Where Free-Market Economists Go Wrong

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Dec 052016
 
tax protest

By Sheldon Richman

Depressing as it is, politics usually trumps economics. There’s nothing new in that, but free-market advocates ought to learn some lessons and adjust their strategy accordingly.

The politicians who run the government—and think they run the country—are afraid to appear as though they are doing nothing. We saw this when the recession hit. They were particularly worried about seeming to put party above the public good.

As the Wall Street Journal put it back then

The speed with which Washington hashed out the [stimulus] plan was driven mostly by the drumbeat of bad economic news. Behind the scenes, it was greased by other powerful motivations. Congressional Democrats needed to demonstrate they were capable of results after a year of gridlock. Republican lawmakers, up for re-election, wanted to show sensitivity to voters’ economic woes. And the White House didn’t want ‘recession’ added to its legacy.

Political interest was universally aligned against good economic sense. The politicians could get away with this because most of the public is economically illiterate. The “seen” overshadows the “unseen.” Such is how we get economic policy. It’s happening now.

As free-market economists point out, government cannot affirmatively stimulate what we misleadingly call “the economy.” (It’s not a machine; it’s people using their property to engage in transactions.) All government can do is move money around. To make some people able to spend more it must make other people spend less. Politicians imply that they know who ought to have more and who ought to have less, but beside the obvious injustice of the matter, they simply can’t know.

Economists Fall Short

I said the government can’t affirmatively stimulate the economy, but it can encourage productive activity. How? By not discouraging it. Here is where some free-market economists fall short in shaping the public debate. Too much of what they say is along these lines: “The economy is fundamentally healthy. Recessions are a necessary correction of errors. So just let the economy work through its current problems. The government need do nothing.”

That message should make advocates of individual liberty squirm because it implies that the market today is essentially as free as it needs to be. For example, a few years ago the news media proclaimed that gasoline prices were at historic highs. In fact, when adjusted for inflation they were not. But the economists pointing this out sounded a little too defensive, as though they were the defending the free market’s honor against its critics. What should we say if next week gasoline does hit a historic high and the anti-market folks blame the free market? I know what I’d say: What free market? (With all the subsidies and regulations on the books, can there possibly be a free market?)

The same defensiveness can be seen whenever a left-statist charges that the gap between rich and nonrich has widened or income mobility has ceased. Whatever the truth of these charges, libertarians shouldn’t react as though the free market’s honor is being assaulted. The critics may think it’s the free market they’re attacking. But—I say again— we have no free market.

Similarly, if economic activity slows down, it can’t be the free market’s fault.

What we have—and have had for a long time—is corporatism, an interventionist system shot through with government-granted privileges mostly for the well-connected–who tend to be rich businesspeople. This system is maintained in a variety of ways: through taxes, subsidies, cartelizing regulations, intellectual “property” protections, trade restrictions, government-bank collusion, the military-industrial complex, land close-offs, zoning, building codes, restrictions on workers, and more. As a result, people can get rich at the expense of the government’s victims. Even some who have prospered apparently by market means have actually done so through government intervention, such as transportation subsidies and eminent domain. Wealth can be transferred in many ways besides welfare and Medicaid, some of them quite subtle. Most transfers are upward.

Overlooked Facts

Free-market economists know this, but they often seem to forget it, such as when they indiscriminately defend firms (such as oil and pharmaceutical companies) in today’s corporatist economy. These economists convey the message that since in a free market people get rich and companies get big only by serving consumers, anyone who is rich today and any company that is big today must have gotten that way by serving consumers. The flaw in the argument should be obvious.

Given the corporatist nature of the economy, it is a mistake—as well as strategically foolish—to say the government should do nothing when a recession might be coming on or when recovery is disappointingly sluggish. There’s much it should do—or rather undo. Freedom’s advocates must spell this out in detail, revealing how existing government privilege harms the mass of people who have no political connections. In contrast, when an economist who proclaims his support for the free market says the current economy will fix itself, he brands himself a defender of the statist quo and turns his back on the State’s victims.

The freedom philosophy is a radical idea that looks ahead, rather than to some mythical golden era or Panglossian present. Every time we pass up an opportunity to make this point, we alienate potential allies who are concerned about those who are having a tough time of things. Yes, living standards have improved for decades and being poor in the United States is not what it used to be—thank goodness. That only shows that even a marketplace hampered by government privilege can produce astounding wealth. But to be satisfied with that is to be willing to trade freedom and justice for a mess of pottage.

F.A. Hayek never spoke more wisely than when he wrote, in “The Intellectuals and Socialism”:

What we lack is a liberal Utopia, a programme which seems neither a mere defence of things as they are nor a diluted kind of socialism, but a truly liberal radicalism which does not spare the susceptibilities of the mighty (including the trade unions), which is not too severely practical and which does not confine itself to what appears today as politically possible. . . . Those who have concerned themselves exclusively with what seemed practicable in the existing state of opinion have constantly found that even this has rapidly become politically impossible as the result of changes in a public opinion which they have done nothing to guide. Unless we can make the philosophic foundations of a free society once more a living intellectual issue, and its implementation a task which challenges the ingenuity and imagination of our liveliest minds, the prospects of freedom are indeed dark. But if we can regain that belief in power of ideas which was the mark of liberalism at its best, the battle is not lost. [Emphasis added.]

