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From Sixteen Tons to Sixteen Months the Business Cycle and the Downward Spiral
Illinois Review ^ | June 28, 2012 A.D. | John F. Di Leo

Posted on 06/28/2012 7:53:12 AM PDT by jfd1776

The Left feels cheated. Not by you or me… not by the system, exactly, but by fate.

Recessions, someone told them, resolve themselves in sixteen months, give or take. That’s what someone calculated, someone who knew about such things, someone who did math and statistics for a living, and should therefore know.

And if recessions resolve themselves in sixteen months, we can do whatever we want in 2009, they reasoned. Whatever we want. Raise taxes, force through some massive spending bills and regulations, provide giveaways to our buddies… If the recession will end anyway, why not?

And so they created “Cash for Clunkers” to buy the votes of American car buyers by paying them to destroy their American cars and purchase Hondas and Toyotas and Hyundais instead.

They created a trillion-dollar stimulus package to spread federal dollars around state governments and county governments and city governments, not to really create any jobs, but to act as a bridge loan to get them all through the current rough patch until the recovery began and tax receipts magically began again to climb.

They wrote small checks to poor people and big checks to rich people – federal checks for buying a house, federal food stamps for buying liquor and cigarettes, federal cell phones for people without a wall of their own to hang a landline on. They federalized all remaining student loan programs, federalized hundred-million dollar loans to fictional green energy companies with fictional business plans in the midst of being boarded up and shut down for their implausibility.

And they waited for the regular business cycle to come around, and the recovery to return, on schedule. And they kept on waiting.

2009 went by, then 2010, then 2011, then 2012. And everything just got worse, with housing continuing to plummet, gold continuing to climb against the dollar. American commercial real estate’s vacancy rates now compete unfavorably with those on uninhabited planets. Unemployment is in the eights, even having repeatedly changed the way unemployment is calculated; if we honestly used the same standards that were used during the Great Depression, our unemployment rate would be reported at about seventeen percent, give or take, continually now for over three long and painful years.

How could the business cycle have so let us down?


Philosophers tell us that when things go wrong, and there seems to be no explanation, check your premises; perhaps the foundation of the argument is at fault. And sure enough, the fault lay in the left’s belief that there is some ephemeral entity called “the business cycle.” There is not. There never has been.

In fact, the private sector reacts, as any conservative would have told them, to its environment. When taxes are cut and regulations are reduced, when the currency is strong and the financial markets are stable, then the private sector can flourish. Tax cuts and regulatory relaxation like that of the early 1980s will always cause economic growth; the better the cutting of taxes and red tape, the more the private sector will thrive. Since that’s the course normally taken when in recession, the economy comes around in response, usually relatively promptly… thereby providing the data that led to their vaunted 16-month average turnaround time.

But the private sector will also react to negative pressures. When tax hikes and growing regulatory burdens are felt, the private sector contracts. When it appears that there will be no end to such pressures – when the threat of constant increases of such burdens smothers the horizon as far out as any watcher can foresee – then No, of course, there will be no recovery at all. As we have seen.

Our economy is not behaving badly, acting in contradiction to expectations. In fact, this six year torment has never improved, precisely because the Democrat Party has refused to ever allow the conditions for recovery to be implemented. Conservative proposals to rein in the CRA’s destructive mortgage market pressures could never see the light of day; the thorough conservative solutions to climbing healthcare costs were dismissed and remained unacknowledged by the mainstream media. The majority party promised forced-unionization to an already struggling factory base, promised punitive taxes to already borderline employers, promised to double the price of fuel and quadruple the price of coal, so that insustainable energy costs in an energy-rich nation would put the last remaining painful nail in the coffin of American manufacturing.

And the left preached class warfare… took on the manufacturers, distributors, and all the other employers and investors so desperately needed by the public for job creation. Is it any wonder that they stopped hiring?

The American Left shouldn’t just blame themselves for their destructive policies, they should blame the fool “economists” who told them that recoveries “just happen” automatically, regardless of the actions taken by government. How could any analyst so misread the data as to see the results while missing the causation? And how on earth could an entire political party be so devoid of common sense as to blind themselves and fall for such poppycock?


Perhaps worst of all has been the utter breakdown of the “checks and balances” of government designed by the Framers of the Constitution, 225 years ago this summer.

Congress was designed to negotiate and pass laws, the executive branch to implement them, and the federal judiciary to put a brake on misinterpretation or other overreach by the other two. The president cannot write any regulation to implement anything not already authorized by Congress, and none of the branches can legally write any act or order in violation of the Constitution.

But in the week of June 25, 2012 A.D. alone, at least three judicial and regulatory actions landed direct blows on the American private sector, pushing any recovery out even further.

Arizona v. United States: In this outlandish ruling against the sovereign state of Arizona’s right to enforce the law and defend its citizens, a peculiar majority of the United States Supreme Court struck down the state’s ability to prosecute illegal aliens for unlawfully applying for work, while reiterating the law’s obligation to prosecute employers who hire them. What about the traditional American theme of personal responsibility??? Now, anyone will grant that the relatively few companies that intentionally seek out illegals to hire should indeed be prosecuted… but to roll all businesses into that small subset of the private economy belies a bigotry against the business sector that only a socialist could hold. To exempt the perpetrators of the crime – the illegals who obviously know they are here illegally – while judging the usually helpless and well-intentioned employers as guilty until proven innocent – is an institutionalized class warfare that one might expect from the community organizing crowd, for whom disingenuousness is to be expected, but should never, ever emanate from the federal branch once populated by giants like John Jay and John Marshall.

