Economics

The economic problems that are plaguing the United States economy at the present are numerous to say the least.  Since the collapse of the Housing market, the United States has experienced what some have come to call an economic recession.  In response to this, economists have placed the economic recovery of the United States as a long term goal, especially in light of the fact that the bail out tarp did not have the intended stimulus effect that it was supposed to have.

Recent news, however, suggests that there might already be a light at the end of the tunnel of recession.  In his article entitled, Evidence Mounts of Strong Recovery, Mark Whitehouse dissects the current economic data available and makes the compelling argument that there is undeniable economic growth that is happening much sooner than most economists believed possible.  The growth of consumer spending has been the reason for this economic recovery.  It has been said that the service sector has started its ascent with Marchs 1.6 increase in retail sales, contrary to prior projections.  This growth has prompted several analysts to improve their projections to adding 8.2 million more jobs in the United States economy.

While there are those that are worried that more and more American jobs will be lost overseas, the impact of this global growth is something that may lead to the growth of the American economy.  The advantage that the United States has is not something that has been or can be, as Friedman, in his book, The World is Flat A Brief History of the Twenty-First Century, suggests, be overcome overnight.  There are still many features that the American economy has that these developing countries do not.  As such, to suggest that the United States is already falling behind and falling victim to Globalization 3.0 ignores the fact that the other countries are only able to develop through the innovations in technology that America develops.  Yet, it does not detract from the fact that while these inherent advantages exist for the United States, this does not ensure success as historical precedent has shown in the case of Japan, Korea and China, being underdeveloped countries before that now challenge the reign of the American economy.

The news of a recovering economy is indeed good news but the basic principles of economics must not be forgotten.  Russell Roberts, in his article entitled, A Marvel of Cooperation How Order Emerges without a Conscious Planner, argues that there is no such need for massive government intervention because economics has a way or bringing about order in life.  Citing the teachings of Hayek and Frederic Bastiat, he effectively argues that the workings of the markets do not need government intervention or guidance for it to flow.  He essentially argues that the time for Keynesian Economics has passed.  The application of government regulation and intervention techniques are no longer as effective as they used to be. 

Perhaps the wisdom of the words of Russell Roberts is more evident in the manner by which governments all over the world have reacted to the recent economic crisis.  The time for Keynesian Economics has passed.  The application of government regulation and intervention techniques are no longer as effective as they used to be.  Since the problem was caused by government intervention in the first place, it stands to reason that the solution may not possibly lie in that area.  Laissez Faire can, and will, create an avenue of growth that will solve the global slowdown.  The free market system, as shown by the impact that consumer spending has had on the economic scenario in the United States, will be more reactive to the real world scenario and will bring solutions to the current economic problems.