In a recent column in the New York Times, editorialist Paul Krugman lead off his piece titled “Averting the Worst,” with this quote:
“So it seems we aren’t going to have a second Great Depression after all. What saved us? The answer, basically, is Big Government.”
This is a little, to my mind, like saying that a man who shoots you in the back, paralyzes you for life, and then hands you a second-hand wheelchair so you can putt around is to be hailed as a savior.
In an essay written by John Hasnas, Associate Professor of the McDonough School of Business at Georgetown University, titled “What it Feels Like to be a Libertarian,” he writes:
“Imagine spending two decades warning that government policy is leading to a major economic collapse, and then, when the collapse comes, watching the world conclude that markets do not work.
“Imagine continually explaining that markets function because they have a built in corrective mechanism; that periodic contractions are necessary to weed out unproductive ventures; that continually loosening credit to avoid such corrections just puts off the day of reckoning and inevitably leads to a larger recession; that this is precisely what the government did during the 1920’s that led to the great depression; and then, when the recession hits, seeing it offered as proof of the failure of laissez-faire capitalism.
“Imagine spending years decrying federal intervention in the home mortgage market; pointing out the dangers associated with legislation such as the Community Reinvestment Act that forces lenders to make more risky loans than they otherwise would; testifying before Congress on the lack of oversight and inevitable insolvency of Fannie Mae and Freddie Mac to legislators who angrily respond either that one is ‘exaggerat[ing] a threat of safety and soundness . . . which I do not see’ (Barney Frank) or ‘If it ain’t broke, why do you want to fix it? Have the GSEs [government-sponsored enterprises] ever missed their housing goals?’ (Maxine Waters) or ‘The problem that we have and that we are faced with is maybe some individuals who wanted to do away with GSEs in the first place’ (Gregory Meeks) or that Fannie Mae and Freddie Mac are ‘one of the great success stories of all time’ (Christopher Dodd); and arguing that the moral hazard created by the implicit federal backing of such privately-owned government-sponsored enterprises is likely to set off a wave of unjustifiably risky investments, and then, when the housing market implodes under the weight of bad loans, watching the collapse get blamed on the greed and rapaciousness of ‘Wall Street.'”
Such revelations do little to sway government apologists in the media like Krugman, however. Here’s what he had to say about the government’s actions in response to the economic crisis:
“Probably the most important aspect of the government’s role in this crisis isn’t what it has done, but what it hasn’t done: Unlike the private sector, the federal government hasn’t slashed spending as its income has fallen.” He then readily admits that state and local governments are a different story – more on that below. Krugman continues: “Tax receipts are way down, but Social Security checks are still going out; Medicare is still covering hospital bills; federal employees, from judges to park rangers to soldiers, are still being paid.”
What Paul Krugman and those of his ilk consistently ignore is that there are only two ways such lunacy can continue while flying wildly in the face of basic mathematics. First, of course, is taxation – money taken from the productive private sector by the unproductive “public” sector literally at gunpoint. However, since the amounts of revenue necessary to perpetuate government at its current and future spending levels are unachievable through taxation alone – both in the practical and political sense – politicians must continue to borrow from the privately-owned Federal Reserve, which simply prints more and more fiat currency and lumps it into the banking system and economy. The end result, invariably, is hyperinflation and higher interest rates. In effect, a hidden tax on savings and investment. A recipe for disaster. Yet Krugman would have us believe that handing a bandage and an aspirin to a leukemia patient is all that’s needed to perpetually outhit disaster ad infinitum. After praising government intervention once again for rescuing the banking system, and Obama’s American Recovery and Reinvestment boondoggle, Krugman states, “Sometimes the private sector is the problem, and government is the solution.” He then ends the column on this note: “We appear to have averted the worst: Utter catastrophe no longer seems likely. And Big Government, run by people who understand its virtues, is the reason why.”
I’ll pass on whatever he’s smoking. Utter catastrophe has been postponed, not eliminated. The leukemia patient has been hit with a little morphine, but that’s about all.
Professor Hasnas, in his essay, says it best:
“Libertarians spend their lives accurately predicting the future effects of government policy. Their predictions are accurate because they are derived from Hayek’s insights into the limitations of human knowledge, from the recognition that the people who comprise the government respond to incentives just like anyone else and are not magically transformed to selfless agents of the good merely by accepting government employment, from the awareness that for government to provide a benefit to some, it must first take it from others, and from the knowledge that politicians cannot repeal the laws of economics. For the same reason, their predictions are usually negative and utterly inconsistent with the utopian wishful-thinking that lies at the heart of virtually all contemporary political advocacy. And because no one likes to hear that he cannot have his cake and eat it too or be told that his good intentions cannot be translated into reality either by waving a magic wand or by passing legislation, these predictions are greeted not merely with disbelief, but with derision.
“It is human nature to want to shoot the messenger bearing unwelcome tidings. And so, for the sin of continually pointing out that the emperor has no clothes, libertarians are attacked as heartless bastards devoid of compassion for the less fortunate, despicable flacks for the rich or for business interests, unthinking dogmatists who place blind faith in the free market, or, at best, members of the lunatic fringe.
“Cassandra’s curse was to always tell the truth about the future, but never be believed. If you add to that curse that she would be ridiculed, derided, and shunned for making her predictions, you have a pretty fair approximation of what it feels like to be a libertarian.
“If you’d like a taste of what it feels like to be a libertarian, try telling people that the incoming Obama Administration is advocating precisely those aspects of FDR’s New Deal that prolonged the great depression for a decade; that propping up failed and failing ventures with government money in order to save jobs in the present merely shifts resources from relatively more to relatively less productive uses, impedes the corrective process, undermines the economic growth necessary for recovery, and increases unemployment in the long term; and that any ‘economic’ stimulus package will inexorably be made to serve political rather than economic ends, and see what kind of reaction you get. And trust me, it won’t feel any better five or ten years from now when everything you have just said has been proven true and Obama, like FDR, is nonetheless revered as the savior.”
Of course, it doesn’t have to be that way. First however, Americans must realize that not just Big Government, but any political government – of any size or type – will only produce the same failed, disastrous results. Markets work, state socialism and fascism don’t. We have thousands of years of human history to prove this. It’s time to stop voting, stop supporting politics and politicians altogether, and start looking for ways to build a future for ourselves not hampered and threatened by such madness.