slippery slope

The Real Burden of Government

Drawing on estimates of GDP and its components, it is easy to quantify the share of economic output that is absorbed by government spending. (See, for example, “The Commandeered Economy.”) With a bit of interpretive license, it is even possible to assess the cumulative effects of government spending and regulation on economic output. (See, for example,  “The Price of Government.”)

But the real economy does not consist of a homogeneous output (GDP). The real burden of government therefore depends on the specific resources that government extracts from the private sector in the execution of particular government programs, and on the particular products and services that are affected by government regulations.

Each new or expanded government program raises the demand for and price of certain kinds of goods and services, and channels rewards (claims on goods and services) in the direction of the businesses and persons involved in providing goods and services to government; for example:

  • Social Security rewards individuals for not working. The service, in this case, is the “good feeling” that comes to politicians, etc., for having done something “compassionate.”  The effect is to raise the prices of the goods and services that prematurely retired individuals would otherwise produce, therefore reducing the well-being of the working public.
  • Medicare — another of many feel-good programs — rewards retirees by subsidizing their medical care and prescription drugs. The upshot of this feel-good program is to reduce the well-being of the working public, which must pay more for its medical services and prescription drugs (directly, through higher insurance premiums, or because of lower wages to offset the cost of employer-provided health insurance).
  • R&D conducted in government laboratories and under government grants absorbs the services of scientists and engineers, thus raising the compensation of many scientists and engineers who couldn’t do as well in the private sector (the reward) and reducing the numbers of scientists and engineers engaged in private-sector R&D (the cost). Remember the private-sector inventors, innovators, and entrepreneurs who brought you the telephone, automobiles, radio, television, any number of “wonder drugs,” computers, online shopping, etc., etc., etc.?
  • A goodly fraction of the teachers and professors at tax-funded schools and universities are rewarded with incomes that they could not earn if they worked in the private sector. (Tax-funded education also provides feel-good rewards to the usual suspects, who worship at the altar of statist inculcation.) Given that the “educators” and administrations of tax-funded educational institutions are essentially unaccountable to their “customers,” it should go without saying that tax-funded education delivers far less than the alternative: combination of private schools (including trade schools), apprenticeships, and penal institutions. Moreover, tax-funded education deprives private-sector companies of the services of (some) teachers and professors who have the skills and ability to help those companies to offer better products and services to consumers.

That’s as far as I care to take that list. You can add to it easily, just by selecting any federal, State, or local government program at random.

All of those programs, onerous as they are, have nothing on the insidious regulatory regime that has engulfed us in the past century. Regulation often are the means by which “bootleggers and Baptists” conspire to protect their interests, on the one hand (“bootleggers”), while slaking their thirst for do-goodism, on the other hand (“Baptists”). The classic case, of course, is Prohibition, which enriched bootleggers while making Baptists (and other temperance-types) feel good about saving our souls. You know how well that worked.

Obamacare is a leading example of “bootleggers and Baptists” at work. Insurance companies and the American Medical Association, anxious to protect themselves, lent their support to a program that promises to increase the demand for prescription drugs and doctors’ services. It’s a pact with the devil, of course, because (unless, by some miracle, it is repealed or declared unconstitutional) insurance companies and doctors will find that they are nothing more than government employees, in deed if not in name. And guess who will end up paying the bill? The working public, of course.

Obamacare is not a purely regulatory regime, however, because it revolves around a feel-good giveaway program. For examples of purely regulatory regimes, I turn to the myriad mundane regulations that are imposed upon us for “our own good” and at our own expense, from make-work schemes for electricians and plumbers building codes to death-inducing delays in drug approval the Pure Food and Drug Act.

More notorious (though perhaps not more damaging to the economy) are the federal government’s misadventures in “managing” the economy. A good place to begin is with the Federal Reserve’s actions from the late 1920s to the early 1930s, which helped to bring on the stock-market bubble that led to the stock-market crash that led to a recession that (with the Fed’s help) turned into the Great Depression. A good place to end is with the recent financial crisis and deep recession — a creature of Congress, the Fed, other federal suspects too numerous to mention, plus Freddie Mac and Fannie Mae — their pseudo-private-bur-really-government co-conspirators.

Have you had enough? I certainly have.

The growth of government and its incursions into our personal and business lives during the past century has done far more than rob us of wealth and income. It has ruined our character and our society, and deprived us of liberty. What has happened to self-reliance, social networks, private charity, and civil society in general? What has happened to plain old liberty, which is a value unto itself? That they are not gone with the wind is due only to the tenacity with which (some of us) hold onto them.

Government grows in power and reach because every government program and regulation — even the most benighted of them — creates a vested interest on the part of its political sponsors (in and out of government), bureaucratic managers, and dependent constituencies. New suckers are born every minute who believe that they can join the gravy train without paying the piper (to mangle a few metaphors). And when the problems created by government become too obvious to ignore, the conditioned response on the part of politicians, bureaucrats, their dependent constituencies, and most of the public is to find governmental solutions to those problems. It is the ultimate vicious circle.

Government is the problem. And it will be the problem for as long as it does more than merely protect its citizens from domestic and foreign predators, so that they can enjoy liberty and its fruits.

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Related posts: Too numerous to mention. Begin with this list of posts at Liberty Corner, then start at the beginning of Politics & Prosperity, work your way to the present, and stay tuned.

Is Statism Inevitable?

In “Parsing Political Philosophy” I suggest that our descent into statism may continue indefinitely. The suggestion is based on years of observing American politics, which have brought me to the understanding that voters are profoundly irrational. They prefer statism to liberty, regardless of what they say. They (most of them) believe statism to be benign because it often wears a friendly face. But statism is not benign; it is dehumanizing, impoverishing, and — at bottom — destructive of the social fabric upon which liberty depends.

