- Carl Menger’s Theory of Institutions and Market Processes - April 13, 2021
- Dangerous Monetary Manipulations and Fiscal Follies - April 6, 2021
- Wars and “Following the Science” are Sure Paths to Tyranny - March 30, 2021
The coronavirus crisis will be considered one of the most important global events of the early decades of the 21st century. Like a pebble that is dropped in a pond of water from which a series of waves are sent out across its surface, the virus has created waves of hundreds of thousands of human victims in countries all around the world from its originating epicenter in Wuhan, China.
Among the questions facing the United States is not only how to immediately deal with this tragic pandemic, but what lessons should be learned from it concerning the future role of government in society and the types of economic policies that should be extended or introduced.
The editorial board of The New York Times (April 9, 2020) has proposed an expansive agenda, in what they say is “The America We Need.”
The Times editorial board declares that there is “need for new ideas, and the revival of older ideas about what the government owes the nation’s citizens, what corporations owe employees and what we owe one another.” What they propose and call for, however, is merely more of the same paternalist ideas and bankrupt economic policies that have helped to create many of the social problems that they rail against; and which if instituted would make far worse over time the conditions of everyone in society, with a lot less freedom or prosperity for all.
Discounting the Private Sector, Calling for Much Bigger Government
Once more, individual initiative and private enterprise are either slighted or condemned. “Corporate action and philanthropy certainly have their places, particularly in the short term . . . But they are poor substitutes for stewardship by public institutions. What America needs is a just and activist government.” The Times ridicules the “narrow conception of corporate responsibility” that sees the primary duty of private enterprises to be maximizing shareholder return.
No, instead, they insist that companies, whether producing and earning revenues or not in the midst of the coronavirus crisis should have kept most workers on the payroll with near to their full salaries; and they should institute paid leave, daycare facilities, and support for the unionization of their employees to bargain against them.
The Times editorial board insists that, “The idealization of individual action in an open marketplace has had its mirror image in denigration of collective action through government.” What is it that is lacking that an “enlightened” government should be doing? “The United States does not guarantee the availability of affordable housing to its citizens . . . It does not guarantee reliable access to health care . . . The cost of a college education in the United States is among the highest in the developed world. And beyond the threadbare nature of the American safety net, the government has pulled back from investment in infrastructure, education, and basic scientific research, the building blocks of future prosperity.”
The editorial board bemoans “the federal government’s lack of resources, competence and skill.” One of the proofs of this has been the failure of government and its agencies to better prepare, warn about and safeguard against the health care harm that has been caused by the coronavirus that is plaguing the land. “A major reason for the faltering response is a chimerical expectation that markets will perform the work of government.” If only government had been bigger, more extensive, more intrusive, the virus’s impact would have been so much less, and America would be so much more of a just, fair, and “free” country.
Size and Scope of Government Belies the Times’ Criticisms
It is hard to conceive of on what planet The New York Times editorial board members live, in terms of some of their statements about the size and scope of government over the decades since the 1960s, which they consider to be a period of declining governmental presence in society.
In 1970, federal government spending absorbed about 18 percent of Gross Domestic Product (GDP). Before the coronavirus crisis, the government’s 2020 budget was projected to absorb around 21 percent of GDP, or 17 percent greater in real terms than fifty years ago. The Congressional Budget Office projected in February 2020, that in 2030, a decade from now, federal spending would be nearly 23.5 percent of GDP, representing a further 12 percent increase and then still climbing.
In the current U.S. government budget for fiscal 2020, Social Security and healthcare expenditures including Medicare and Medicaid, combined, come to 50 percent of all federal spending. Because of an aging population, that is expected to continue to rise as a percentage of federal spending, under current mandated, “entitlement” programs.
Total federal spending before the current health crisis was planned to be around $4.7 trillion. This, obviously, does not include state and local government expenditures, which were estimated for the same 2020 period of time to come to at least an additional $3.5 trillion. That is, the total for all levels of government, combined, was forecasted to come in at well over $8 trillion!
