The world is convening in Davos, Switzerland for the annual economic conference. If the opening speeches and panel discussions are any indication, uplifting is not a word I would use to describe the tenor of the outlook. For me, it has always been difficult to prognosticate what is going to happen by what has recently happened. It fits into my “nobody knows nothing” mantra.

Of course, I am referring to the short run.

Are the world’s economies going to suffer significant economic duress for 2009? Um, does the Pontiff don a oversize lid?. The real issue is what happens after that.

While all of this gnashing of teeth is going on, there are some important warnings coming from the world’s economists about how this thing can actually be made worse by stupid fiscal policy. I (and they) are principally worried about the propensity for any government to lean towards protectionism during times like these.

I must admit it is refreshing to see the world’s leading economists agreeing that protectionism is a bad thing. Let’s get this on the table; trade protectionism is a very bad thing (can you say, Smoot-Hawley? I knew that you could). But, I warn you somebody is going to propose that type of action. It will be a wolf in sheep’s clothing, and the rhetoric pushing this sort of agenda has already commenced here in the United States.

There is a growing school of thought that believes that government is the answer for what ails us, and I will continue to beat the drum hopefully pointing out that it is government that is doing the ailing.

We can argue all day over where the blame lies when it comes to the pickle in which we find ourselves. Whether the SEC was asleep at the switch (they were) or Citigroup buying a 50 million dollar airplane after taking TARP money (they should not have) or Bank of America not knowing the mess that Merrill Lynch would provide (they should have known), is a moot point because the assumption is that with tighter government regulation, all of these maladies would have been avoided.

I do not subscribe to that theory. I think governments, with the exception of waging war and collecting taxes, are extraordinarily inept at most other tasks especially anything having to do with business.

Having trouble following me? Try asking a postal service manager how to compete with UPS or Fedex. Or, better yet go observe the “business” that goes down everyday in one of our fine DMV offices. If operated under the government model of “doing business”, private enterprise would shut down faster than you can say “What can brown do for you”.

It gets to the lack of efficiency inherent in governmental structures. I could go on, but you get the point.

Folks, government is not the solution. Government is the problem.

Yes, you say, so who is to watch Wall Street? I would suggest that the proper mechanism is in place and it is called the United States Justice Department. If you would like evidence of my theory that governments are not much good at stuff, ask yourselves the following; how is it that Bernie Madoff is sleeping in his penthouse bed instead of on a concrete mattress?

Ciao.

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