All Commentary
Wednesday, February 16, 2011

Are We Lacking “Ideas on a Grand Scale”?

No, we're lacking freedom.

There are times when I read the editorial page of the New York Times to see what people might say when they believe they have a firm grasp of the obvious. No one has a tighter grip than op-ed writer Bob Herbert, who forever is telling anxious readers this economy is in a depression.

Herbert even seems aware that people are losing jobs and income, and that such losses are a bad thing. And like so many others, Herbert seems to think the current job losses and cutbacks, especially in government, are nothing more than a nefarious plot by evil budget cutters. He writes:

Employer-based pensions, paid vacations, health benefits and the like are going the way of phone booths and VCRs. As poverty increases and reliable employment becomes less and less the norm, the dwindling number of workers with any sort of job security or guaranteed pensions (think teachers and other modestly compensated public employees) are being viewed with increasing contempt. How dare they enjoy a modicum of economic comfort? [Emphasis added.]

If I might interpret Herbert’s statement, it is that the failure of American taxpayers to fund all of these things represents a moral failure on their part. Americans, it seems, simply lack the political will to give up even more resources so their governments can operate as though there were no depression. He continues:

For a variety of reasons, there are not enough tax revenues being generated to pay for the basic public services that one would expect in an advanced country like the United States. The rich are not shouldering their fair share of the tax burden. The wars in Afghanistan and Iraq continue to consume an insane amount of revenue. And there are not enough jobs available at decent enough pay to ease some of the demand for public services while at the same time increasing the amount of taxes paid by ordinary workers.

The U.S. cannot cut its way out of this crisis. Instead of trying to figure out how to keep 4-year-olds out of pre-kindergarten classes, or how to withhold life-saving treatments from Medicaid recipients, or how to cheat the elderly out of their Social Security, the nation’s leaders should be trying seriously to figure out what to do about the future of the American work force.

While I agree with Herbert that America’s imperial adventures devour resources – and I believe these wars represent the height of insanity and hubris – nonetheless, the economic problem is not that American tax rates are too low or that American corporations have decided to produce their goods overseas in more friendly environs.

No, the problem is that government policies have encouraged massive malinvestments for more than a decade and now that same government is blocking the necessary readjustments of capital and resources. Instead of permitting entrepreneurs in a free market to find profitable uses for resources, the authorities insist that hundreds of billions of dollars be diverted to fund boondoggles like high-speed rail, corn-based ethanol, and electric windmills — all projects that will drain this economy of wealth.

Unfortunately, Herbert does not get it. Instead, he rants:

New ideas on a grand scale are needed. The United States can’t thrive with so many of its citizens condemned to shrunken standards of living because they can’t find adequate employment. Long-term joblessness is a recipe for societal destabilization. It should not be tolerated in a country with as much wealth as the United States. It’s destructive, and it’s wrong.

At one level I totally agree. But what he really is saying is that the U.S. government, through confiscation of wealth and central economic planning, can fix the current problems as though they were little more than math problems to be calculated with a bit of effort. It never occurs to him – and never will – that free markets create wealth and government destroys it. No amount of ranting will change that simple truth.

  • Dr. William Anderson is Professor of Economics at Frostburg State University. He holds a Ph.D in Economics from Auburn University. He is a member of the FEE Faculty Network.