Hayek wrote that over 60 years ago. We haven’t progressed as much as we like to think.

(A version of this article first appeared on February 1, 2008.)

Sheldon Richman


Sheldon Richman

Sheldon Richman is the former editor of The Freeman and a contributor to The Concise Encyclopedia of Economics. He is the author of Separating School and State: How to Liberate America’s Families and thousands of articles.

This article was originally published on FEE.org. Read the original article.

Our world has gone nuts

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May 142016
 

Our world appears to have gone crazy. Those wishing to remain within the boundaries of sanity and reality must fight for it, as well as for our children.

Many of us in America are at a loss to understand how our world has gotten so crazy so quickly.  What has been known for centuries to be right and good is now, suddenly, in the last twenty years been turned the opposite.  What all have known to be evil is now considered good – and what has been good is now said to be evil. Darkness takes the place of light, and light for darkness. Bitter is now ‘sweet’ – and sweet is exchanged for bitter.

sBrothers and Sisters – stand fast for what you know to be true. Stand strong for what you know to be good and right for your children and grandchildren. And when you have done all – continue to stand.

You are not the crazy one.

Unfortunately – it is not just our worldview and way of life that is under attack.  Christians around the world are being persecuted and even murdered – crucified, church’s blown up, heads cut off –  simply because they acknowledge Jesus is Lord and Messiah.

None of us know where the current persecution of Christians and Jews across the world is headed.  But most of us realize we are just at the beginning of whatever is coming.

In the 1930’s, a European government began pushing new laws and world view upon its people.  Many – in their hearts – recognized the evil.  Further, contrary to popular belief, many citizens did not agree or go along with it.  Many, unfortunately, died in their efforts to stop the evil.

Praise God – although that evil government went on to torture and murder millions – they did not prevail with their intention to take over Europe and then the world.  They did not go on to murder millions more.

They were stopped. And if we care at all for the world and our children – it is incumbent on us all to stand in the gap – stand strong – and stand up for what is right and good. …and having done all, to stand firm.

 

For more encouragement and information, visit “Women Pushing Back” on Facebook….

https://www.facebook.com/WomenPushingBack/

 

 

 

Dear Liberals… we want a divorce…

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Nov 042012
 
tax protest

November 4, 2012
Facebook poster Darren Price has suggested an amicable divorce…

“Dear American liberals, leftists, social progressives, socialists, Marxists and Obama supporters, et al: We have stuck together since the late 1950’s for the sake of the kids, but the whole of this latest election process has made me realize that I want a divorce. I know we tolerated each other for many years for the sake of future generations, but sadly, this relationship has clearly run its course.

Our two ideological sides of America cannot and will not ever agree on what is right for us all, so let’s just end it on friendly terms. We can smile and chalk it up to irreconcilable differences and go our own way.

tea party vs occupy

 

Here is our separation agreement:

–Our two groups can equitably divide up the country by landmass each taking a similar portion. That will be the difficult part, but I am sure our two sides can come to a friendly agreement. After that, it should be relatively easy! Our respective representatives can effortlessly divide other assets since both sides have such distinct and disparate tastes.

–We don’t like redistributive taxes so you can keep them.

–You are welcome to the liberal judges and the ACLU.

–Since you hate guns and war, we’ll take our firearms, the cops, the NRA and the military.

–We’ll take the nasty, smelly oil industry and the coal mines, and you can go with wind, solar and biodiesel.

–You can keep Oprah, Michael Moore and Rosie O’Donnell. You are, however, responsible for finding a bio-diesel vehicle big enough to move all three of them.

–We’ll keep capitalism, greedy corporations, pharmaceutical companies, Wal-Mart and Wall Street.

–You can have your beloved lifelong welfare dwellers, food stamps, homeless, homeboys, hippies, druggies and illegal aliens.

–We’ll keep the hot Alaskan hockey moms, greedy CEO’s and rednecks.

–We’ll keep Bill O?Reilly, and Bibles and give you NBC and Hollywood .

–You can make nice with Iran and Palestine and we’ll retain the right to invade and hammer places that threaten us.

–You can have the peaceniks and war protesters. When our allies or our way of life are under assault, we’ll help provide them security.

–We’ll keep our Judeo-Christian values.

–You are welcome to Islam, Scientology, Humanism, political correctness and Shirley McClain. You can also have the U.N. but we will no longer be paying the bill.

–We’ll keep the SUV’s, pickup trucks and oversized luxury cars. You can take every Volt and Leaf you can find.

–You can give everyone healthcare if you can find any practicing doctors.

–We’ll continue to believe healthcare is a luxury and not a right.

