The Arithmetic of Disunion

In some of my several posts about a national divorce (see thisthisthisthis, this, and this), I have opined that the new union formed by conservative States

could easily afford a robust defense after having shed the many useless departments and agencies — and their policies — that burden taxpayers and the economy.

(Many of the policies, especially those that regulate economic activity, are worse than useless: they are economically destructive; see this and this).

Let’s examine the proposition that the new union could easily afford a robust defense. For this exercise, I assume that the new union, which I have elsewhere dubbed Freedomland, consists of 25 States (listed in order of population): Texas, Florida, Ohio, North Carolina, Tennessee, Indiana, Missouri, South Carolina, Alabama, Louisiana, Kentucky, Oklahoma, Utah, Iowa, Arkansas, Kansas, Mississippi, Nebraska, Idaho, West Virginia, Montana, South Dakoto, North Dakota, Alaska, and Wyoming. (A shift of one or two States in either direction won’t change the thrust of this analysis.)

Those 25 States comprise 43 percent of the population of the United States. But they account for only 38 percent of U.S. GDP. (The discrepancy shouldn’t be surprising given the composition of the list.)

The cost of the federal government in 2022 (the latest year for which estimates are available at bea.gov) was just over $6 trillion, including $725 billion in interest payments on federal debt. The operating cost of the federal government was therefore about $5.3 trillion, including $727 billion for national defense. (It’s telling national defense, a key element of the impetus for the Constitution, accounts for only 12 percent of federal spending and is about the same as the cost of financing the federal debt.) Assuming that the cost of the federal government, less debt service, is shared in proportion to the distribution of GDP, the citizens of Freedomland are pumping more than $2 trillion a year into the federal treasury.

Now, what to do about the federal government? Team Blue, in a spirit of “fairness”, might propose keeping it intact and sharing costs and benefits according to Team Blue’s and Freedomland’s respective shares of GDP. Team Blue would (of course) continue to operate the federal government and would (of course) honestly account for the distribution of costs and benefits. It would be up to Team Blue (of course) to decide the level of costs and benefits.

Freedomland would reject the deal out of hand, not wanting its fiscal future to be hijacked by the cost of an ever-growing and ever-interfering central government. Freedomland’s leaders would make the following calculations:

  • 38 percent of $6 trillion = $2.3 trillion.
  • Freedomland’s share of federal outlays on health benefits and income security is $1.5 trillion a year. In exchange for giving up its share of those outlays, Freedomland will set up its own system of health benefits and income security. (The initial costs will be offset and reduced over time by robust economic growth; the reduction of benefits flowing to able-bodied persons below retirement age; rolling back the expansion of Medicare; denying benefits (direct or indirect) to illegal aliens; raising the retirement age; increasing work requirements; etc.)
  • Freedomland will take responsibility for defense of the 50 States and the District of Columbia. (It would be far more costly to defend Team Blue and Freedomland separately. Team Blue could trust Freedomland to mount a robust defense of the continent. And Freedomland would be assured of border security by doing the job itself.)

Freedomland’s total (initial) cost to defend the nation and ensure the health and income security of its citizens: the same $2.3 trillion a year it now sends to DC. But in the long run, the citizens of Freedomland would be far better off economically and relieved of the oppressive government in DC.

But the citizens of Freedomland should never forget that eternal vigilance is the price of liberty — and prosperity.

Paradoxes Abound

I have written several posts about political and economic paradoxes in the past 18 years. Here are the highlights (with some commentary).

The paradox of libertarianism:

 Liberty rests on an agreed definition of harm, and on an accompanying agreement to act with mutual restraint and in mutual defense. Given the variety of human wants and preferences, the price of mutual restraint and mutual defense is necessarily some loss of liberty. That is, each person must accept, and abide by, a definition of harm that is not the definition by which he would abide were he able to do so. But, in return for mutual restraint and mutual defense, he must abide by that compromise definition.

That insight carries important implications for the “anything goes” or “do your own thing” school of pseudo-libertarianism. That school consists of those libertarians who believe that harm is in the mind of the doer, or who believe that they can define harm while standing on the outside of society looking in. Thus they proclaim abortion and same-sex “marriage” (among other things) to be harmless — just because they favor abortion and same-sex “marriage” or cannot see the harm in them.

I am therefore a conservative libertarian.

  • Conservative because voluntarily evolved social norms are binding and civilizing, and therefore should not be dismissed out of hand or altered peremptorily.
  • Libertarian in a minarchistic way. The urge to power makes a state inevitable; the best state is therefore the one that only defends its citizens from predators, domestic and foreign.

