Updated July 8,2009]Dec. 29 (Bloomberg) -- There’s more cash available
> to buy shares than at any time in almost two decades, a sign to some
> of the most successful investors that equities will rebound after
> the worst year for U.S. stocks since the Great Depression.
> The $8.85 trillion held in cash, bank deposits and money- market
> funds is equal to 74 percent of the market value of U.S. companies,
> the highest ratio since 1990, according to

Jul 10 03:04 PM

[Poor Texan:]

Not gonna happen! Far too many people have lost too much money to trust the markets. The MSM and congress have spent tons of energy vilifying the investment community as the source of all our problems. Why would the average Joe want to do anything other than stay with CDs or ultra conservative investments. Once burned, twice shy. Less demand for investment risk, lower prices for investments. It's a whole new ball game. Things have CHANGED (like promised).


On Jul 10 01:36 PM Longinvestor wrote:

Cash at 18-Year High Makes Stocks a Buy at Leuthold (Update4)
By Eric Martin and Michael Tsang

Jul 10 05:13 PM

[Robert.from.Ct:]

Nice article,,,BUT...the Federal gov is completely corrupt.....Wall street is completely corrupt....the Banks are completely corrupt....The american people are fat and lazy and stupid....This country is screwed....

Jul 10 08:07 PM

[Alphameister:]

The Democrats now in power well understand that the key to being elected "in perpetuity" (except where term limits interfere) is to make at least 50% of the voting public feel they are dependent on a benevolent government for their well-being and that their only personal responsibility (since they don't pay meaningful taxes) is to continue to elect Democrats to office.

Jul 10 08:15 PM

[awake09:]

There is a moral instinct in Western culture that demands compensation for the poor man's plight. It's part of our sympathetic nature to give a benefit of the doubt to a politician who wants to aid the "less fortunate," and we typically vote for him.

But is poverty aid the equivalent of feeding feral cats-- does it help anything in the long run? Is there an obvious line where enough public help becomes too much? It's the on-going story every election, but Americans keep electing the most "generous" politicians every time.

On Jul 10 08:15 PM Alphameister wrote:

> The Democrats now in power well understand that the key to being
> elected "in perpetuity" (except where term limits interfere) is to
> make at least 50% of the voting public feel they are dependent on
> a benevolent government for their well-being and that their only
> personal responsibility (since they don't pay meaningful taxes) is
> to continue to elect Democrats to office.

Jul 10 09:39 PM

[Neil459:]

It used to be that generosity and helping the less fortunate was an individual responsibility. You know, hospitals that treated the needy insurance or not, ability to pay or not. Used to be that people volunteered at hospitals, soup kitchens, etc. Used to be that people donated things they did not need any more to the less fortunate. Used to be that people donated new stuff to help the less fortunate. When I was in high school our band regularly played concerts with the benefits (food drives, clothing drives, toy drives) going to help different groups.

Now most people are selfish and rely on the government to take what is needed to help people. Through mismanagement and the ease with which the government can take, the benefits go to help people that do NOT need the help. Paying for votes. Enriching the fat cats. etc.

All the waste, mismanagement, and corruption that accompany government bureaucracy result in much less benefit and much more politics.

On Jul 10 09:39 PM awake09 wrote:
> There is a moral instinct in Western culture that demands compensation
> for the poor man's plight. It's part of our sympathetic nature to
> give a benefit of the doubt to a politician who wants to aid the
> "less fortunate," and we typically vote for him.
>
> But is poverty aid the equivalent of feeding feral cats-- does it
> help anything in the long run? Is there an obvious line where enough
> public help becomes too much? It's the on-going story every election,
> but Americans keep electing the most "generous" politicians every
> time.
>
> On Jul 10 08:15 PM Alphameister wrote:

Jul 11 08:37 AM

[a. palmer jr.:]

Good piece Rick..I actually read it all the way through, which is rare for me. I would agree totally with you if, as was stated by others, the government wasn't taking our money and giving it to bankers and big business that actually should fail. As I've said to others: If I owned a hardware store that spent out more money over the years than it took in, who would be there to continually hand me money? Nobody. I would have to go out of business.

Jul 11 09:41 AM

[Ferdinand E...:]

I seem to remember somebody saying that ' there are no bad regiments, just bad officers'. Well, the Obama government replaced some of the worst officers in the history of the republic, and now that those dunces are gone, the next step is to get the troops to shape up.

There are some good observations in this article, with one of the best being that of Professor Mauro, and I guess that given time I could add a couple of hundred - or thousand - more, but if I remember correctly, President Obama said something about straightening out the schools of America. That should come first, and it might be something that almost everybody can join in, because it concerns their future.

Jul 11 10:06 AM

[Northstar10000:]

Don't you remember we got that hope and change thing in November.

Jul 11 06:19 PM

[Neil459:]

On Jul 11 10:06 AM Ferdinand E. Banks wrote:
> I seem to remember somebody saying that ' there are no bad regiments,
> just bad officers'. Well, the Obama government replaced some of the
> worst officers in the history of the republic, and now that those
> dunces are gone, the next step is to get the troops to shape up.

Which officers would that be? It seems the the same people are running the FIDC, SEC, FED, House, Senate as were there when Bush left office.

The Obama's are using the same tired old philosophy of pretending to do one thing and really just rewarding their cronies. Remember "No Pork", now its "We have to have pork for the sake of the economy." Remember "We need more transparency", now its "We don't have time for transparency because of the economy". Remember "let no crisis go to waste", by Obama's chief of staff. If you are so blinded by ideology to ignore the realities then we are doomed to suffer another great depression.

Jul 12 07:38 AM

[Longinvestor:]

Typical negative attitude blinds your perception of what was written.
The government gives me nothing...I pay for it with my taxes and I expect to get value for that money. That's what the "make the government" meant.


On Jul 10 02:37 PM Neil459 wrote:

> On Jul 10 12:20 PM Longinvestor wrote:

Jul 12 01:33 PM