I have a new piece today on Northwood University’s blog, “In Defense of Capitalism & Human Progress,” on “The Debt Crisis and the Fiscal Leviathan State.”
http://defenseofcapitalism.blogspot.com/2011/07/debt-crisis-and-fiscal-leviathan-state.html
I explain that virtually all that is going on in Washington about the government’s debt is really smoke and mirrors because everyone there accepts the premises of the “entitlement” society. As a result, practically no one is willing to call for the real cuts in government spending that would bring about a reduction of the government’s “slice” of the national economic pie; and put the country on a real solution to the debt problem.
I discuss that the reason for this unwillingness has origins: First, an ideological one, which takes the implicit form of the acceptance of the socialist critique of capitalism. Left to its own devices, the socialists claimed, the market economy leads to abuse of workers by employers, tends toward monopoly manipulation of consumers, and results in a failure to produce the products and services people “really” need. Hence the necessity for the paternalistic interventionist-welfare state, with its massive growth in government spending and intrusiveness in society.
The second is pragmatism of everyday politics. After Keynesian Economics undermined the rationale for an annual balanced budget, politicians soon saw that they could justify offering voters “something for nothing” – government spending, programs, and interventions with a smaller price tag they the real cost – through the “miracle” of deficit spending.
As a result, modern government has become the Fiscal Leviathan State that is absorbing more and more of the society’s wealth and productive capability.
I conclude with arguing that there are few short-term solutions given the anti-capitalist ideology of our time, and the political pull of interventionist and redistributive paternalism that serves the interests of politicians and special interest groups.
The long run solution requires a change in the climate of ideas – and that requires setting the historical record straight on the achievements of free market capitalism, and articulating and defending the moral case for the free society and its smaller role for government.
Richard Ebeling
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| “The long run solution requires a change in the climate of ideas…” |
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( ” The long run is a misleading guide to current affairs. In the long run we are all dead.” — John Maynard Keynes, 1923 )
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Keynes was 100% correct about that. And even his incorrect ideas still dominate America almost a century later.
You can NOT change the “climate of ideas” … as long as the government controls the American education system. We have a century’s worth of direct evidence of that unpleasant fact.
So what’s the specific plan to change that “climate” ?
It is all smoke and mirrors, but is more complicated that simply being an “entitlement society”. As Ebeling notes politicians have adopted the “miracle” of deficit spending. Embedded in that “miracle” is the failure of our politicians to actually make tough decisions. Note that proposed budgets promise to balance the budget at some future point in time – after the politicians have left office. Nothing like making promises for other people to keep! Historically, these so-called promises seem to be repudiated by the newly elected Congress people based on new crises-of-the -day concerns that demand evermore deficit spending.
Particularly troublesome is the claim by politicians that they can manage the economy through their dynamic leadership. I am beginning to think that politicians should never campaign on an assertion that they can fix the economy. Obama is giving us a “bread and circuses” economy.
Particularly galling are the Republicans vilification of the government. The Republicans assert that government is a lead weight to the economy and needs to stay out of economic meddling. Yet the Republicans demand that the government provide incentives to promote economic growth.
Furthermore, the Republicans never call on private enterprise to solve our economic woes. So how come the champions of private enterprise neglect to mention that it should be private enterprise that should solve our economic problems, not the evil government. (sarcasm).
One final point. Incentives given to private enterprise to promote economic expansion are a form of welfare. The Republicans claim to be against the welfare state and have been attempting to eliminate entitlements. So how come for Republicans entitlements/welfare for the poor is wrong, but entitlements/welfare to the private sector is considered good. Hypocrisy.
Winston Churchill stated,”History is written by the victors.” This – coming from the preeminent statist of his day provides a remarkable glimpse forward toward the institutions of our present governments, both Federal and State. Until there is a change in the level of critical thinking on the part of the citizenry, the rationale of present society will remain unaltered.
Mises provides through its literature collection (available here!) a vast compilation of carefully researched revisionist history, which effectively challenges the assumptions of “fact” that are currently taught as the ‘truth’ in government schools today. In some oxymoronic way, collectivist philosophy and personal freedom are merged into the dysfunctional government that exists today. Sad to say, “freedom” for many is just freedom from responsibility.
It will be a rude awakening to the USA, when the presently ‘submerged’ laws of economics finally force a change in our government. Hopefully, the result will work out better for Americans than that of the USSR and its satellites.
Starting with Edward Gibbons, a thoughtful analysis of the past events of the Western experience in government would be enlightening to those who wish to go beyond “facts” to find truth.
In fact, the present Congressional-approved debt limit of around $14.3 trillion dollars was passed through in June of this year. The U.S. Treasury Department has been merely juggling the books to shift funds and keep spending money. The government has been using tax revenues that it is legally obligated to set aside for federal employee retirement accounts – and which is supposed to be “put back” at some point when the government formally has the authority to borrow more and get further into debt. It is the type of thing that if done by a private employer to cover his current business expenses would be labeled misappropriation of funds.
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