First principle of economics: understand the problem.

“I’m extraordinarily proud of the economic record that we were able to produce.”

--Barack Obama, June 20, 2011

Really?

There is a weekly measure of our (lack of) economic progress. And initial claims for unemployment benefits came in today at 428,000, after economists had forecast claims dropping to 420,000. The total marks the 12th straight week claims have been above 400,000, dismal news since 400,000 is the level below which claims must fall to show progress on job creation. June’s continued string of 400,000+ weekly unemployment claims suggests this month’s job growth total, due July 8, may be around 90,000. That would be below the 167,000 needed just to keep pace with population growth.

Unemployment is the most visible sign of economic trouble. Another is the size of public debt both here and abroad, debt generated by out-of-control welfare states. Using Bank for International Settlements figures previously unfamiliar to me, Washington Post columnist Robert Samuelson sums up the horrible data on our international debt crisis:

We've arrived at a historical reckoning of the post-World War II welfare state, burdened with aging populations and huge debts. Germany's gross public debt is 87% of its economy; Japan's, 213%; Britain's, 89%; and the United States', 101%. . . Greece is not alone. [And remember,] The United States, Europe and Japan [are] half the world economy.

To reach a solution, you must first understand the problem. Conservaties consider the size of government—its gigantic footprint on the national economy—to be 1) our biggest economic problem, and 2) the reason Obama cannot address our problem.

We earlier noted that job growth in the U.S. today occurs primarily in government, and especially in two government-dominated sectors, education and health care. Now Arnold Kling of the Cato Institute and Nick Schulz of the American Enterprise Institute, both conservative think-tanks, have published in National Affairs a lengthy, documented attack on government domination of education and health care. Kling and Schultz tell us:

The commanding heights of our economy today are . . . education and health care. These are our foremost growth sectors — the ones most central to employment and consumption; the ones that, increasingly, drive our economy. And it is in precisely these two sectors that the case for extensive government intervention and planning, if not outright control, is dominant — and becoming ever more so.
. . it will simply not be possible to maintain a genuine free market — or a thriving, innovative, growing economy — if our education and health sectors are controlled by the government.

Bureaucratic monopolies don’t work, while competition—the competition small businesses are forced to endure, the competition that liberated our airline industry after 1979—generates economic growth. As Walter Russell Mead writes:

The bureaucratic state is too inefficient to provide the needed services at a sustainable cost – and bureaucratic, administrative governments are by nature committed to maintain the status quo at a time when change is needed. For America to move forward, power is going to have to shift from bureaucrats to entrepreneurs, from the state to society and from qualified experts and licensed professionals to the population at large.

Of course, it’s exactly that transfer of power threat our national elite of bureaucrats, experts, and professionals fight so hard to stop.

But there is hope. Mead reminds us:

American society is the most revolutionary force on the planet. The Internet is more subversive than the CIA in its prime. The dynamism of American society is constantly creating new businesses, new technologies, new ideas and new social models. These innovations travel, and they make trouble when they do. . .It is power of a free people more than the brilliance of our intellectual and social establishment that has brought the United States this far; in that truth lies the secret of our revolution and of our success. [emphasis added]