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2009: Prospects for Liberty Part II
Continuing my annual January blog essay on “The Prospects for Liberty” in the coming year, I’m emphasizing this year what I call “the tyranny of bullshit.” As discussed in Part I, the single greatest threat to individual freedom today is paternalism – the expanding 20th-century regulatory/ welfare state, which deprives individuals of the freedom (and the responsibility) to govern their own lives. Here in the United States, given the results of the 2008 elections (with the party of the welfare state, the Democrats, increasing their control over the U.S. Congress and regaining control over the presidency), further expansion of the welfare state – and with it, the loss of more and more individual freedoms (not only economic freedom but other aspects of “personal” freedom as well) – will be a real threat for the next several years. The policies that will result in the expansion of the “Nanny State” are based on nothing more than bullshit: bullshit rationalizations offered by paternalistic politicians, bullshit believed by a majority of the gullible public, the fools who voted for the politicians “whose sole qualification to rule [us] was their capacity to spout the fraudulent generalizations that got them elected to the privilege of enforcing their wishes at the point of a gun," to quote Ayn Rand’s apt definition of politicians. Unlike other forms of tyranny in the past, the tyranny of bullshit is not based on the use of force against an unwilling people: it’s based instead on fraud, fraud committed by the politicians who spout the bullshit theories that persuade a gullible majority of the people to put the collars around their own necks. Part I focused on the bullshit espoused by the new President of the United States, B.O., our new “demagogue-in-chief.” Contrary to his claim – the mantra of “Change” chanted by the handlers of his presidential election campaign and espoused by his slobbering friends in the news media – B.O.’s administration will not bring any meaningful change to Washington. On the contrary, it will bring just more of the same – more of the same tired, old, failed welfare-state policies of the past – nothing but an expansion of the 20th-century regulatory/welfare state model, albeit on an even bigger scale. The only questions remaining to be answered, as I argued in Part I, are: How soon will it take for Americans to realize that B.O. is a fraud?, and how bad will things get in the United States? – how much will the economy be destroyed, how much will the Constitution and its limits on governmental power and its protections for individual rights be eviscerated – before the American people begin to demand real change – that is, a reversal of paternalism and a reinvigoration of the free, capitalist system that America’s founders sought to create? One brief, post-inaugural update to note: In Part I, I made the following prediction about the new president: Given his politics, he lacks the requisite understanding of, and respect for, constitutional limits on the powers of government – which means that on January 20 when he takes the oath of office to `preserve, protect, and defend the Constitution of the United States,’ he will be lying. Virtually everything he’ll do as president will undermine the Constitution, the limits it places on the powers of the executive branch and the federal government generally as well as its protections for the rights of individuals.
Anyone who watched B.O.’s swearing-in ceremony (either live or on tape) will see how he dramatically illustrated the truth of my prediction by flubbing the oath, stumbling over its words. As Randy Barnett has observed on the “Volokh Conspiracy” blog, B.O. followed Chief Justice John Roberts in misstating the presidential oath – saying he “will execute the office of president of the United States faithfully,” rather than saying, as prescribed in the Constitution, that he “will faithfully execute the office.” True, Chief Justice Roberts deserves some blame for getting the words wrong, but the new president – who, more than any other person, ought to know the proper word order in the oath, notwithstanding Roberts’ error – ought to be held responsible for getting it wrong himself. (Law professor Orin Kerr, also posting to the “Volokh Conspiracy,” joked that the flubbed oath “teaches one important lesson: The answer to the question, `How many former editors of the Harvard Law Review does it take to administer the Presidential oath properly?` is `More than two.’”) All joking aside, however, the Constitution stipulates that “[b]efore he enter[s] on the Execution of his Office,” a new president “shall” take the prescribed oath. As some perceptive commentators noted following the inaugural ceremonies, B.O. should have a “do-over,” taking the oath correctly, lest the constitutionality of his executive acts be called into question. The fact that he did have the chief justice re-administer the oath in the White House on January 21 shows that the new president’s advisers took such concerns seriously. Why is it so important that a new president properly take the oath? It’s not just because the Constitution so stipulates: it’s also because, in the history of Anglo-American common law, oaths are quite serious. Under the old English law, dating back to Anglo-Saxon times, if a litigant failed to correctly state his oath – if he got a single word wrong, or even merely stumbled over the words – the law regarded it as a divine sign that he was not telling the truth. So, the real significance of the flubbed oath is that it proves my original point about B.O.’s contempt for the Constitution and the rule of law. How appropriate a beginning for this presidency based on bullshit, to not even get the constitutional oath of office right! (I believe B.O. is the first president in U.S. history to so mangle the presidential oath at his inauguration – which is an act far more telling about the prospects of his presidency than all the Lincolnesque symbolism and other pomp and circumstance that occurred on January 20.) Part II focuses on three other ways in which “the tyranny of bullshit” will manifest itself over the coming year, and beyond: first, “green” bullshit; that is, the bullshit theories espoused by radical environmentalists – principally, the theory of “climate change,” or of “global warming,” allegedly caused by human consumption of carbon-based, or “fossil,” fuels – and the havoc that “green” public policies will wreak on American society; second, “bailout” bullshit, the policies followed by the Bush administration and likely to be expanded upon by the B.O. administration, of federal government “bailouts” of Wall Street, banks, the Detroit auto companies, and other industries, coupled with B.O.’s plans for a massive spending, or “stimulus,” program, that will exacerbate, rather than relieve, the current economic crisis; and third, and finally, the bullshit espoused by “Big Government conservatives,” paternalists within the Republican party and the conservative political movement who threaten to destroy any effective opposition to left-wing paternalism by offering paternalistic bullshit rationalizations of their own.