With an anticipated (in February) GDP for 2020 of $22.2 trillion, that meant before all the additional government spending now in play, total government expenditures were anticipated to come in as equal to more than 40 percent of the country’s output. That is, $4 out of every $10 of final goods and services produced in the U.S. economy would pass through and be spent by government. But according to The New York Times editorial board, government is starving from a lack of funding.
Before the coronavirus, the federal government expected to borrow over $1 trillion of all that it would spend in fiscal year 2020. This would have represented almost 25 percent of all its expenditures. With the additional $2.2 trillion expenditure bill recently passed by Congress and signed by the president, this means the percentage of deficit spending will rise to almost 50 percent of all expenditures coming out of Washington, D.C. This will all be added to the current federal government debt of over $24.2 trillion.
The Strangling Regulatory State Made the Virus Crisis Worse
Nor is the regulatory arm of the government lacking in the United States. Everything from hair braiding to practicing medicine or law is heavily regulated throughout the country. Try adding an addition to your house; or renting out your apartment or house to short-term renters or participating in “ridesharing” to earn a living or supplementing your retirement income. Local and state governments do everything in their power to make life difficult or impossible for those trying to improve their lives and create opportunities for earning a living. The Small Business Administration has estimated that compliance with government regulations costs the private sector around $2 trillion a year.
In the present coronavirus crisis, the Times editorial board shows a high degree of chutzpah, to pooh-pooh local and private sector responses when it was the Food and Drug Administration (FDA) and the Centers for Disease Control (CDC) that has done everything in their power, seemingly, to prohibit, restrict or retard attempts of private organizations and enterprises from filling the gap in needed ventilators, hand sanitizers, facial masks, and all other related “personal protective equipment” essential for the treatment of patients and the safety of medical personnel risking their own health and lives in performing their professional duties. (See David R. Henderson, “COVID vs. Capitalism”.)
The Times points to the high cost of housing, or even its availability, for those in the lower income categories. They are frustrated that people are told to shelter at home, when too many have no home to go to. Why is this the case? Well, just turn to those states and municipalities with among the highest housing costs and the most “homeless” people. They are the places politically controlled by “progressive” Democrats, places like California and New York City.
Zoning laws, outright restrictions on the building of more residential housing, and rent controls that destroy incentives to build and maintain low-income housing are all “progressive” policies and their consequences are damning statements about their impact on millions of people living in these places. Of course, when things do not turn out the way “progressives” imagined in their ideological fantasies of “enlightened” government, they turn once more to a condemning of private enterprise and businessmen for their own policy follies and failures.
Health care availability? Americans have not had anything approaching a market-based and competitive health care and insurance system for many decades. The government has hampered, regulated, restrained and crowded out the creative and innovative possibilities that could have and would have increased the quality and availability of health care, and lowered its expense, if only a real free market in health care services and insurance had been allowed to exist. (See my article, “For Healthcare the Best Government Plan is No Plan”.)
The same applies to education, as well. Over the last ten years or so, government spending on higher education has increased by almost 25 percent. Per capita student spending over this period has gone up by 15 percent. Many would consider this as far from being a starvation diet of government money on higher education in the United States. It is a totally different matter if we were to ask about the quality of the education that is being received for all the dollars spent. Political correctness and the all too frequent “dumbing down” of what is expected of college students suggests that the bang for the buck is far less than what many of us want. (See my article, “Educational Socialism vs. the Free Market”.)
All of these policies and their consequences lock out and keep down many of the lower income and less fortunate members of the society, precisely because of the politically imposed barriers and hurdles to market opportunities that, otherwise, could and would be there. By doing so, these “progressive” policies bring about and worsen the very income inequalities that arouse their anger. (See my article, “The Inequality Trap Distracts from the Real Issue of Freedom”.)
Businessmen and “the Rich” are the Progressive’s “Misfortune”
The Times’ editorial board never really deals with the issue of how and from where will come all the money needed to fund this massive and intrusive increase in the interventionist-welfare state, this giant lurch in the direction of Bernie Sanders’s “democratic” socialism. They simply point to a hedge-fund billionaire who, they say, spent $238 million on a Manhattan apartment overlooking Central Park, while almost 11 million people are barely able to keep a roof over their heads.
