I sent this letter to the WSJ today:
Daniel Henninger points out that young people will suffer most from the “death of Reaganomics” (Opinion: “Joblessness: The Kids Are Not Alright,” Apr 8, 2010). He even manages to avoid citing the great American Ponzi scheme of Social Security. But while Henninger’s observation is both graceful and astute, he never names the difference between successful and failed job creation strategies: Investment.
Henninger notes that Reagan’s job policies created a 92-month economic expansion. Compare that to the current Administration’s struggle with baseline 10% unemployment and sinking job prospects under a “subsidy-driven” regime.
The difference is that expansionists look for investment opportunities to create growth, while subsidizers merely redistribute. Look no further than the contrast between Reagan’s “supply-side” approach and Obama’s war on unpaid internships to see which perspective better encourages youth sector employment growth.
Subsidies beget more subsidies. Breaking windows and smashing old cars does not create growth. We can learn that from misguided European examples and protect the American gold standard based in investment, as Henninger suggests. Or we can follow Europe down that well-traveled, subsidized road, giving up our yellow bricks to Value Added Taxes, subsidies, and demand-side economics; to each according to his need.