The Endless Cycle Of Government Intrusion
In a recent essay for the Wall Street Journal, Mr. Alan Blinder makes a partisan diatribe for more government while claiming he is for less. His is an outstanding piece of convoluted Keynesian economic propaganda. Near the end he tells the reader he wants a more neutral tax system under which “… the allocation of resources are made by individuals and businesses, not by Congress.” Yet prior to that are numerous arguments for more government. He wants higher taxes in exchange for budget cuts. He advocates federal subsidies of state budgets. He proposes borrowing more for building roads, relating roadwork to the slump in employment in the general construction industry. We are told that more money needs to be spent on K-12 education while suggesting that competition for public schools is a waste of effort. To top it off, the reader is led to believe a higher marginal tax rate is related to “…one of the greatest periods of prosperity in US history….”
When one finds that Mr. Blinder is an economics professor at Princeton and was at one time a vice chairman of the Federal Reserve, one quickly understands what is wrong with our country’s economy. The problem is government.
Beginning in the 1930’s, with the leadership of Mariner Eccles, deficit spending, a.k.a. Keynesian economics, began. Businesses and banks have encouraged government to borrow against the future trying to maintain or increase current spending. The rationalization is that the next upturn will bring a payoff of the incurred debt; but when one examines the history of US Debt, one finds only six years in the past 60 when debt has gone down, yet the economy has grown tremendously during that time. With $15 trillion in debt Keynesian economics has been the political establishment’s policy through Democrat and Republican leadership. To argue we need more stimulus is avoiding the fact we have had nothing but deficit spending for decades. The question is how will we pay the debt if the economy is now in the doldrums, even with this much accumulated Keynesian policies in place? Certainly more deficit spending, even the trillion per year currently accumulating, will hardly be noticeable. Then there are the government regulations themselves.
Mr. Blinder only refers to one area of regulation, the tax code. Yes, the tax code needs to be simplified. Untold millions of dollars, perhaps billions, are spent in compliance. This is nothing more than transfer payments to accountants, government employees, tax lawyers and associated paperwork shufflers. There is no good to the economy accomplished here.
Worse are myriad local, state and federal regulations that drive up the cost of almost everything, making it more and more difficult to operate a business. An example is in the area of Medicaid and old-age benefits. In North Carolina, Federal regulations drive the cost of a home-delivered meal up from $6 per plate to $10 per plate. The actual result is two-fold: fewer elderly people receiving meals and an unwarranted higher cost to taxpayers for the meals that are delivered.
The list is endless, yet daily people cry out for government to fix the problem. It would seem we should know by now that government actually can’t fix the problem. But because of the demand for it, the politicians make the attempt in order to maintain the illusion they are doing something useful – to alleviate the pain of the economic cycles, or this imagined problem or that. The intelligentsia, in order to maintain the place at the table, reinforce whatever the current conventional political wisdom is, decrying any who opposes their pronouncements. Thus we have the Alan Blinders and Paul Krugmans of the pundit world regurgitating as necessary to maintain their importance.
Yet the truth remains and government is not able to fix it, but has proven it can make it worse. People need to work to be able to house, clothe and feed themselves. If left to their own devices, they will find something to do, make, service or sell, something of value to trade with those who produce what they desire. Every regulation government promulgates and every tax created inhibits the free flow of trade, making it more difficult and expensive. Then, because of the nature of men, wishing things to be easier than they are, we ask government to do more, which makes things worse. And the cycle continues.
There will always be cycles. Government has obviously not caused them to go away, but exacerbates them with regulations that distort the economy. With sycophants such as Alan Blinder doing their best to obfuscate reality, we will continue to suffer the blunders of an overbearing government until Greece looks attractive.
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