Here is the “progressive” answer for everything: tax “the rich.” Their conception, clearly, is of a segment of the population sitting on huge treasure chests filled with money, earned for doing little or nothing of importance other than harming others, that is used to buy worthless things, like high-end Manhattan apartments. Just tax them, and again, and again, and again.
That there will always be more treasure chests that are hidden away is an implied assumption, just waiting to be redistributed to the needy and deserving. This mentality reminds me of the Nazis who would demand that Jews locked away in ghettos during the Second World War pay ransoms to keep them from being sent to concentration camps; to try to save their lives they scraped together all the gold and cash they could put together that represented their hidden life savings, and then the Nazis would say, “We knew that they had a bottomless well of money, those Jewish bloodsuckers, we should have asked for double. Well, when we rounded them up to send them to the concentration and death camps, we will get the rest.”
In the “progressive” and socialist mentality, all businessmen, and especially the financially successful, are their version of what the Nazis called “the worthless and exploiting Jew.” For the ideological collectivists in our midst, businessmen, private enterprisers, and entrepreneurs are their “misfortune” who stand in their way of having control of the means of production to use for “socially just” purposes and to fully redistribute those bloodsuckers’ ill-gotten gains to others who they think deserve it. I intentionally use the term “their misfortune” because that is how in the late 19th century anti-Semitic German nationalists viewed the Jews in Imperial Germany, a plague on the land that prevented all in society from being good and well.
Just as those German anti-Semites would sometimes refer to a “good Jew” who they did not find too obnoxious and irritating with his manners and behavior, our modern-day “progressives” have their “good businessman,” who funds their “social justice” causes, parrots all the politically correct words and phrases, and endorses the taxes and regulations that will assure his social corporate responsibility “good behavior.”
Neither Wealth nor Prosperity Without the Entrepreneur
After the Nazi annexation of Austria in 1938 and their plundering and confiscation of Jewish-owned private enterprises, Austrian economist Ludwig von Mises (1881-1973) pointed out that, “The so-called Aryanization of firms was based on the Marxist idea that capital (machinery and raw materials) and the labor input of workers were the only vital ingredients of an enterprise, whereas the entrepreneur was an ‘exploiter.’ An enterprise without entrepreneurial spirit and creativity, however, is nothing more than a pile of rubbish and old iron.”
There is no wealth produced; there are no goods to service the needs, wants and desires of the consuming public; this is no coordination of all that is done in a complex social system of division of labor; and there are no avenues for incentives for saving and opportunities for value-generating investments without vibrant, open and free markets in which private enterprisers of all types may freely apply their skills, experiences and entrepreneurial visions of what to produce, for whom and how – if society is to have the material and culture advances that raise people from poverty to plenty.
But nurtured on socialist and Marxian foundations that private enterprise means exploitation, that profit means plunder, that personal and peaceful self-interest means anti-social selfishness, that market transactions are miserly manipulations, they have little or no knowledge and understanding of the workings and essentialness of economic liberty and that entrepreneurial spirit if a society and its people are really to be free and prosperous. (See my articles, “The Miracle and Morality of the Market” and “Business Ethics and the Morality of the Marketplace”.)
Twisting the Meaning of Liberty into Political Paternalism
This gets us to a fundamental and foundational linguistic fabrication by which and through which such “progressives” as those who man the editorial board of The New York Times try to claim that all that they want to see changed in America is really a fulfillment of the country’s original ideas.
They say that past crises which the United States survived, inspired reforms which made the country more just and free. They admit that there are other Americans who claim also to be for preserving and extending liberty, those who have a “minimalist conception of government.” But “theirs is a narrow and negative definition of freedom: the freedom from civil duty, from mutual obligation, and from taxation.” This is an “impoverished” view of freedom that merely shelters and services the wealthy and the privileged.
Instead, the Times’s editorial board harks back to Franklin D. Roosevelt, who in 1936 declared that, “Liberty requires opportunity to make a living – a living decent according to the standard of the time, a living which gives man not only enough to live by, but something to live for.” What does this mean? The editorial board explains that this entails a “broad and muscular conception of liberty: that government should provide all Americans with the freedom that comes from a stable and prosperous life.” There needs to be “the national commitment to a richer conception of freedom: economic security and equality of opportunity.”
