There are at least two reasons to be disappointed. The first is economic.
The reelection of President Obama will, unless there is a lot of unforeseen good circumstances, result in continued slow growth of the economy with GDP rising at a trudging 2 percent per year – not fast enough to bring unemployment down to the 4 or 5 percent we can expect from a well-performing economy. Since the recession ended officially at the end of June 2009, GDP growth has exceeded 2.6 percent in only two quarters and grew at 1.3 percent and 2 percent the last two. It is difficult to see how Obama is going to improve on this record.
The uncertainty about what government is going to tax next – and the regulatory interference in the economy – has greatly slowed investment and hiring. This will not improve in the near future as Obamacare becomes fully implemented in 2014. The more than 20,000 pages of regulations, increased taxes, and expansion of Medicaid will create forseen – and unforeseen – circumstances that will slow growth.
We know who will be the next president, we don’t know what the rules of the game will be. We do know there will be higher medical costs. One obvious example is the medical device tax of 2.3 percent on the value of medical devices such as pacemakers. The increased demand for health care will drive up health care costs in general, creating further problems for Social Security and Medicare.
We will continue to see massive government intervention in the financial and energy industries with The Central Planner deciding which companies get subsidies and which get more regulation. This will mean businesses seeking to game the political process – rather than producing goods and services consumers want.
Economics aside, the re-election of Obama is a signal that we are losing the battle for a free society.
As Hayek wrote in 1960, a free society can maintain itself only if each person accepts that their position in life is the result of their actions and accepts that this is the way the social order should be. His point is that a free society requires more than any other that people be held responsible for their actions. A fear of responsibility is a fear of freedom.
The reelection of the president reflects this fear of freedom. People were persuaded by the argument that the rich are out of touch with the consumer and must be made to pay more in order to provide the rest of us with health care, retirement, education, birth control pills, and a host of things we want but don’t want to be responsible for providing for ourselves.
Many people don’t understand that you get wealthy in a market economy by producing for others, and that innovation requires taking risks.Taxing the not-yet-rich-but-who-seek-to-be-rich will reduce innovation and make everyone poorer.
It is no coincidence that my new book, “A Capitalist Manifesto: Understanding the Market Economy and Defending Liberty,” was released on Amazon this week. The only way we can save our free society is by winning the battle of ideas. This book is my attempt to explain why Mises and Hayek were right, that market capitalism and individual liberty are the key to prosperity for all and that the central planning of the Obama administration will only lead us further down the road to serfdom. Perhaps it will help in some small way to make the election of 2016 one where we can celebrate freedom and individual responsibility.
(Dr. Gary L. Wolfram is the William E. Simon Professor in Economics and Public Policy at Hillsdale College. Find him on Facebook at www.facebook.com/GaryWolfram. And on Twitter at @Gary_Wolfram. Originally posted on The Michigan View.)