“Green” Bullshit: Threats to Liberty from Radical Environmentalism
Perhaps the greatest threat to the freedom and prosperity of the industrialized Western world today is the threat posed by radical environmental activists and the politicians who follow their bullshit, pseudo-scientific theories. And no theory better epitomizes this “green bullshit,” as I call it, than the theory of “global warming” – or “climate change,” as it’s now euphemistically called – in other words, the theory that the average global temperatures are increasing, and that the Earth’s warming will lead to cataclysmic disasters such as massive flooding of coastal areas as the polar ice cap melts and the world’s oceans rise to dangerously high levels, etc., etc., and that this dangerous global warming is caused by human activity, namely, by man-made carbon dioxide (a so-called “greenhouse gas”) created by the burning of carbon-based “fossil fuels” such as coal, oil (and other petroleum products), and natural gas. The global-warming thesis is a theory that, despite the propaganda of global-warming alarmists, is far from being scientifically proven. Indeed, it is a flawed theory that fails to fit the facts. Even though a large number of scientists believe it, the theory is not proven; it remains merely a theory, a theory based on faulty “junk” science. Even a supposed “consensus” of scientific opinion does not prove its truth, because science is not based on majority vote. And thankfully so. The best scientists, in my opinion – those who care about objective standards of scientific proof and who know that good science is based on these standards, rather than on majority opinion – constitute a minority of “skeptics” who bravely resist the political pressures to join in the hysteria. In recent years it has become politically correct for many scientists to jump aboard the global-warming bandwagon – in large part, because environmental activists have created such a climate of fear that anyone who dares speak out against the thesis becomes, in effect, black-listed (targets of media smear campaigns, denounced as “deniers” and equated with “flat-Earthers” or even with Holocaust deniers, unable to obtain government grants, etc., etc.). All this is well-documented in an excellent book written by Christopher Horner (senior fellow at the Competitive Enterprise Institute), Red Hot Lies: How Global Warming Alarmists Use Threats, Fraud, and Deception to Keep You Misinformed (Washington, D.C.: Regnery Publishing, 2008). (See especially Chapter 6 of Red Hot Lies, entitled “Big Government: How Government, Politicians, and Alarmists Abuse Power in the Pursuit of Power.”) Perhaps the most “inconvenient truth” to the global-warming alarmists – to borrow a phrase from fear-monger-in-chief AlGore – is the fact that the Earth seems to be cooling rather than warming. As Deroy Murdock reports in a December 18 article in the Seattle Post-Intelligencer (“Global cooling is here”), there is abundant evidence that average global temperatures are lowering rather than increasing. According to the National Climatic Data Center, 2008 was America’s coldest year since 1997. In mid-December, for example, a half-inch of snow fell on the hills of Malibu, California, and three inches of snow closed the Las Vegas airport. Last summer was Anchorage’s third coldest on record, and Alaska’s glaciers are actually getting thicker. Meanwhile, on the other side of the equator, Brazil had an especially cold September, with snow in its southern provinces. The same day the British House of Commons debated “global-warming” legislation in October, snow fell in London for the first time that early in the season since 1922. Globally, surface temperatures are holding steady – a far cry from the 0.54 degree Fahrenheit average global temperature rise predicted by the UN’s Intergovernmental Panel on Climate Change – while the average temperature of the Earth’s atmosphere near its surface actually decreased some 0.25 degrees C (0.45 degrees F) between 1998 and January 2007; from January 2007 until the spring of 2008, it fell a whopping 0.75 degrees C (1.35 degrees F). The growing body of evidence of global cooling, rather than warming, despite increases in carbon dioxide levels, calls into serious question the thesis that manmade CO2 causes global warming. Rather, recent data all seem to support the argument made by many scientists (including Harvard-Smithsonian astrophysicist Dr. Sallie Baliunas) that natural forces, especially solar variability, much more than CO2, influences global temperatures. (This year’s sunspots and solar radiation approach the minimum in the Sun’s cycle. This solar quietude seems to underlie the global cooling in 2008.) And viewed from the standpoint of history, climate change truly does seem to follow cycles related more to natural phenomena (like solar activity) and wholly unrelated to human activities. Indeed, the historic evidence is that the Earth warmed since the end of the so-called Little Ice Age, about 150 years ago, but that we are presently experiencing a cooling trend, even as emissions of so-called “greenhouse gases” from carbon-based fuels are on the rise. Undeterred by such inconvenient truths, radical environmentalist alarmists are now avoiding the term global warming the way leftists generally have been avoiding the label “liberal”; instead, the P.C. term they now prefer to use is climate change, which supposedly covers either possibility. But if all the hysteria they’ve generated is based on models of global warming, how could evidence that the Earth is in fact cooling mean anything else than their whole theory is fundamentally flawed? As I reported last year, the global warming thesis has been aptly called “a scam,” indeed “the greatest scam in history.” In a hard-hitting op-ed published on the Internet (on the Web site of Icecap, an organization dedicated to exploding myths about climate change) in Fall 2007, John Coleman – meteorologist and the founder of The Weather Channel – separated facts from fiction quite succinctly. “There is no run away climate change. The impact of humans on climate is not catastrophic. Our planet is not in peril.” And yet, led by Al Gore, “the high priest of Global Warming,” perpetrators of this great scam have been remarkably successful. Coleman bluntly explains how and why the scam has worked: “Some dastardly scientists with environmental and political motives manipulated long term scientific data to create an illusion of rapid global warming. Other scientists of the same environmental whacko type jumped into the circle to support and broaden the `research’ to further enhance the totally slanted, bogus global warming claims. Their friends in government steered huge research grants their way to keep the movement going. Soon they claimed to be a consensus.
