Ah, say the Keynesians, people aren’t buying, and that’s why businesses aren’t investing and hiring. Only government can jumpstart the economy.
But people didn’t just wake up one day and decide not to consume and invest. They hold back because the economy is uncertain. Then they hold back more because they don’t know what activist government will do next. Will it prop up housing or other prices? Will it nationalize the banks?
The way to get private activity going again is to let markets adjust to reality and set prices accordingly. Only then will economic activity resume and unemployment recede.
If, through your perseverance, things begin looking up, credit belongs not to Obama and Congress. It belongs to you.
John Stossel is co-anchor of the ABC News current affairs TV program 20/20 in the US.
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