From Forbes.com:
Simplified, the Obama economic plan is one whereby we'll run deficits to fund welfare programs that, by definition, will slow economic growth. Indeed, individual stimulus will involve taking from the productive to aid the less productive, and it's easy to see how this will cause the productive among us to reduce their efforts.
Meanwhile, corporations propped up by federal largess will end up subsidizing their ailing competitors. This is the opposite of what Schumpeter meant when he talked about "creative destruction." In the Schumpeter model, company failure was essential for economic growth, given the certainty that failed or weakened companies would be snapped up and run better by new management. The prevailing economic models of today suggest this true economic stimulant will be shown the door in favor of corporate welfare.
Returning to our national debt, while we may, for now, be able to borrow on good terms from the rest of the world, it seems charitably naïve to assume that this will continue to be the case. Good or bad, our past deficits were largely meant to protect a growth-oriented, capitalistic way of life that made the U.S. a credible debtor.
Our present-day deficits have everything to do with running away from a purer form of capitalism in favor of a corporatist welfare state. That being the case, future economic growth stateside promises to be more sluggish, and if we stop growing, our debt we will necessarily become less attractive to investors. Unless this sad economic chapter can be unwritten, high interest rates are just around the corner.
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