“Environmental extremists, notable politicians among them, then teamed up with movie, media and other liberal, environmentalist journalists to create this wild `scientific’ scenario of the civilization threatening environmental consequences from Global Warming unless we adhere to their radical agenda. Now their ridiculous manipulated science has been accepted as fact and become a cornerstone issue for CNN, CBS, NBC, the Democratic Political Party, the Governor of California, school teachers and, in many cases, well informed but very gullible environmentally conscientious citizens.”
Mr. Coleman concluded his op-ed on an optimistic note, predicting that in time – in a decade or two – the outrageousness of this scam “will be obvious”: the horrible scenarios postulated by the scammers – polar ice cap melting, coastal flooding, super storm patterns, and so on – will fail to occur. “The sky is not falling. And natural cycles and drifts in climate are as much if not more responsible for any climate changes underway.” Indeed, Coleman predicts, “the next twenty years are equally as likely to see a cooling trend as they are to see a warming trend.” Coleman’s statement drew attention, not only from conservative talk-radio hosts like Glenn Beck and Rush Limbaugh, but also from the Weather Channel, which rushed to deflect his statement by distancing itself from him – and, in the process, conceded its own activist agenda, as Christopher Horner reports in Red Hot Lies. Unfortunately, as I also noted last year, by the time people realize that global warming is a scam, it may be too late: politicians will have enacted legislation, purported to help “solve” this phony global warming “crisis,” which will in fact have devastating consequences on our economy and our lifestyles. As Horner notes, “in the global warming agenda we are dealing with a premise that, once adopted, leads to no other conclusion than to accept government control of nearly every aspect of our lives.” Quoting the economist Vaclav Klaus, president of the Czech Republic – who noted that global warming “has become a new religion or new ideology” – Horner notes how the warmists’ agenda “threatens to undermine freedom and the world’s economic and social order.” Global warming, he notes, “is merely the latest, best excuse for energy controls and economic interventions – for the enemies of capitalism on the Left to undermine the market system and the freedom and prosperity it brings to people around the world. Already in the United States we have seen how the past Congress, working together with the Bush administration, passed legislation – the energy bill of late 2007 – enacting the radical environmentalist agenda, limiting the freedom (and decreasing the quality of life) of all Americans. Among the consequences of that misguided legislation have been a loss of freedom of choice in the way people light their homes and offices (through the ban on incandescent light bulbs and the mandate for replacing them with compact fluorescent bulbs), a steep rise in the price of foods (through the mandate for increased use of corn-based ethanol and other biofuels), and less-safe motor vehicles (through an increase in the CAFÉ, or fuel-economy, standards) – all in the name of reducing consumption of carbon-based fuels in the generation of energy. B.O. and the Democrats in Congress (allied with many Republicans, such as Senator John McCain, who also have jumped on the “green” bandwagon) plan to enact additional laws that will implement such things as “cap and trade” mandates to force utility companies to switch from carbon-based fuels such as coal to far more expensive – and far less reliable – “alternative” energy sources as wind and solar power. Loss of freedom of choice for consumers and higher prices for electricity are just part of the consequences of such legislation; loss of reliable sources of energy and concomitant disruption in the nation’s electric grid – with brownouts and blackouts becoming common occurrences rather than extraordinary phenomena – are likely to be the long-term consequences of such misguided policies. The radical environmentalist, global-warming alarmists’ real agenda – and the real result of the legislation being pushed by their politician allies – is to so increase the price of carbon-based fuels that this plentiful (and safe and relatively inexpensive source of energy) will no longer be economically feasible. This will have a devastating impact on everyone’s quality of life. Chris Horner cites, for example, the agenda of one activist group – Carbon Sense Coalition in Australia – as evidence of the sort of proposals we can expect here in the United States, in the near future, to change our laws to modify people’s behavior in the name of preventing global warming. Frighteningly, many of the schemes being pushed by the Australian radical environmentalists already have been enacted by the U.S. Congress, such as the ban on incandescent light bulbs and increased fuel economy standards (as noted above) and limits on choice in appliances. The other schemes include:
Horner quotes B.O.’s policy advisor Jason Grumer in admitting, “This is going to require a kind of social commitment the likes of which we haven’t seen in this country since World War II.” Given B.O.’s choices for key administration positions – for example, his pick for energy secretary, physicist Steven Chu, who is a global-warming fanatic who wants the U.S. to lead the way in cutting use of carbon-based fuels – we’re likely to see efforts to force these and other misguided policies on Americans over the next several years.
