Is anyone else starting to get nervous about our new President and his policies?

It is looking more and more like we are in for an era (for as long as the Obama Era lasts) that entails the following megatrends:

1. Extreme regulation of economic activity (click the following link for information on just one example of this, the CPSIA at http://www.learningresources.com/category/id/104512.do?code=CPSIA). We are looking at an environment in which the default approach to any problem is regulation (i.e. what we need to solve this problem is a new mandate for a federal agency and a new set of regulations). If you have been in the business world for any length of time, you know that many regulations, while well-intentioned, end up costing businesses more than the benefit to society they set out to create. Regulations create costs for businesses. And, that translates into less jobs being created. There is really no debate on this point.

Doesn't seem to be a great time for this, with 600,000 plus new jobless claims each week.

As a society, we should seek to balance the need for regulation against the economic cost-benefit analysis of the regulation. Usually, this analysis results in less regulation and more market forces being used to solve problems. I know this is anathema right now - to suggest that market forces can be used constructively - but we need to be careful not to over-react to circumstances in the financial sphere and over-compensate elsewhere in our economy with more regulation. That will cost us, big time, in the long run.

2. Class Warfare. It seems to me that President Obama, and his Congressional partners, are setting a tone in this country that pits one group against another. Just take a look at the pronouncements that accompanied his new economic proposals. The tone of what our President is saying is that the wealthy are dodging taxes (is that fair?) and that what we really need to do is to make sure they pay their taxes by limiting itemized deductions and increasing the tax rates. Meanwhile, the top 2% of taxpayers paid in 40% of the total taxes paid, while earning 22% of the taxable income in the most recent year for which the data is available.

And, by the way, does our President understand that charitable donations are itemized deductions? So, limiting itemized deductions will, as night follows day, result in a decrease in charitable donations. Is this a great idea right now? When there are more and more people turning to charitable organizations for economic asisstance. Also, mortgage interest is an itemized deduction. Do we need another reason created by the tax code to send real estate values down further? That can't be a good thing right now.

Overall, I am unimpressed by what President Obama is saying, and by what he is doing. Time will tell if this is political posturing (to payback supporters) or if he really means these things, but it is not a great start, in my view. And, that's what you get here at woldyworld . . . my view.

Later . . .