"Economics Is Too Important Just To Be Left to the Economists."

There is a fallacy among economists which says that "what might be a good course of action for an individual can lead to disaster if widely adopted by members of the larger group. In this case, disaster could be the result if there was too strong a preference for savings over consumption." Andrew B. Wilson in his column today at the Wall Street Journal ("Thatcher Wouldn't Have Gone Wobbly on Detroit") says that what is good for an individual in these times, saving his capital, IS good for the country. And he sites the example of Margaret Thatcher and how she saved Britain's economy with her good sense and basically told the "economists" to take a hike.

While the automakers are clamoring to take out more loans for their bankrupt industry, Americans are using their common sense and trying to STAY OUT of bankruptcy. Our government - Obama - is also talking of: "...spending hundreds of billions on public works with the hope of creating some jobs, but remember: 93.3% of Americans, though shaken, already have jobs." What's going on here? Where is common sense? But then politicians never did have common sense just the desire to get reelected again and again. Read this column.

It reminds me of the open letter that 364 economists addressed to British Prime Minister Margaret Thatcher in 1981, condemning her for daring to cut public borrowing in the midst of a recession, which was contrary to the Keynesian orthodoxy at the time. They did not accept Mrs. Thatcher's reasoning that too much public-sector borrowing and government-directed investment could only crowd out private-sector borrowing and risk-taking.

They also implicitly rejected Mrs. Thatcher's strongly held belief that both governments and individuals must be guided by fundamental rules of common sense and frugality, in good times and bad. The economists described her thinking on this score as naive.

Mrs. Thatcher spurned the collective wisdom of the 364 economists, seeing their advice as just more of the same failed interventionist policy prescriptions which the country had followed for over three decades.

...But Thatcherite principles remain as valid as ever. The freedom of the marketplace is still the only effective mechanism for eliminating poor business practices, identifying productive investment, and providing long-term growth.

...Yet by sticking to her policies of lightened regulation, reduced trade barriers, privatization of a raft of publicly owned companies, reduced taxation, and the adoption of laws to prevent abuses of union power, Mrs. Thatcher achieved something few if any of today's economists have begun to consider. She achieved a genuine, productivity-led recovery that transformed Britain from perennial basket case into the Europe's most improved and vibrant economy.

What we need is a Mrs. Thatcher who is not afraid of the medicine we need to take to cure the symptoms of decades of abuse of our economy. Obama, the pragmatist, IS NOT that person.