–We’ll keep “The Battle Hymn of the Republic” and “The National Anthem.”

–I’m sure you’ll be happy to substitute “Imagine”, “I’d Like to Teach the World to Sing”, “Kum Ba Ya” or “We Are the World”.

–We’ll practice trickle-down economics and you can continue to give trickle up poverty your best shot.

–Since it often so offends you, we’ll keep our history, our name and our flag.

Would you agree to this? If so, please pass it along to other like-minded liberal and conservative patriots and if you do not agree, just hit delete. In the spirit of friendly parting, I’ll bet you might think about which one of us will need whose help in 15 years……again

 

Arnold, Forget the Angry Mob; Watch out for Angry Moms

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May 022010
 

May 2nd, 2010

California Governor Arnold Schwarzenegger told Greta Van Susteren on Tuesday that he expects the tea party to “twinkle and disappear” as the economy improves.

Is he kidding? He obviously has no clue how people really feel and why. Will an improved economy change how we feel the The National Debt? Obamacare? How about the way Obamacare was forced on us? The corruption rampant in Congress? The buying and selling of votes?  The attitude the politically elite have had toward average Americans? The way the Obama administration have treated us? Excuse me?

What Gov. Schwarzenegger is exhibiting here is exactly the callous and tone deaf attitude that we are so angry about!

Gov. Schwarzenegger doesn’t understand because he is not part of it, and he is not part of it… because he doesn’t understand.

Schwarzenegger derided the tea party during the Van Susteren, complaining about what he thinks is lack of momentum and solutions.

He said, “People meet. They talk about it. What can we change? How? And it’s all healthy and it’s all good. But I’m just saying they’re not going anywhere with it because nobody is coming up and saying, Here’s our candidate, here’s our solution, here’s what we’re going to do, and have a whole policy debate over the various different issues. So this is why I think, in the end, when the economy comes back, I think that the tea party will disappear again. It will, you know, twinkle and disappear, and that will be it. So that’s exactly what I feel about it.”

Again, he’s obviously not listening. The Tea Party has suggested solutions on many various issues and has backed several candidates. And momentum? What do you call the feverish pitch with which the Tea Party has grown over the last year? What grass roots movement has he watched grow as quickly as this one, pulling such a diverse group of people from all over the country?

What he really doesn’t like, as evidenced in his confusion over why there is no policy platform, is the organizational structure of the Tea Party – or lack thereof.  He assumes that because it doesn’t look or function like a conventional political party, it must not be a real movement and can’t work.

Well. we’ll see about that.  The reason there isn’t a set platform is because the Tea Party’s are all individual, local bodies.  They don’t want anyone from afar defining them.  The reason for the grass root, local, loose organizational model is a direct result of the anger people are feeling toward the out-of-control and unaccountable leadership we’ve had from the Democrats and Republicans. Call it a knee jerk reaction.

And of course that very same leadership isn’t going to understand that. They want everything to continue as it had been – where they expect to get automatically reelected no matter how much they cheated and lied to their constituents.  They don’t want us standing up and telling them “No,” and they most definitely don’t want to lose control of our votes.  They want us to get back into our separate Democrat / Republican corners and stay there.  But we’ve been resilient to their efforts to mock and divide us.  Therefore, they fear the Tea Party, and want to see it fail.
Yes, there will be a change. That’s the whole point of the Tea Party. Our country has reached the point where we have to go one direction or the other. Fortunately, it will probably change in a good direction as it appears that most Americans want to return to a Constitutional Republic.

It’s just so sad that a third of America is still trying to control everyone else with the kinds of remarks and accusations they’ve bandied about; Not just Gov. Schwarzenegger, but the reigning leadership in DC, calling us a “Mob”, and accusing us of being violent and racist. Funny, we didn’t see Nancy Pelosi crying about the violence from leftist protesters in Arizona this last week. Or Bill Clinton, warning those protesters to behave themselves. In fact, I don’t think either of them said anything.

Of course they didn’t. Our out-of-control Political leaders tend to think that Liberal protesters are always justified in carrying through with their angst.

But conservative protesters better not even have a tinge of emotion in their voices. The conservatives are the ones that really scare them, even though the Tea Partiers have been anything but violent.

I think maybe our leaders have seen too many Hollywood movies – the ones that portray rural conservatives as idiots, racists, and murderers. That’s Hollywood for you.  Maybe our leaders should try to get to know some of us.  They might find out Hollywood was wrong.

But …I suppose it’s to be expected; in any historical situation, there is always a group that, for their own selfish reasons, opposes what is right and good. There’s no getting away from it.

I pray, in the name of Jesus, that we, the Tea Partiers, will stay strong – as well as nonviolent. I pray that we will be able to continue with the current structure of local control, open to all who want to join in support of constitutional law, as well as continuing to be mature in our communication with those we disagree with.

I pray for the healing of our country, and a return to the standards, morals, and ethics that once made it strong. I pray this in the name of Jesus. Amen.

The Manhattan Declaration
The Mount Vernon Statement