Presidential Hubris
If we were going to spend $700 billion, it seems it would be wiser having that $700 billion going to folks who would spend that money right away.
In October Barack Obama said this in defense of his opposition to extending the 2001 and 2003 tax-rate reductions for people making more than $200,000 a year. The government guesses that not extending them—that is, raising taxes—would bring in $700 billion over a decade.
Let’s break the statement down.
If we were going to spend $700 billion . . . The “we” isn’t you and I. It’s him and his army of bureaucrats. There is no collective decision made by the nation. A group of identifiable individuals, backed by armed personnel, will decide how those resources will be used. How did they get those resources?
Imagine a mugger eyeing a potential victim, thinking, “I could spend that guy’s money by leaving it in his pocket, or I could spend it myself right away. Now which would be the better way to spend it?”
Anyone can see what’s wrong. But change the context to government, and all the rules are thought to change. Why? Because the government represents us? But it doesn’t really. The people who run the government say it represents us, but they don’t know what they’re saying. True, they can be voted out of office by a majority. But no individuals can opt out. So while the politicians are in office, they represent only themselves and their patrons.
. . . it seems it would be wiser having that $700 billion going to folks . . . Does it now? On what grounds are we to conclude that Barack Obama—or anyone else in political office—is qualified to say what a wiser use of such a sum of money would be? It’s hard enough deciding what’s a wise use of one’s own meager resources. The future is uncertain and the choices are many. It is the height of hubris—a pretense of knowledge, to use Hayek’s phrase—to invoke wisdom while asserting the power to dispose of that money.
. . . who would spend that money right away. There you go. He has a good reason after all. He says the money will go to people who will spend it in a hurry. Of course, he doesn’t actually know that. The money would just be distributed across the budget, funding the same old boondoggles or starting some new ones. Part of that $700 billion would surely go to military contractors to make something irrelevant to Americans’ welfare and inimical to the welfare of some non-Americans. We don’t know how quickly those recipients would spend the money. The wealthy executives of the contracting companies may be the same people who would have held on to the money if the tax-rate reductions were extended. A lot of it will go to government employees, who have higher wages than people in the private sector. This is one of those talking points that sounds as though it makes sense until you . . . think about it.
But let’s assume the people who get the money would spend it right away. Why is that better than simply letting the people who make the money keep it? The theory is that people making over $200,000 a year don’t spend enough of their incomes to stimulate the economy. So it’s Keynesianism that Obama is espousing here. The economy’s in a ditch. Consumer spending would get it out, but consumers are afraid to spend, so the government must spend for them.
But Keynesianism gets it wrong on so many counts. The fundamental economic problem is not that aggregate demand is too low. Individuals are doing things—and not doing things—for particular reasons in response to what’s going on around them. Consumers are holding back because they’ve lost their jobs or fear they may do so. People are losing their jobs because a government-produced inflationary boom went bust and malinvestments need to be liquidated so resources can be realigned with consumer demand. But that’s not happening (fast enough) because unpredictability over what the government may do next and other factors make entrepreneurs and investors cautious.
Once the reasons are understood, the remedy becomes clear. The burdens of government must be lifted quickly and people must be confident they will stay lifted.
* * *
Congress created the Privacy and Civil Liberties Oversight Board to assure the people their freedom is safe. Was it just a device to lull people into believing their freedom is safe? James Bovard says that’s closer to the truth.
Patents and copyrights can do some serious damage to genuine property rights and innovation. But they can also yield some funny stories. David Levine has a few.
New diseases are being invented (not discovered) all the time. They are the product of collusion among the medical profession, the pharmaceutical industry, and the government—not a combination to inspire confidence, writes Wendy McElroy.
Vested interests are powerful political forces, but not as powerful as ideas. Isaac Morehouse explains.
America’s attempt to prohibit the manufacture and sale of alcoholic beverages was a failure on so many levels that it was called off after little more than a decade. Douglas Rogers examines those years via the latest scholarship on Prohibition.
Insider trading sounds like a terrible crime that strikes at the very foundation of the economy. Warren Gibson says it’s more like much ado about nothing.
Wilhelm Röpke was at the first meeting of the Mont Pelerin Society with Ludwig von Mises, F. A. Hayek, Milton Friedman, and Leonard Read. For many years his book A Humane Economy was recommended reading for libertarians. Yet he had some differences with American free-market advocates—differences interesting enough to get the attention of Joseph Stromberg.
As our columnists were saying . . . Donald Boudreaux shows that tariffs did not create America’s nineteenth-century economic growth. Burton Folsom tells the story of a boat-building entrepreneur. John Stossel points to early cracks in Obamacare. Walter Williams says people express preferences among human differences all the time. And Steven Horwitz, reading Paul Krugman’s assertion that war can stimulate an economy, proclaims, “It Just Ain’t So!”
This issue’s book reviewers dissect tomes on the Constitution, revisionist history, socialism, and the New Deal.