Through this linguistic sleight-of-hand, liberty is turned into meaning a form of servitude; freedom is transformed into political paternalism. For centuries, generations of people, especially in the West, fought for and worked to achieve liberty; that is, the freedom of the individual from the coercive power and control of others, especially those asserting and imposing political authority over people.
Natural Rights and the Liberty of the Individual
Kings and conquerors made other human beings into their compulsory servants, made to obey under threat of punishment and death. For the vast majority of humanity their lives were not their own. That which their mental and physical labor produced was not theirs to keep and use. They were commanded to do “this,” and forbidden to do “that.”
The mass of humanity was prohibited from publicly saying what was on its mind, from openly stating and expressing their religious and other beliefs under fear of torture and execution. A wrong look at the lord of the manor could lose you an eye or an ear, your nose or your tongue. People were born into a craft, trade, or occupation inherited from one’s father in the towns, and to which you were tied, just as were those born on the land and who were bound to serve and work for that lord who lived in the castle.
There slowly arose the idea that each individual human being had a right to his own life, liberty, and honestly acquired property. These rights were not “privileges” or favors given by those in political authority and open to revocation at any time at the pleasure of the ruler. No, these were “natural” rights inherent in being a human being.
Many said these rights came from that ultimate higher authority, God, who created man in his own image, breathed life into him, gave him a will to accept or reject salvation, and the freedom to choose a righteous or sinful life. No man should presume to play the role of God and claim the authority to rule over men with absolute power as if they were a divinity. They, too, were made by God and answerable to his Law, just as all others.
But it was not only based on a blind acceptance and faith in God that the idea of individual rights should be adhered to. Men also possessed reason, and right reasoning enables all men to dispassionately and unbiasedly reflect on the nature of man, his requirements for existence and betterment, and the reasonableness of men seeing the justness and goodness that can come from men respecting and protecting each other’s rights; and for them to live and associate on the basis of peaceful and voluntary cooperation and exchange for mutual gains that can enhance the quantities and qualities of things that make for a comfortable, prosperous, and humane existence.
The Free and Self-Governing Individual
It was from these ideas, as found, for instance, in John Locke’s Two Treatises on Government (1689) and in the Declaration of Independence of July 1776, that served as the ideal and therefore the foundation-stone of the American “experiment” in a self-governing people. Key to this was the idea that self-governing did not only mean the right of the people to elect to political office those who would oversee and administer the laws of the land to protect them in their liberty.
The more fundamental and essential notion of a self-governing people was the right of each and every individual to govern over himself in peaceful cooperation with others. Each individual had the freedom to decide on his own purposes and meanings for life, to determine what he considered to be the best means to achieving those ends, and to produce and acquire property through honest labor, and to be free to own and accumulate that which his productive labor had honestly created.
Freedom meant, therefore, the absence of coercion and of arbitrary political rule that abridged people’s individual liberty. Ethical and practical ways of solving the common problems of men were through the exchanges of the marketplace or the voluntary associations of mutual assistance and purpose that comprise the institutions of civil society. (See my article, “Individual Liberty and Civil Society”.)
The role of government was to secure each person’s life, liberty and honestly acquired property from the plunders and dishonesty of others. But because political power is so easily abused for personal and other purposes once possessed, the American experiment in this self-government of free individuals also limited the powers of government to a narrow set of duties and functions, as detailed in the Constitution, precisely to prevent concentration and misuse of government for the violation of those rights rather than their protection. (See my articles, “John Locke and American Individualism” and “The Real Spirit of the Declaration of Independence”.)
From Individual Liberty to a False “Positive” Freedom
But there arose in the second half of the 19th and the early part of the 20th centuries the idea that this was too narrow a conception of freedom. True or real liberty meant not only an absence of coercion over one’s life at the hands of others, inside and outside of government. No, for what good is that type of freedom if you did not have food in your mouth, a roof over your head, a decent set of clothing covering your body, a good and secure job at reasonable pay, and the certainty of a comfortable old age without concerns about the hardships of illness and poor health?
