Sedgwick County Commissioner Karl Peterjohn gave a crash course in macroeconomics – and the choices between market or government control – in a speech to the Wichita Independent Business Association (WIBA) July 13. “Instead of simply discussing county issues, I wanted to discuss the larger environment including the battle of ideas that we face in trying to solve our economic problems, he said in an email to KansasWatchdog.

Many economists are drawing comparisons to the policies of President Franklin D. Roosevelt in the early stages of the Great Depression.

Peterjohn, who holds bachelor’s and master’s degrees in economics, quoted Secretary of the Treasury, Henry Morgenthau’s testimony before congress on May 9, 1939.

“We have tried spending money.  We are spending more than we have ever spent before and it does not work….I say after eight years of this Administration we have just as much unemployment as when we started…And an enormous debt to boot!”

According to Peterjohn government should protect, not inhibit, business, the true engine of economic growth, by fostering:

• Rule of law
• Regulatory stability
• Certainty in taxes
• These steps must be taken by government at all levels

President Obama’s decision to fire the CEO of General Motors, transfer majority ownership of GM from investors to the unions and force closure of dealerships were anything but the rule of law according to Peterjohn. He said the health care takeover and ongoing banking and financial takeovers and regulation add to the uncertainty while nothing is done to address the underlying causes of the economic meltdown.

The housing bubble, and its subsequent bust, were caused by government intervention in the free market. The Community Reinvestment Act, created under President Jimmy Carter and expanded under President Bill Clinton, by forcing financial institutions to make loans to people who couldn’t afford them. The toxic debt eventually poisoned much of the financial system. The recent financial reform legislation took no action to correct this failure or improve oversight of Fanie Mae or Freddie Mac.

In addition to the current problems facing economic recovery, In just six months, the largest tax hikes in the history of America will take effect. Americans for Tax Reform has the full list of tax hikes.

Peterjohn said the future can still be bright and offered lists of solutions for local, state and federal government. He said all local governments should:

• Provide stable regulatory & tax structures
• Ensure transparency on spending
• Stop suing for more tax $–no more Montoys
• Be required to ask for voter approval for state/local tax hikes, a provision already in place in Colorado, Oklahoma and Missouri
• Re-examine regulatory structure, zoning and other local rules and costs

The presentation is below. Slide 22, a rap video presenting the economic theories of Keynes and Hayek, can be found here.

Karl Peterjohn economic policy presentation