—Sheldon Richman srichman@fee.org
Comment by Deonet Wolfe on 23 December 2010:
All of the politicians are nothing more than professional liars, con-men, corporate whores, and terrorists of the “people” (the everyday Americans that allegedly voted them into office) who violate their oaths, engage in treason against We the People, and rape Lady Liberty at every turn after wiping the corporate semen off of their lips the second they are in office. For anyone with an IQ over 70 with the ability to deeply study history – real, factual history and not the fairy tale crap we are fed throughout our elementary and high school years – the GD was caused by the Rockefellers and Rothschilds, along with other old money buddies, via their political contacts and false rumors that they spread about the banks being insolvent. Inflation is the government printing more paper money than it has gold, silver, or other commodity to back it – not so much supply and demand, which is why people were burning the stuff back then. Remember the Loony Toons cartoon showing Granny with Tweety burning bundles of cash? It was said back then and holds true now that any recession or depression after the GD would be intentionally created. Think about it! People and businesses do not just change their spending habits or lifestyles overnight or even over months. The stock market is and has been manipulated, ditto for the commodities market. The FedReserve with its Bildeburger (sp?) buddies can collapse our entire economy with but a few words. Those same people are tied into the IMF/World Bank. Our founders also fought against the idea of a central bank, like the one in London and now the FedRes, along with the b.s. taxation and tariffs, warrantless searches and seizures, and false imprisonments. Open your eyes and realize that Uncle Sam, with all his little lackeys, needs to be put down like the rabid dog he is and we as a nation need to start over.
This recession has been caused by our wonderful “public servants” spending like children in a candy store with an endless credit card, violating their Oaths of Office, ignoring or using the Constitution and Bill of Rights as toilet paper, taxing most of the people into poverty to support themselves and their ever growing bureaucracies, increasing their power and invasions into our lives, and living like kings while so many Americans struggle to put food on the table along with their Wall Street and Fed Reserve buddies. Our tax money is not theirs to give to whatever industry, corporation, foreign nation, or domestic grouping they see fit. Taxes were and are Constitutionally to be strictly for the upkeep of the government – a small government that exists to promote trade, our national security from foreign attack, postal services, parks, the regulation and printing of money that is or is backed by gold or silver, and our prosperity as a nation instead of the tyrannical monstrosity that we have now. Read the Constitution!
One of our founding fathers said when our government taxes us in our food and our drink, our pleasures and pains, our homes and livelihoods it is our patriotic duty, our obligation as Americans to overthrow our government and start anew. None of us owns a damned thing if the government can take it away from us whenever it sees fit without our consent – look what happens if you don’t pay the tariff on your car yearly or miss a property tax payment. Why should any of us have to pay for another’s unemployment, retirement, disability, bastard kids, kid’s schooling, the multiple services that kids from primary mother custody homes need throughout their lives because the courts see fit to often remove a perfectly good father from their lives without proof or justifiable cause, services we don’t use or want, bureaucracies that we do not want or consent to, etc. Whatever happened to our government’s only power being “from the consent of the governed”? C’mon people, it is time to wake up, realize that voting and the current system is a joke, take all the lawyers, judges, and politicians to a tar-feather-light up-and-hanging party, and begin anew.
What makes a nation and its people wealthy, great, are low taxes on corporate profits and gains, fair tariffs/taxes on imported goods, no taxes on a man or woman’s Right to earn a living, no property taxes on a man’s home (such taxes did not exist prior to Roosevelt’s regime), free market capitalism, small government that is strictly regulated and defined by founding documents along with the People’s Right to hang til’ dead any politician who steps out of bounds, simple and basic laws as are found in the Bible (such as the Ten Commandments, not the ones that are gender biased and blame the woman for rape or allow a rapist to take a woman as wife) to keep us all polite with each other, a rule of law and individual Rights that are never second or subservient to “public policy”/mob rule or judicial discretion, the principle of Jewish law that anyone who makes false accusations is to suffer the punishment as though they committed the crime to be instituted, a return of common sense and personal responsibility, the Clean Hands Doctrine to apply to domestic and contract law, enforcing the rule of law that no one has the right to benefit from their own wrong (i.e. a burglar suing the homeowner because the homeowner’s dog bit him; a trespasser suing the property owner for injuries; an adulterer suing the injured spouse for divorce, et. al.), elimination of admiralty/maritime laws from the land, having a gold standard, making sure the government does not spend more than it makes – just like the rest of us are forced to live, abolishing corporate welfare, the Right of the People to bear arms to protect themselves and neighbors from threats to their freedoms both foreign and domestic, equal protection and rights for all Citizens, enforcement of the concept that he/she who claims full rights to something also bears full responsibility such as a woman and her “right” to the full decisions regarding sex and the product of her womb should bear full responsibility or the owner of a firearm bearing full responsibility with what he does with that gun, ditto for the car owner, and the government at all levels not having the power to interfere with our lives at all so long as we do not harm someone else or someone else’s property. In essence, small government, low taxes, simple laws, free capitalism, a gold/silver standard, and personal responsibility is what makes a nation wealthy, happy, and strong.
Comment by David Green on 27 December 2010:
Sheldon,
Thank-you for such a thoughtful examination of the Presidents words. Sometimes we are so taken by the slight-of-word. In the shell game of politics, I see my tax dollars dropping from the shells through a hole in the table to the Wealth Redistributionalists’ greedy hands.
Indebted to you!
dg
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