Freedom needed to be something “positive,” something given to people to protect and guarantee them from the wants of material circumstances that would not make life worth living. Thus, arose the idea of the “new” or “neo-liberalism,” the “social liberalism” of the 20th century that was to go beyond the merely limited and negative “classical” liberalism of the early and middle decades of the 19th century. (See my articles, “American Progressives are Bismarck’s Grandchildren” and “How the Word Liberalism Came to Mean Its Opposite”.)
When the editorial board of The New York Times talks about needing a “richer conception of freedom,” under which “government should provide all Americans with the freedom that comes from a stable and prosperous life,” a “just and activist government” that guarantees housing, food, health care, education, a secure job, a decent salary and standard of living, a comfortable retirement, and reduced societal tensions of various sorts, which is based on a more “muscular conception of liberty,” they are really demanding the abridgement of liberty and the extension of command and control over multitudes of people’s lives.
If some in society are to be given and guaranteed this long wish list of “good things” for government to provide, the supply of these good things must come from somewhere and from someone. Since government does not produce and sell any goods and services from which I might earn sufficient revenues over expenses to have the financial means to provide all these various goods and services, it has only one source from which to draw the sums of money (and the goods and services those sums represent in the marketplace) and that is to tax those who have produced goods and services and earned incomes from their sale in the market arena.
Progressive “Caring” Requires Coerced Taking for “Good Purposes”
Put simply and clearly, “progressives” consider it ethically right to coercively take that which others have produced and earned in the private economy and redistribute it to those the government considers deserving of it in various types and to various degrees. To improve the material betterment of some requires the use of political power to force a reduction in the material conditions of others.
At this point in a conversation, if you are looking at a “progressive,” and no doubt this would apply to the members of the Times editorial board as well, and make such an argument, you will see their eyes roll, a smirk on their lips, and the body language of someone who just knows that you are either a yahoo simpleton or an conscious dope and apologist for “the rich” and powerful (you know, like you must be on the payroll of Koch Industries, most likely).
They cannot see or will not see that wealth and even great wealth, if earned on a free, competitive market, has been earned by honestly and peacefully supplying others with goods and services that those buyers valued and benefitted enough from that it was worth the prices paid that cumulatively generated the income that that successful entrepreneur or businessman has acquired.
Nor do they see, or only through a glass darkly, that profits made have not come from abuse or exploitation of those employed to participate in the processes of production. The wages and other contractual incomes earned from working in a businessman’s enterprise have been made possible from the savings of either the enterpriser or those who have agreed to lend him the needed investment capital.
The businessman’s expenses are only recouped if he correctly anticipates what it is that consumers will be willing and interested in buying, otherwise he suffers a loss while all those working for him have received their pay all during the time leading up to offering the product on the market. And, in addition, the wages paid are set by the open and competitive interactions of supply and demand that offer the widest range of employment opportunities possible at any moment in time. (See my article, “The Austrian Economists Who Refuted Marx (and Obama)”.)
Paternalists Do Not See that Interventions Reduce Opportunities
If self-employment opportunities are lacking, with the unskilled and lower income workers having a hard time finding gainful employment, these “progressives” should look at their own “well-intentioned” policies of minimum wage laws that price out of the market some of the very people they say they wish to help; they should look at the regulatory restrictions, barriers and costs that make it financially difficult to start up and expand small businesses that the low or unskilled easily might operate or find work within.
If they are concerned about the educational deficiencies of various segments of the society, they should look at the public school system to which they are so devotedly dedicated, with its top-heavy administrative expenses, its rigid resistance to change by the teachers’ unions, and the resulting discouragements to innovation when competition is suppressed or denied. If they care about educational opportunity and improvement, they should see the value and benefit from private competitive schooling and educational choice for parents and students.
But, no, they look to “activist” government to coercively take for “collective action” what some have earned to fund those and those things they consider to be good and not “private.” They are not moved, as was said, by the argument that taking from those financially better off, including and especially “the rich,” is wrong, because they generally, by definition, do not consider such large incomes to be honestly gained.
The “Progressive” Dislike that Some Have More than Others
In addition, they cannot see why someone should have more than others who are less well off, particularly some “clearly” worthless hedge fund manager who buys a Manhattan apartment for nearly a quarter of a billion dollars. Who needs that much money? From here arises the ethical paternalist and moral despot.