The Government’s “Bailout” Binge: More Nanny State Bullshit
As I noted in my previous essay “The Myth of Market Failure” (Oct. 2), both Democratic and Republican politicians in Washington – not only the members of Congress and both the past and the current presidential administrations, but also the regulators at the Federal Reserve and other agencies – have reacted to the current economic crisis with misguided legislation that will only worsen the economy. Both the $700 billion Wall Street “bailout” legislation enacted by Congress last fall (in response to the hysteria generated by Mr. Bush’s secretary of the treasury) and the over $800 billion “stimulus” legislation now being being pushed by the B.O. administration (with the new president utilizing similarly hysterical rhetoric) are based on the same bullshit theory – the myth that some sort of “market failure” (that is, a failure in the capitalist, free-market system) requires government intervention to “save” the economy. The bullshit behind both the Bush “bailout” and the B.O. “stimulus” is the notion – originally propounded by socialist British economist John Maynard Keynes – that governments can, by spending vast amounts of their taxpayers’ money, somehow legislate prosperity. That was the fallacious notion behind FDR’s “New Deal” programs of the 1930s – which scholars now know did not help the economy at all but rather simply prolonged and worsened the Great Depression. (See the books I cited in my “Market Failure” essay: Gene Smiley’s Rethinking the Great Depression (2002), Jim Powell’s FDR’s Folly: How Roosevelt and His New Deal Prolonged the Great Depression (2003), and Amity Shlaes’ The Forgotten Man: A New History of the Great Depression (2007).) The economic history of both the United States and the world in the decades since the end of World War II have proven that Keynesian economics is untenable – nothing more than bullshit, to put it bluntly – and yet the policy-makers in Washington seem determined to repeat these failed public policies of the past. It proves the truth behind the saying that those who are ignorant of history are doomed to repeat it: similarly, those who are ignorant of the real history of the New Deal (not the propaganda of “progressive” activists and scholars, but the story of what FDR’s programs really did to the nation’s legal and economic system) seem doomed to repeat it – and to create a second Great Depression, as a sort of self-fulfilling prophecy. As I noted in “The Myth of Market Failure,” it was not capitalism, or the free-market system, that caused the current recession: rather, it was misguided public policy, laws passed by the Congress and enforced by government regulators, that so distorted the private credit market that it created, first, a “bubble” in the housing market, which (when the bubble burst) has negatively affected credit markets generally. One of the best essays explaining the causes of the financial crisis that I’ve read is a briefing paper published by the Cato Institute and written by Lawrence H. White, called “How Did We Get into This Financial Mess?” (Nov. 18, 2008). As White explains, the root cause of the mess was the expansion in risky mortgages to underqualified borrowers, a policy that was encouraged (and even mandated) by the federal government. The growth of “creative” nonprime lending followed Congress’s revision of the Community Reinvestment Act, the FHA’s loosening of down-payment standards, and HUD’s pressuring lenders to extend mortgages to borrowers who previously would not have qualified. Fannie Mae and Freddie Mac, those Frankenstein monsters created by Congress, grew to own or guarantee about half of the United States’ $12 trillion mortgage market, yet Congressional leaders refused to rein in these institutions’ expansion, instead pushing them to promote “affordable housing” through expanded purchases of nonprime loans to low-income applicants. And the credit that fueled these risky mortgages was provided by the cheap money policy of the Federal Reserve. (Former Fed chairman Alan Greenspan, following the 2001 recession, slashed the federal funds rate from 6.25 to 1.75 percent, and then it was cut further in 2002 and 2003, reaching a record low of 1 percent in mid-2003, where it stayed for a year. Subsequent actions by the Fed have slashed interest rates even further.) Thus, as White summarizes it, “[t]he actual causes of our financial troubles were unusual monetary policy moves and novel federal regulatory interventions. These poorly chosen policies distorted interest rates and asset prices, diverted loanable funds into the wrong investments, and twisted normally robust financial institutions into unsustainable positions.” Just as the “New Dealers” did in the 1930s, Congress under both the past and now the current administrations failed to address the root causes of economic downturn – the misguided governmental policies that distorted financial markets – and instead has continued, and even expanded, those misguided policies. Rather than reforming Freddie and Fannie, Congress has not only allowed them to continue making bad mortgage loans but now is even considering using the second half of the $700 billion Wall Street bailout program to, in effect, further subsidize risky loans by providing more guarantees against mortgage foreclosures. Overall, rather than allowing the housing “bubble” to burst and markets to reach a fair equilibrium – that is, to allow the market system to work, correcting itself, to reduce housing values from their overpriced levels of a few years ago to a level more justly reflecting their true