Global Warming: The US Court of Appeals for the Washington DC district unanimously rebuffed four separate but related challenges to outrageous and unconstitutional overreaches by the Environmental Protection Agency. In one day, this judgment serves the false church of global warming in granting the EPA the powers to regulate carbon in virtually any area they find it, from automobiles to power plants, from manufacturing to private employment. The proudly stated goal of the Obama administration is to destroy the coal mining business in the United States, taking down the economies of numerous states in the process. This set of rulings will be appealed, but if the appeals fail at the Supreme Court, then the Obama administration’s effort to destroy our economy will last long past his expected personal defeat at the polls.

Miniature Golf and More: This week, the federal Justice Department clarified that the 2010 revision of the Americans with Disabilities Act standards for miniature golf courses, saunas, rifle ranges, gyms, jails, and numerous other facilities must be implemented on both new-builds and renovations. They limit the inclines on at least half the holes on a mini-golf course; they require wheelchair accessibility on full golf courses, prisons and jails; they require wheelchair positions on amusement park rides and every type of exercise machine in a fitness center. Imagine this – a health club with three circuits of a dozen machines each must retrofit every machine in one of those circuits to handle a wheelchair-bound person. Even if the club doesn’t have a single member or potential member with such a disability. The increases in construction costs will approach geometric levels.

The private sector will resist such preposterous actions, but there are only so many ways to do it. The offended states can sue the EPA all the way to the Supreme Court; but what do you do when the Supreme Court rules against sanity? The offended manufacturers can simply shut down or move abroad, but how does that help an economy struggling for employment growth?

Some of these rules are designed to foolishly serve a substitute religion, the environmentalist extremist church of global warming. Discredited by even its founders in light of a decade of evidence that the theory of manmade global warming was utterly wrong, its adherents nonetheless happily violate both Constitution and common sense in passing restrictions on carbon usage that serve no purpose other than to crush economic activity and impoverish thousands or even millions (on Earth, of all places – a planet of carbon-based people, carbon-based plants, and carbon-based animals – they have the intellectual audacity to claim that carbon is a pollutant to be eradicated!).

Some of these rules are just to serve political interest groups for cold factional advantage; make it look like you’re helping the handicapped, perhaps you’ll win a few votes. This may be worst of all, as it doesn’t really help them at all, but could destroy whole industries and communities in the process.

Wonder why hiring is down? Here’s why. The American economy is in limbo, afraid to move forward, afraid to grow… afraid that every new hire, every expansion, every innovation will invite the visit of another federal agent with a clipboard, looking for multimillion-dollar tasks to force upon it. If hiring the unemployed is a good deed, then the old saying is certainly true: No good deed goes unpunished.

This problem can be solved; the destruction need not be permanent. The right President and the right Congress – both houses – can do a great deal to restrain the lawlessness of the modern federal bureaucrat, and to return the judiciary to its proper role in service to the Constitution of the United States. But Constitutionalists must first be elected, and they must be diligent and courageous in the face of a mainstream media hostile to both journalistic integrity and the American Way.

But there is no other choice. To save this nation’s economy, we must recast the federal government in the mold that our Founding Fathers left for us. We must remove the central governmental brakes – based in Washington, DC – that have slowed our economy to a halt.

To quote the last great American President, Ronald Reagan, whose like we certainly need again today: The ten most dangerous words in the English language are “I’m from the federal government, and I’m here to help.”

Copyright 2012 John F. Di Leo

John F. Di Leo is a Chicago-based Customs broker and international trade compliance trainer. He has spent forty years facilitating international trade, and dreams of a return to the days when manufactured exports were at parity with manufactured imports. Exporting goods is wonderful for America; exporting jobs is not.

Permission is hereby granted to forward freely, provided it is uncut and the byline and IR URL are included. Follow me on Facebook and LinkedIn!

TOPICS: Business/Economy; Government; Miscellaneous; Politics
KEYWORDS: epa; recession; recovery; regulation
It's been a bad week for the economy. federal courts and bureaucrats continued to load new and greater burdens on the private sector, pushing out the recovery ever further. The next administration will have a LOT to repeal in January, in order to get this economy out of recession at last.

My thoughts on the matter, and the real reason for this endless recession, are in my Illinois Review column this week, here, if you're interested...

1 posted on 06/28/2012 7:53:17 AM PDT by jfd1776
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To: jfd1776

Only Democrats are stupid enough to think that economists run the economy.

2 posted on 06/28/2012 7:59:59 AM PDT by txrefugee
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To: jfd1776

Actually all of these things are good news. They will precipitate The Fall sooner. After that we can begin to rebuild.

3 posted on 06/28/2012 8:00:47 AM PDT by Lurker (Violence is rarely the answer. But when it is, it is the only answer.)
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To: jfd1776

That was extremely well written piece.

4 posted on 06/28/2012 9:06:41 AM PDT by sf4dubya (I rebelled against my parents by becoming a conservative)
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To: sf4dubya

Thanks very much, sf4dubya!

I’m rather depressed today, so thanks for cheering me up!

(until I go back to reading the latest ruling, anyway...!)

5 posted on 06/28/2012 9:19:06 AM PDT by jfd1776
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