They, of course, do not want to be so labelled. They are good, decent, caring people, who pay their own taxes, naturally, after making all their legal (and sometimes extra-legal) deductions on their tax forms. When “the rich” use a tax shelter it is a sign of greed and anti-social selfishness; when one of the enlightened “progressives” use any equivalent, it’s just following the tax code with no ill intention or lack of concern for others in doing so. After all, the “progressive” earned his money, it’s just the ones with more than him in the business world who are the callous ones who hate humanity.
That there would be nothing like the standards of living that all of us take for granted and wish to improve on without the market engine of the self-interested profit-motive, and that “the poor” have standards and qualities of life in America far above many in other countries today, or in comparison to times in the past, they refuse to accept or consider legitimate.
The Paternalism of Envy
Theirs, and I speak frankly here, is simply the politics of resentment and envy. They resent that some have financially succeeded far more than others when those others live so much more poorly in comparison. The mere “having” is found to be ethically repulsive by them; it goes against their moral grain.
Since private charity, a priori, is taken to be misplaced since only “government” represents “all of us in it together” as a vehicle of a wanted shared community, and since private philanthropy will “of course” never be enough, all must be compelled to participate and “give” or “receive” as those among the enlightened “progressives” know to be best.
This makes this democratic despotism worse than the bygone monarchical despotism. Kings may have mouthed that they ruled for the good of their people, as ordained by God; but almost all of them were self-interested power-lovers, enjoying the pleasures of life made possible by extracting the productions of others over whom they ruled.
Our modern-day democratic despots certainly take advantage of position, power, and perks when in political office or in the circles of planning or implementing the policies of the interventionist-welfare state. After all, we are all human, and as Oscar Wilde said, “I can resist anything except temptation.” But what makes such people dangerous is that far too many of them really believe that they want and should have power or influence in shaping public policy because they sincerely believe that they know what the right thing is to do, to “do good.”
As Adam Smith said, nowhere is such political power “so dangerous as in the hands of a man who had folly and presumption enough to fancy himself fit to exercise it.” They know how much you should earn. They know what should be produced, how much, and for whom. They know who should receive what redistributed benefits and who are those who must be compelled to work and provide it.
They know the education that everyone should have and with what content. They know the work and wages each should be guaranteed. They know the retirement and health care everyone should have provided. They know, they know, they know, they . . . (See my articles, “Why Progressives Don’t Understand and are Enemies of Liberty” and “Reasons for Anti-Capitalism: Ignorance, Arrogance, and Envy”.)
The Hubris and Arrogance of the Political Paternalist
And they know that everyone needs to have all the things they know everyone should have from cradle to grave. If that sounds like using loaded rhetoric against them, the Times editorial board members say so, themselves: “To give Americans a fair chance in the race of life, government must begin from birth.”
In other words, you should and would be a ward of the State from the time you are born – even before, since your birth mother will have been subsidized and guaranteed in various ways before you appeared – with your destiny dictated and determined by those “democratically” elected as the social engineers of everything in society.
How else other than political paternalism, democratic despotism, societal central planning, Big Brother totalitarianism do you call such a proposed system of government and arrangement of social and economic affairs?
Fully entering into such a world, we really would be in George Orwell’s “newspeak:” coercion is liberty; command and control is freedom; political paternalism is self-realization; government planning is free association; collective decision-making is personal choice.
Years ago, Wilhelm Röpke spoke of “the hubris of the intellectuals,” and Friedrich A. Hayek pointed to their arrogant “pretense of knowledge.” Adam Smith, long before them, referred to “the man of system” who views society as a great chessboard on which he presumptuously wishes to move people around into those places and position that he considers best, with little thought that those human beings that he is treating as mere pawns to be manipulated would rather freely determine their own places and positions on that great chessboard of society.
This is the future that the editorial board of The New York Times and many other social justice and identity politics warriors want to make for us in the post-coronavirus era. Now repeat after me, “I love Big Brother, I love Big Brother, I love . . .” Oh wait! That probably should be “I love Sentient Being whose gender is indeterminate and changeable.” You have to update the language of the past to fit the political correctness of the present – just as was Winston’s job in George Orwell’s novel, 1984.