market value – policymakers seem determined to perpetuate the “bubble,” prolonging if not compounding the distortions and making true recovery even more difficult at any time in the near future. What Congress has done in perpetuating and even worsening the problems it caused, in the housing market, it’s done to an even more dangerous degree in its efforts to “bail out” particular industries such as banking and the “Big 3” Detroit auto companies. Consider the case of General Motors. GM’s problems are not based, as many commentators have asserted, on inferior products, or “cars no one wants to buy.” There’s nothing wrong with GM cars or trucks; they remain popular with consumers, both in the United States and around the world, especially consumers who appreciate larger, safer, more comfortable vehicles. (Full confession here: as a longtime owner and driver of a Buick car – one that actually gets fairly good mileage for a “gas guzzler” – as well as an owner of some shares of GM stock, which I inherited from my father, who was a longtime GM employee, I have a bias in favor of GM. I also know more about the company than many of the commentators who’ve been spouting their opinions about it.) GM’s fundamental problem is its high labor costs – not only the unjustifiably high wages the UAW union has negotiated for hourly workers, but also (and especially) the “legacy” costs (particularly the generous health-care benefits) that the UAW has extorted from GM and the other Detroit auto companies. That’s why it would be in the best interest of GM for the company to go into bankruptcy, so it could renegotiate its labor contract (forcing the UAW to make some much-needed real concessions, not just the symbolic concessions it seemed to make as the bailout legislation was being considered in Congress); it’s the only way that GM, Ford, and Crysler can effectively compete with other foreign-owned auto companies (Honda, Toyota, etc.), which (because their factories are located in right-to-work states, where even workers’ freedoms are protected from union monopolies) are not saddled with the high labor costs brought about by UAW extortion. The “bailout” legislation passed by Congress will not help alleviate this fundamental problem; the Democrats in Congress helped cover the UAW’s ass, just as they also evaded Congress’s own responsibility in aggravating Detroit’s problems, with CAFÉ (government fuel-economy standards) and other mandates that interfere with the carmakers’ ability to manufacture the kind of vehicles consumers really want (roomy gas-guzzlers). Indeed, Congress has used its “bailout” of the Detroit auto companies as a vehicle (if you pardon the pun) for forcing its radical-environmentalist agenda on the companies. With the members of Congress second-guessing the business decisions made by auto company executives, the industry seems doomed to fail, no matter how many additional taxpayer-backed loans and other “guarantees” the demagogues on Capitol Hill promise. What’s most disturbing about these “bailouts” are the precedents they set – precedents that will result not only in demands by other industries and institutions for more U.S. government “relief,” but also in the further erosion of constitutional limited-government and even of morality in the United States. Already, we can see how the federal efforts to assist Wall Street, major banks and insurance companies, and the Detroit auto companies has spurred a variety of industries – including even the southern California porn industry! – to call for federal aid, too; and politicians in state and local government – such as the Democrat governor of Ohio, as well as the Democrat mayor of Columbus (both of whom claim to be friends of the new president) – have joined in clamoring for their piece of the incredibly expensive “pie” – the $800-billion “stimulus” program – currently being considered by Congress. (Isn’t it interesting how many “friends” B.O. has, given his plans to redistribute some $825 billion of the wealth produced by American taxpayers!) Like pigs at the trough (or, perhaps a more apt metaphor) piglets suckling at a sow’s teats, all the looters are competing with one another for their “share” of the loot, U.S. taxpayers’ money – the wealth produced by others. Such unsightly and, frankly, sickening competition over whose “needs” are greatest is, sadly, the inevitable consequence of public policies based on the Marxist principle “From each according to his ability, to each according to his needs.” Thanks to the “bailout” philosophy, American society as a whole is being destroyed by the same vicious principle that destroyed the Twentieth Century Motor Company, as dramatized in Ayn Rand’s amazingly prescient novel, Atlas Shrugged, over fifty years ago. Federal government bailouts violate the U.S. Constitution, undermine morality (and the personal responsibility upon which morality depends), and worsen a bad economy. Bailouts are unconstitutional. Subsidies of business, regardless what form they take, are not among the powers of the national government enumerated in the Constitution; by falling outside the enumerated powers, they are unconstitutional abuses of power. Moreover, whenever government exercises its powers to “bail out” one particular company or industry, it unjustly enriches that company or industry and simultaneously unjustly penalizes competing companies or industries, thereby violating the fundamental constitutional principle of equal protection of the laws. A government that has the power to “save” a particular company or industry – the power to make “winners” in the competitive