If statism — and perhaps something worse — is an inevitable product of our representative democracy, why is that so? One explanation invokes the slippery slope, which is

an argument for the likelihood of one event or trend given another. Invoking the “slippery slope” means arguing that one action will initiate a chain of events that will lead to a (generally undesirable) event later. The argument is sometimes referred to as the thin end of the wedge or the camel’s nose.

That is to say, once a polity becomes accustomed to relying on the state for a particular thing that should be left to private action, it becomes easier to rely on the state for other things that should be left to private action.

Another metaphor for the rising path of state power is the ratchet effect,

the commonly observed phenomenon that some processes cannot go backwards once certain things have happened, by analogy with the mechanical ratchet that holds the spring tight as a clock is wound up.

As people become accustomed to a certain level of state action, they take that level as a given. Those who question it are labeled “radical thinkers” and “out of the mainstream.” The “mainstream” — having taken it for granted that the state should “do something” — argues mainly about how much more it should do and how it should do it, with cost as an afterthought.

Perhaps the best metaphor for our quandary is the death spiral. Reliance on the state creates more problems than it solves. But, having become accustomed to relying on the state, the polity relies on the state to deal with the problems caused by its previous decisions to rely on the state. That only makes matters worse, which leads to further reliance on the state, etc., etc. etc.

More specifically, unleashing the power of the state to deal with matters best left to private action diminishes the ability of private actors to deal with problems and to make progress, thereby fostering the false perception that state action is inherently superior. At the same time, the accretion of power by the state creates dependencies and constituencies, leading to support for state action in the service of particular interests. Coalitions of such interests resist efforts to diminish state action and support efforts to increase it. Thus the death spiral.

Can we pull out of the spiral? Not unless and until resistance to state action becomes much stronger than it is. Nor can can it be merely intellectual resistance; it must be conjoined to political power. The only source of political power toward which anti-statists — and disillusioned statists — can turn is the Republican Party. And if the GOP does not return to its limited-government roots, all may be lost.

How can the GOP succeed in divesting itself of more of its Specters, while adding new blood in sufficient quantity so as to become, once again, a potent political force? Fred Barnes, writing in The Weekly Standard (“Be the Party of No,” vol. 14, issue 33, 05/18/09) is on the right track:

Many Republicans recoil from being combative adversaries of a popular president. They shouldn’t. Opposing Obama across-the-board on his sweeping domestic initiatives makes sense on substance and politics. His policies–on spending, taxes, health care, energy, intervention in the economy, etc.–would change the country in ways most Americans don’t believe in. That’s the substance. And a year or 18 months from now, after those policies have been picked apart and exposed and possibly defeated, the political momentum is likely to have shifted away from Obama and Democrats.

This scenario has occurred time and again. Why do you think Democrats won the House and Senate in 2006 and bolstered their majorities in 2008? It wasn’t because they were more thoughtful, offered compelling alternatives, or had improved their brand. They won because they opposed unpopular policies of President Bush and exploited Republican scandals in Congress. They were highly partisan and not very nice about it.

If Republicans scan their history, they’ll discover unbridled opposition to bad Democratic policies pays off. Those two factors, unattractive policies plus strong opposition, were responsible for the Republican landslides in 1938, 1946, 1966, 1980, and 1994. A similar blowout may be beyond the reach of Republicans in 2010, but stranger things have happened in electoral politics. They’ll lose nothing by trying….

Republican efforts to escape being tagged the party of no are understandable…. But no matter how restrained and sensible Republicans sound or how many useful ideas they develop, they’re probably stuck with the party of no label. They have more to gain by actually accepting the role and taking on Obama vigorously. If they come to be dubbed the party of no, no, no, a thousand times no, all the better. It will mean they’re succeeding.

In other words, Republicans might make some headway against the forces of statism if they will simply live up to their reputation for “meanness,” instead of apologizing for it — as they have been doing for decades. (Here’s how not to do it.) In order for that to happen, the Cheney wing of the party must prevail over the Powell wing. The good news is that the Powell wing — as represented by RINOs like Susan Collins and Olympia Snowe — may simply choose to follow Arlen Specter’s cynical conversion to the party of statism.

If the GOP fails to revert to its small-government stance, all may be lost. Democrats will be free to spend and spend, elect and elect, until — somewhere down the road — voters finally rebel. But until that distant day, Democrats will have enacted so many more crippling laws and regulations, and appointed so many more lawless judges, that nothing short of a constitutional revolution could rescue us from our political and economic hell.

Having had one constitutional revolution, I doubt that we will be lucky enough to have another one. Only a wise (and rare) élite can establish and maintain the somewhat minarchistic state we enjoyed until the early 1900s. The existence of such an élite — and its success in establishing a lasting minarchy — depends on serendipity, determination, and (yes) even force. That we, in the United States, came close (for a time) to living in a minarchy was due to historical accident (luck). We had just about the right élite at just about the right time, and the élite’s wisdom managed to prevail for a while.

That we have moved on to something worse than minarchy does not prove the superiority of statism. It simply suggests that our luck ran out because statism was (and remains) inevitable in a representative democracy, where irrational voters fuel the power-lust of politicians, and politicians gull irrational voters.

But I have not lost all hope (because of this, in part). And so, I await with interest (and some hope) the outcome of the struggle for the Republican Party’s soul.

Related reading: Peter Ferrara’s The Strategy of Not-So-Smart Surrender