- - Sunday, November 30, 2014

ANALYSIS/OPINION:

In remarks before Thanksgiving weekend, University of California, Davis, professor Gregory Clark reminded us of work he published in August when he dared claim “there is no American dream.” For those who know harsher conditions in countries that are run even less well than America, Mr. Clark’s observations seem jarring and flatly wrong.

Yet when you prove Massachusetts Institute of Technology professor Jonathan Gruber incorrect by engaging your own minds and analyzing available evidence, you will be shocked by what you find.

It should be obvious in 2014, even to those who spend too much time living in virtual reality, that bigger is not better. Whether in government, business or education, sprawling organizations stifle progress.

Meanwhile, nimble and smaller competitors rush to embrace fast-moving and liberating technologies that, on balance, gut the workforce by reducing the need for human workers at most skill levels, adding to downward pressures on wages, and ultimately constraining demand for most goods and services offered in the private sector.



Put starkly, machines and robots do not need durable goods such as houses and cars, or other items such as food and clothing.

You would think leaders throughout our great nation would know this by now, yet they evidently do not. We citizens suffer mightily, and perhaps permanently, from their resolute ignorance of economic reality.

Gigantic, centrally administered organizations do more harm than good to households that struggle to contend with threats posed by the rapid pace of technological change.

President Obama: Glutton for government

The candidate dreamer we met on the national stage in July 2004 extolled the promise available in this country of determined work.

That was a long time ago. Under Barack Obama, total annualized federal government expenditures have reached $4.0 trillion, using current running rates.

Last year, only three of 227 nations had an economic output that was larger than the amount Americans spend merely on federal government.

Federal government debt has soared, and intrusion into most aspects of daily life has become almost overwhelming. Where are the tangible benefits for American citizens of such a gigantic Obama bureaucracy?

Information captured by the U.S. Bureau of Labor Statistics in its consumer expenditure surveys is worth studying.

From 2012 to 2013, after-tax incomes of the richest households tracked in a survey dropped 24 percent, from an average of $246,439 to $187,528. Worse, after-tax incomes of all other households — approximately 93 percent of the total in both years — dropped 11 percent, from an average of $51,216 to $45,697.

We are all losers.

Big Business does no better

In the 1950s, American giants such as General Motors and General Electric dominated global markets. Most of their significant foreign competitors had been devastated by two world wars.

Can we conclude these behemoth bureaucracies are better off as we near the sixth anniversary when each began pronounced realignment during the great financial crisis of 2008-2009?

With so much to study concerning the manifestly false promise of Obamacare, not enough analysis has been done in the mainstream press examining whether General Motors, inside the United States alone, truly was restructured for the better — and if it was, who actually benefited?

Another large bureaucracy, General Electric, certainly has changed its business mix and reduced its total indebtedness. Yet shares of this iconic conglomerate have not regained heights seen before 2009.

Regulations do little positive for large companies such as these. We should roll back the regulatory state, not feed it more.

After fellow Democrats’ bruising defeats on Election Day, Mr. Obama refuses to understand how badly his big-government policies punish us where it hurts most: in our pocketbooks. His is the type of change in which no one sensible now believes.

Charles Ortel serves as managing director of Newport Value Partners (NewportValue.com), which provides economic research to executives and to investment firms.

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