Big Government Creating High Unemployment And Stagnant Wages.

by Michael E. Newton, The Path to Tyranny: Marketwatch reports Salaries and wages are rising, but not by much. Even that subdued headline is upbeat when you read some of the details:

Want some more bad news? Average wages today are lower than a decade ago when adjusted for inflation, according to an analysis earlier this year by the Economic Policy Institute.

For high school graduates, median inflation-adjusted wages were $626 per week in 2009, compared with $629 in 2000. If you assume a worker gets paid for a full year that totals $32,552 in 2009, down from $32,708 in 2000.

For college graduates, weekly wages were $1,025 in 2009, compared with $1,030 in 2000, according to EPI. Over one year, that works out to $53,300 last year, down from $53,560 in 2000.

Additionally, the official unemployment rate was just 4.0% back in 2000. Today, it stands at 9.5%. So not only are working Americans earning less, many more are unemployed and earning nothing.

The American dream is dying. But why? I again return to this chart, first posted here.



As is clearly evident in that chart, the government’s intrusion in our economy is at historically high levels. In this recent recession, government spending has hit all new unforeseen levels. But even prior to that, the 90s and 2000s, a period under both Republican and Democratic Presidents and Congresses, saw government spending excluding defense bouncing around the 30% level. Even that much-lauded decline in government spending under President Bill Clinton and the Republican Congress, only saw non-defense government spending decline from 31.87% in 1991 to 28.95% in 2000, a 2.92% decline. By comparison, non-defense government spending rose a 4.86% in 2009 alone. A supposedly major accomplishment that took ten years to achieve was obliterated in less than a year.

While non-defense government spending at 28.95% may look appealing now that the figure is about nine percentage point higher, non-defense government spending had never exceeded that level prior to 1982. While many talk about the small government days of Bill Clinton and the Republican Revolution of 1994, remember that FDR, LBJ, and Jimmy Carter all spent less excluding defense (which is wildly volatile depending largely on external affairs) than the U.S.’s recent best.

Our experiment with government intervention in society is failing. Government control over a third of the economy has produced high unemployment and stagnant wages. For decades, the United States enjoyed small government and prospered as a results. It is no coincidence that our recent weakness is the result of an overly large and burdensome government.

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Tags: Michael E. Newton, The Path to Tyranny, Capitalism, Economics, Government spending, Jobs, Redistribution, Socialism, Unemployment, big government, government spending, economics, unemployment, United States, Inflation, wages, economy To share or post to your site, click on "Post Link". Please mention / link to the ARRA News Service. Thanks!