The Fourth of July week brought unwelcome birthday gifts to the United States in the form of poor domestic jobs data and similarly gloomy information from other major economies. Amidst the heat and festivities, it has become difficult to deny that the economy is deteriorating. Politicians appear helpless, thrashing about for a solution and blaming everything and everyone but themselves. This lack of leadership is apparent to those who have by now lost all confidence of a possible quick rebound, if only the tough decisions had been made early and swiftly.
For many of us the reality is simple: government has become too big, too costly and too aggressive. This has progressed to the point where what's left of the free enterprise system is now suffocating. Furthermore, the costs of massive amounts of quantitative easing (QE) and artificially low interest rates are perpetuating sluggish and unproductive economies both here and in Europe. Unless radical change is implemented, our economic future will be bleak.
The tepid "recovery" of the last few years has restored just 4 million of the roughly 9 million jobs lost in 2008-10. Last week it was announced that in June 2012 American employers added only 80,000 jobs, a figure far below expectations. It appeared even worse when seen in context. In the first six months of 2011, employers added an average of 160,000 jobs each month. In the same period of 2012 that figure dipped to 150,000. The decline occurred despite the supposedly stimulative effects of negative interest rates and trillions of dollars of government deficits.
The same story is unfolding in the world's largest economy, the 17-nation Eurozone. In order to survive its own crisis, the Europeans have agreed to issue more debt and have consented to greater EU sovereignty over their national governments. Whether this additional layer of oversight can rein in excesses or, instead, merely results in greater economic stagnation remains to be seen.
But irrespective of whether one is looking at the Eurozone or the U.S., massive regulation in the marketplace has smothered businesses and stifled employment. Rather than helping the West change course, however, our politicians are simply taking the path of least resistance - leaving us with high taxes and unimaginable debt in the process. With Europe and America grinding to a halt, the economies of even the vibrant emerging markets, such as China, have now begun to lose traction.