marketplace – also has the power to destroy, to make other companies or industries “losers.” Given what government is (an entity that uses force), it cannot do one without also doing the other. Bailouts undermine morality. They do this not only by directly committing acts of injustice – rewarding the unworthy and punishing the worthy – but also by destroying the personal responsibility upon which all moral codes depend. When a bank is “saved” from failure, or a homeowner’s house is “saved” from mortgage foreclosure, by some governmental action, the beneficiary of government largesse is relieved of his responsibility for the bad choices he made that caused his failure. Simultaneously, businesses or homeowners who acted responsibly – those who made wise decisions, investing capital or spending money, and who did not live beyond their means, making purchases or investments they really couldn’t afford – are in effect being punished for their responsible actions: not only do they fail to benefit from government largesse, but they ultimately pay the bill for it (directly through higher taxes, indirectly through the distortions that government deficit spending causes in credit markets and in the money supply). We’re living under a welfare state that follows the perverse morality that punishes responsible people because of their virtue and rewards irresponsible people because of their vices. As Walter Williams noted in a perceptive column late last fall, “We’ve become a nation of thieves.” And we’ve also become a nation of moochers, increasingly dependent on government. Finally, bailouts worsen a bad economy. They do nothing to address the underlying causes of business failure, as I’ve noted above in my comments about GM and the Detroit auto industry. The “New Deal” programs of the 1930s – both the early programs of government aid to shaky businesses under Herbert Hoover’s New Deal (his Reconstruction Finance Corporation, for example) and the more extensive, and more coercive, programs of FDR’s New Deal (including the National Recovery Administration) – interfered with the natural workings of the marketplace, allowing poorly-managed companies to stay in business (by subsidizing them for their inefficiencies) instead of allowing the competitive system to work as it should, allowing the better-run, more profitable companies, to remain in the marketplace and to succeed. Similarly, long-term unemployment insurance benefits might provide “relief” for the out-of-work employee, but from an economic perspective, they create perverse incentives for workers to remain unemployed – and dependent on government. Thus, bailouts both for failed businesses and for unemployed workers simply exacerbate the problems of business failure and unemployment – because they interfere with the ability of the market system to recover on its own – and therefore prolong and exacerbate recessions and depressions, just as the programs of the 1930s did. The over-$800 billion “stimulus” legislation being pushed by the B.O. administration and the Democrat leaders of Congress will only worsen these destructive effects on the Constitution, moral responsibility, and the American economy. Moreover, that massive increase in federal spending – and in the size of both the federal budget deficit and the U.S. national debt – will have an additional, truly frightening, devastating effect on the economy: it will cause a major problem with inflation. The combined policies of the Bush Treasury Department and the Federal Reserve already have expanded the nation’s money supply by dangerously high levels: it’s not just the $700-billion Wall Street “bailout,” but actually a total of over $8.3 trillion in federal government spending to “rescue” U.S. financial markets. (As summarized in a USA Today sidebar article, “Where is bailout money going?,” Nov. 28, the rundown of the total amount of known U.S. public funds that have been put at risk – either spent, allocated, or pledged – in Fed liquidity, loan and purchase actions, Treasury Department financial rescue efforts, housing support legislation and actions by other federal agencies, include: up to $1.8 trillion in Federal Reserve purchases of top-rated U.S. dollar commercial paper, under a program launched in October; up to $800 billion in Fed support for mortgage and consumer credit markets, including purchases of Fannie Mae and Freddie Mac debt; up to $600 billion in Fed purchases of U.S. dollar commercial paper and certificates of deposit under a program announced Oct. 21; up to $1.9 trillion in new Federal Deposit Insurance Corp. guarantees for banks; up to $900 billion in Fed Term Auction Facility loans offered to meet financial institutions’ cash needs over the 2008 year-end period; the $700 billion for the Treasury to buy equity stakes in financial institutions (the Troubled Assets Relief Program, or TARP); over $400 billion in aid to Citigroup and AIG; $200 billion to backstop Fannie Mae and Freddie Mac, plus an additional $144 billion in purchases of mortgage-backed securities by Fannie and Freddie; $300 billion for the Federal Housing Administration to refinance failing mortgages; and $29 billion in financing for JPMorgan Chase’s government-brokered buyout of Bear Stearns.) When an additional $800-plus-billion in new spending currently being pushed by the B.O. administration is added to this veritable orgy of federal spending, the nation’s money supply will rise drastically to unprecedented levels. As any student of basic economics knows, when the supply of money – the number of dollars in circulation – increases, while the supply of goods decreases