Visible Versus Obscure Economic Effects

Written by William Pauwels on March 19, 2013

MH900426527It is said by many economists and politicians that deficit spending by the government has a positive, stimulating effect on the economy, employment, and prosperity. This may be true in the short-term. However, it must be false in the long-term.  Someone in the future must pay for today’s deficits – and that must inhibit future prosperity.

Clearly the first positive effect is more visible than the second negative effect which is obscure. The first effect is favored by self-promoting, career politicians and government bureaucrats. The second effect is opposed by conscientious patriots concerned about the well-being of future generations.

The same obscure negative effects are at work today in our economy – the result of past years and past decades of deficit government spending. It is obscure, or perhaps even invisible, because past deficits and related interest and principal payment obligations and effects are spread throughout the present and future economy in the form of taxes, inflation, reduced private sector spending, reduced private sector investing, high unemployment, decreased public-sector productivity, ever-increasing deficit government spending, etc. And to make matters even worse for future generations, the Liberal-Leftists in control of our government and regulators, continue to add unaffordable entitlements and benefits for the unproductive takers in our society.

In other words, the immediate effects tend to be more visible – the longer-term effects tend to be less visible.  Of course, the obscurity of the latter effects does not make them less real – and I suspect that enlightened economists can quantify these negative effects. But outside of the academic world, does anyone care?  Will politicians adjust their behavior and advocacy to protect the interests of future generations? I don’t think so.  And in fact the public tends to vote for politicians who promise the most immediate goodies.

Perhaps these short-term versus long-term negative effects are an economic reality that is unavoidable – and can only be countered by enlightened investments, innovation, entrepreneurism, and increased overall productivity – by the power of Free-Market, Constitutional, Free-Enterprise.  This, of course, assumes the de facto Fabian Socialists in our midst do not undermine the traditional American-Way, which they seem determined to do.

William Pauwels
William A. Pauwels, Sr. was born in Jackson Michigan to a Belgian, immigrant, entrepreneurial family. Bill is a graduate of the University of Notre Dame and served in executive and/or leadership positions at Thomson Industries, Inc., Dow Corning, Loctite and Sherwin-Williams. He is currently CIO of Pauwels Private Investment Practice. He's been commenting on matters political/economic/philosophical since 1980.