Saturday, January 30, 2010

The Size and Power of the State (The Economist)

The eminent scholar Jacquez Barzun, in his masterpiece, From Dawn to Decadence, stated we live in an age of absurdity; that is, an age where the attitudes and behaviors exuded by society contradict the visible activities prevalent and commonly accepted. This would be a form of cogitative dissonance on a massive scale. I like the definition of the word “absurd” given by the Merriam-Webster dictionary. It is defined as, “ridiculously unreasonable, unsound, or incongruous.” There is no way to better describe a recent leading article I read in The Economist, which commented on the enormous expansion of government over the recent years. It is filled with half-truths, inconsistencies, omissions, and distortions. To the untrained eye, these observations are non-existent or difficult to pluck. What makes articles like this stand out is that they are sprinkled with veracity, which gives them an aura of accuracy. While providing a full-length correction of the absurdities mentioned in the article would take a book in and of itself, I will make mention of several statements that stand out and then provide an explanation that The Economist fails to mention. I don’t expect to change minds sank deep in ideology, but I do hope to motivate your thinking against what is propagated by court economists and the establishment presently in power.

The Economist recognizes that the trend of government expansion must be curtailed. This is part of the periodical’s economic standard. In particular, the periodical stands for “looking for ways to make the state smaller. That is partly for philosophical reasons: we prefer to give power to individuals, rather than government.” There is absolutely no doubt of its position, which I fully agree. Yet, for the sake of what it terms as “pragmatism”, it forsakes its moral standing on this issue by essentially promoting a system that undermines the very tenets it prescribes to hold. The articles states the following:
“A further danger consists in equating 'smaller' with 'better'. As the horrors in Haiti demonstrate, countries need a state of a certain size to work at all; and more government can be good. The Economist, for instance, is relieved that politicians stepped in to bail out the banks, since the risks of tumbling into a depression were large. This newspaper also supported Mr Obama in 2008 in part because he wanted to extend health-care coverage.”

While equating smaller with better is not necessarily true, more government is always worse. I am not advocating a system where there are no laws or enforcements of contracts. On the contrary, I advocate a government set under the premise of the U.S. Constitution and Declaration of Independence, whereby voluntary transactions cannot be violated in the name of “doing good”. There is nothing in either document that promotes in favor of the central government providing health insurance or any bank bailout for that matter. The U.S. Constitution explicitly exhorts a decentralized authoritative regime. However, over the last century, this idea has been replace by the idea of collectivism. The Economist does not see this. Many policymakers and layman do not understand this shift in thinking. But in the name of “pragmatism”, The Economist is willing to accept the enlargement of the state, which is the very thing that it opposes. Confuse? Makes no sense? Yes, surmised correctly. This is the very embodiment of absurdity.

Government cannot produce economic output; it merely redistributes resources, often done by force. In essence, they are robbing Peter to pay Paul, and in the process they take a cut (i.e. pay themselves) for providing this “service.” Interest groups vote according to which political candidate will give them more money that belongs to other interest groups. Presently, the few that recognize this as form of theft are voices crying in the wilderness: there’s hardly a chance of being heard. “Oh, wait a minute,” someone might say, “the government provides security, it builds roads, it does many good things.” Of course, anyone can do “good things” with someone else’s money. This has always been the case throughout history. And let us not forget the aphorism: “the road to hell is paved with good intentions.” The foregoing statements at its core presume that people are naturally inept and cannot look out for themselves; therefore a central government is required to exist. Indeed, the government was intended to be a provider of security: as the US Constitution claims, the government has the power to protect life, liberty, and the pursuit of happiness, nothing more, nothing less.

But what obfuscates further this situation is that The Economist gives credence to the notion of “state capitalism: more and more of the world biggest companies are state-owned, and more and more of its biggest investors are now sovereign wealth funds.” This is absolutely downright silly. How can two contradictory terms be enjoined to create a coherent idea? Claiming that there is such a thing as “state capitalism” is like saying that a professional bartender runs Alcoholic Anonymous, or like saying that a fox is the best keeper of the hen house. Property rights within the framework of the law define capitalism. The state exists to enlarge itself and subsequently restrict property rights to continue that expansion. The impulse of state intrusion is dependent upon the whims of the present age by way of manipulation and control of the masses (read Le Bon’s The Crowd: A Study of the Popular Mind).

Communism and its light version, socialism, have grown out of this process; yet, The Economist, an economic and political liberal publication at times overtly promotes this philosophy. One can go on and on elucidating the lack of coherency in much of the article. But for now, this will do.

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