or at best remains stable, the inevitable result is inflation: the value of the dollar declines. Inflation is truly the most horrendous form of taxation: thanks to government efforts expanding the money supply, the value of everyone’s wealth – as measured in the value of the dollar – declines. As Robert Samuelson notes in his book The Great Inflation and Its Aftermath (2008) (excerpted in a fascinating article in the January 2009 issue of Reason magazine, “Lessons from the Great Inflation”), one of the most overlooked (and yet crucially important) landmarks in late-20th-century American history was the rise and fall of double-digit inflation in the U.S. From 1960 to 1979, annual U.S. inflation increased from a negligible 1.4 percent to 13.3 percent, as a result of huge blunders the U.S. government (and the Federal Reserve) made in the nation’s monetary policy in the 1960s and 1970s. Thanks to the reform policies of President Ronald Reagan (1981-89) and the Fed under the leadership of Paul Volcker (chairman from 1979 to 1987), the inflation monster was subdued; by 2001 it had fallen to 1.6 percent, almost exactly what it had been in 1960. But given the steep rise in oil and food prices last summer (thanks in large part to the federal government’s misguided energy policies, including the ethanol mandate), inflation had risen by late 2008 to the uncomfortably high level of about 5 percent. Given the recent massive increases in federal spending – and continued deficit spending amounting to about $1 trillion more each year, as B.O. recently predicted – it seems that a best-case scenario would be a return to the double-digit Great Inflation of the late 1970s. A worst-case scenario would be triple-digit inflation, the likes of which helped the Nazis rise to power in Weimer Germany. The fallacy underlying massive government spending programs – the Keynesian myth that governments can legislate prosperity by spending money – was exposed long ago by the great early-19th-century French philosopher Frederick Bastiat, who wrote about “what is not seen” whenever government spends money. This was his famous parable of the “broken window,” a hypothetical story involving a boy who breaks a shop window. A group of onlookers try to console the shopkeeper by pointing out how repair of the window will help the local economy: “What would become of the glaziers if no one ever broke a window?” they rhetorically ask. The six francs that the shopkeeper pays to the glazier to replace the glass in the window is “what is seen,” Bastiat observes. “What is not seen,” however, is what the shopkeeper would have done with his six francs if the window had not been broken – for example, replacing his worn-out shoes or buying a book for his library. Generalizing from this simple story, Bastiat argued that the advocates for government action – those who propose a taxpayer-funded public works project, for example – commit the fallacy of considering only “what is seen” (the jobs created by government spending) and failing to take into account “what is not seen” (the other jobs, or other forgone activities, that would have been created by private investment had money not been taxed away). By exposing the fallacy of the broken window, Bastiat called attention to a fundamental fact about government – a fact that frequently ignored by modern policy-makers: that government cannot legislate prosperity. Government itself creates no wealth; it can only forcibly seize (through its taxation powers) wealth that individuals have created or forcibly compel (through its other powers) individuals to act differently from the ways they freely would have chosen to act. Every time and every way government acts, through the coercive power of law, it interferes with the spontaneous order that would have resulted from the free market; that is, from the free choices of individuals in society. Those who believe government can legislate prosperity are like those naďve townspeople in Bastiat’s story: by considering only “what is seen” – employment for a glazier – they fail to consider “what is not seen,” the true costs of governmental action. Every dollar spent by the government is one less dollar that could have been used for truly productive purposes – by private businesses, to invest more capital in their enterprises. Every make-work “job” supposedly created by government takes the place of the only source of real, productive jobs in our economy – those created by private enterprise. Governments do not “make jobs”; they only destroy them. Governments do nothing truly productive; they only forcibly take the wealth created by productive persons in society and reallocate it to other, non-productive persons, or looters. The one and only way that government truly can stimulate the economy is to get out of the way – to repeal the taxes, spending programs, and regulations that distort the market – and thus to set the market system free to function as it should. Economists who understand and appreciate the free-market system – those of the so-called “Austrian” and “Chicago” school of economics – also understand that it’s natural for there to be a business cycle, with periods of “boom” and “bust,” and that recessions – even deep recessions, as the present situation seems to be – do not constitute a “crisis” requiring government intervention to “solve.” Indeed, they also understand that government efforts to “solve” the so-called “crisis” are apt to cause a real crisis – just like that which the politicians in Washington are about to create, if and when they enact more misguided federal government “stimulus” programs.
