Among the issues most commonly discussed are individuality, the rights of the individual, the limits of legitimate government, morality, history, economics, government policy, science, business, education, health care, energy, and man-made global warming evaluations. My posts are aimed at thinking, intelligent individuals, whose comments are very welcome.

01 August 2016

The Obama Economic Growth Record

In the seven years 2009 - 2015 under Obama, the rate of real GDP growth has averaged 1.4% a year. It takes zero increase in productivity to increase the GDP at the rate of growth of the population. Over the six Obama years 2009 - 2014, the population of the USA has decreased from an initial high of 0.98% in 2009 to a 2015 rate of 0.77% as hope has died.  The average population rate over those six Obama years was 0.91%.  The real, per capita GDP growth rate is then about 1.4% - 0.9% = 0.5%. This real, per capita GDP rate is the rate that actually tells us how fast our standard of living is improving.  A 0.5% annual rate is pathetic and the result of a serious national malaise.

Hillary would continue down this sorry path.  That path is looking even worse so far this year.  The 1st quarter real GDP growth rate was just revised downward to 0.8%, while the second quarter rate was reported to be 1.2%.  Subtract the population growth rate to estimate the per capita real GDP growth rate and that rate so far this year is less than the 0.5% of the prior Obama years.  As is the case with Obama, Hillary knows nothing about economics or how to grow a business.  Nonetheless, many Americans will be voting for more of the same in a few months.

Obama is the only President between 1950 and the present to never achieve a 3% real GDP growth rate.  The suppression of high rates of growth following a deep recession is a very great feat, since such high rates are almost invariably the result of the corrections that occur in a recession.  Of course, the Obama administration frustrated many of those corrections in the Great Recession, wasted huge fortunes of money, and enacted extremely expensive and irrational laws and regulations to wreck havoc on the U.S. economy and its businesses.  See:

Let us examine a crucial consequence of adopting the Obama-Hillary new economic growth normal with a government taking huge chunks of the private sector economy under its dictates year after year.  Let us compare the resulting size estimates for real per capita GDP based on a 0.5% Democratic Party rate of growth and a number of rates of growth which could be achieved by more rational economic policies giving us lower tax rates, fewer regulations, no irrational laws, and no violations of the Rule of Law.  Most Americans can expect to live another 40 years.  So let us ask what the size of the economy in terms of the real per capita GDP will be 40 years from now should we forego big government controls for a free and robust private sector economy.

Growth rate of 0.5%, real, per capita GDP in 40 years is 1.22 times the present case on the Obama - Hillary course.

Growth rate of 2.0%, real, per capita GDP in 40 years is 2.21 times the present case, with economic policies marginally less irrational than those of Obama - Hillary.

Growth rate of 3.0%, real, per capita GDP in 40 years is 3.26 times the present case, with economic policies based on a modest level of rationality.

Growth rate of 4.0%, real, per capita GDP in 40 years is 4.80 times the present case with a free market economy.

If we measure the size of the real, per capita GDPs at higher growth rates as ratios to the Obama - Hillary new normal 40-year economy, the economy is much larger.

2.0% growth, the economy is 1.81 times larger.

3.0% growth, the economy is 2.67 times larger

4.0% growth, the economy is 3.93 times larger

Do we really love the big government directed economy of Obama - Hillary so much that we wish to forego an economy in 40 years which is 2, 3, or 4 times wealthier than it is now for one that is only 22% larger than it is now?  We are not just giving up several times more wealth, but we are also giving up all of the extra inventions, the extra funding for science, the extra funding for medical research and its clinical applications, the additional knowledge, the greater national security, improved housing and retirement, and the abundance of interesting and challenging jobs of such robust and diverse economies.  Does the big government model really offer anything to improve our standard of living that begins to compare to what we are giving up by adopting that model of human and economic controls?  It is absolutely inconceivable that the Obama - Hillary 0.5% real per capita GDP growth rate is the rational choice.

This is truly a case of checking out the claims of someone who is claiming to offer you something for nothing. There is clearly an alternative outcome one can choose and that outcome, consistent with liberty, is vastly superior for our personal security and our desire to flourish in life. The freebie is purchased most dearly.  One is reminded of Ayn Rand's frequent refrain that we should ask when offered a packaged deal, "Instead of what?"

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