“Conservative” Paternalism: Bullshit from the Right
Finally, another major threat to individual freedom from “the tyranny of bullshit” comes from the “right” side of the political spectrum. It’s the resurgence of a paternalistic wing within the conservative political movement and the Republican party. These so-called “conservative” paternalists – a motley crew of intellectuals including social conservatives, “Big Government” (or “national greatness”) conservatives, “neoconservatives,” and “reform” conservatives – during the eight years of George W. Bush’s presidency pushed to the sidelines of both the conservative movement and the Republican party the Goldwater-Reagan coalition of traditional limited-government conservatives, “free-market” conservatives, and libertarians. With one of their own (John McCain, one of the so-called “reformer” conservatives) as the Republican presidential nominee in 2008, the paternalists seem to have taken over the Republican Party, just as they had in effect taken over the Bush administration. Today the GOP is at a crossroads, with a struggle for the soul – and the future – of the party underway. Will it recover its limited-government principles and thus offer a real alternative to the welfare-state policies of the Democrats? Or will it continue to be the party of “socialism light,” differing from the Democrats only in the degree of its embrace of the paternalistic “nanny state” model? Among the purveyors of this “conservative” brand of paternalism is political commentator David Brooks, a columnist for The New York Times (and the Times’ favorite “conservative”). Brooks is the author of a number of asinine columns, but I’ll briefly focus on two of them, written over the past year, which I happened to see and to find particularly disgusting. In a July 18 column, “An Activist Age,” Brooks announced, “We’re entering into an era of epic legislation,” identifying five “large problems” that will “compel the federal government to act in gigantic ways over the next few years”: health care (the “erosion of the social compact,” i..e., employer-provided health insurance), “the energy shortage,” “the stagnation in human capital” (by which he means the nation’s failed education system), financial market reform, and infrastructure reform (the U.S. transportation system is “in shambles,” he asserts). To deal with these five problems, Brooks alleges, the next few years necessarily will be “an age of government activism,” similar to comparable periods of great governmental change, or “reform,” when “conservatives” ruled. The two examples from history that he cites? First is British prime minister Benjamin Disraeli and his “One Nation Conservatism,” or Tory conservatism, that helped usher in the late-Victorian welfare state in Britain. Second is FDR’s “New Deal.” Apart from Brooks’ ludicrous identification of either Disraeli or FDR as “conservative” leaders, note what’s missing from Brooks’ column – the unstated premises of his column, in fact. First, the assumption that “activist” government can indeed solve these problems (which, as history has shown, is an erroneous assumption). Second, and more fundamentally, what Brooks fails to grasp is that governmental policies have been responsible for each of the five problems he identifies: first, the health care “crisis” (if there is indeed one) is the rising cost of health insurance and health care, a problem caused by government policies that created the employer-based system and then inflated prices by adding on socialized medicine in the forms of Medicare and Medicaid; second, energy shortages (that is, shortages in oil and gas) have been caused by misguided federal regulation of the energy industry, including the war currently being waged against carbon-based fuels in the name of combating “climate change”; third, the failed U.S. education system, which is almost entirely a problem of failed public, or government, schools (private educational institutions seem to be doing quite well, thank you); fourth, the problem with financial markets, which as noted above, was caused by misguided government policies and programs; and fifth, the problems with the nation’s “infrastructure,” roads and bridges, etc., which again have been mismanaged by government. The obvious answer to these problems which were caused by bad laws and regulations, by bad governmental policies, is to repeal those laws and regulations and to change those policies. That would be real “reform,” not an even-more activist government, which would simply compound the problems that government control caused in the first place. That’s also the true “conservative” solution, Brooks’ skewed vision of conservatism notwithstanding. Even more disgusting is Brooks’ September 15 column, “Republicans must recognize worth of society as a whole,” in which Brooks advises the Republican Party to abandon Barry Goldwater’s limited-government philosophy and instead embrace – you guessed it – a “new conservatism” that “emphasizes society as well individuals, security as well as freedom.” That sounds suspiciously like left-liberal Democrats’ collectivist philosophy, and in fact that’s exactly what paternalistic “conservatives” like Brooks would like Republicans to embrace. Rather than seeking true solutions to the problems caused by failed government policies – for example, individual choice in health care, or vouchers in lieu of government-controlled schools in education, both sound ideas that Brooks ridicules – such paternalist conservatives would offer more failed government programs that differ from the programs offered by Democrats only in their details. With such collectivist and paternalistic bullshit emanating from the pens of self-described “conservatives” like Brooks, is it any wonder that individualism, responsibility, and free markets are now on the defensive in American politics?
| Link to this Entry | Posted Monday, January 26, 2009 | Copyright © David N. Mayer |
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