A non-paradox for libertarians:

What if a society’s transition from a regulatory-welfare regime to a regime of liberty were to result in losers as well as winners? How could one then justify such a transition? Must the justification rest on an intuitive judgment about the superiority of liberty? Might the prospect of creating losers somehow nullify the promise of creating winners?

I argue … that my justification for libertarianism — although it is of the consequentialist-utilitarian variety — rests on a stronger foundation than an intuitive judgment about the superiority of liberty…. The virtue of libertarianism … is not that it must be taken on faith but that, in practice, it yields superior consequences. Superior consequences for whom, you may ask. And I will answer: for all but those who don’t wish to play by the rules of libertarianism; that is, for all but predators and parasites.

By predators, I mean those who would take liberty from others, either directly (e.g., through murder and theft) or through the coercive power of the state (e.g., through smoking bans and licensing laws). By parasites, I mean those who seek to advance their self-interest through the coercive power of the state rather than through their own efforts (e.g., through corporate welfare and regulatory protection)….

[A] transition to liberty might not instantly make everyone better off … but everyone could be better off. That’s simply not the case with the regulatory-welfare state, which robs some for the benefit of others, and ends up making almost everyone poorer than they would be in a state of liberty.

Liberty is a win-win proposition for everyone except those who deserve to lose.

The interest-group paradox:

 Pork-barrel legislation exemplifies the interest-group paradox in action, though the paradox encompasses much more than pork-barrel legislation. There are myriad government programs that — like pork-barrel projects — are intended to favor particular classes of individuals. Here is a minute sample:

    • Social Security, Medicare, and Medicaid, for the benefit of the elderly (including the indigent elderly)
    • Tax credits and deductions, for the benefit of low-income families, charitable and other non-profit institutions, and home buyers (with mortgages)
    • Progressive income-tax rates, for the benefit of persons in the mid-to-low income brackets
    • Subsidies for various kinds of “essential” or “distressed” industries, such as agriculture and automobile manufacturing
    • Import quotas, tariffs, and other restrictions on trade, for the benefit of particular industries and/or labor unions
    • Pro-union laws (in many States), for the benefit of unions and unionized workers
    • Non-smoking ordinances, for the benefit of bar and restaurant employees and non-smoking patrons.

What do each of these examples have in common? Answer: Each comes with costs. There are direct costs (e.g., higher taxes for some persons, higher prices for imported goods), which the intended beneficiaries and their proponents hope to impose on non-beneficiaries. Just as importantly, there are indirect costs of various kinds (e.g., disincentives to work and save, disincentives to make investments that spur economic growth). (Exercise for the reader: Describe the indirect costs of each of the examples listed above.)

You may believe that a particular program is worth what it costs… The problem is millions of your fellow Americans believe the same thing about each of their favorite programs. Because there are thousands of government programs (federal, State, and local), each intended to help a particular class of citizens at the expense of others, the net result is that almost no one in this fair land enjoys a “free lunch.” Even the relatively few persons who might seem to have obtained a “free lunch” — homeless persons taking advantage of a government-provided shelter — often are victims of the “free lunch” syndrome….

The paradox that arises from the “free lunch” syndrome is much … like the paradox of panic, in that there is a crowd of interest groups rushing toward a goal — a “pot of gold” — and (figuratively) crushing each other in the attempt to snatch the pot of gold before another group is able to grasp it. The gold that any group happens to snatch is a kind of fool’s gold: It passes from one fool to another in a game of beggar-thy-neighbor, and as it passes much of it falls into the maw of bureaucracy.

The interest-group paradox has dominated American politics since the advent of “Progressivism” in the late 1800s. Today, most Americans are either “progressives” or victims of “progressivism”. All too often they are both.

The capitalist paradox meets the interest-group paradox:

An insightful post at Imlac’s Journal includes this quotation:

Schumpeter argued the economic systems that encourage entrepreneurship and development will eventually produce enough wealth to support large classes of individuals who have no involvement in the wealth-creation process. This generates apathy or even disgust for market institutions, which leads to the gradual takeover of business by bureaucracy, and eventually to full-blown socialism. [Matt McCaffrey, “Entrepreneurs and Investment: Past, Present, … Future?,” International Business Times, December 9, 2011]

This, of course, is the capitalist paradox, of which the author of Imlac’s Journal writes. He concludes with these observations:

[U]nder statist regimes, people’s choices are limited or predetermined. This may, in theory, obviate certain evils. But as McCaffrey points out, “the regime uncertainty” of onerous and ever changing regulations imposed on entrepreneurs is, ironically, much worse than the uncertainties of the normal market, to which individuals can respond more rapidly and flexibly when unhampered by unnecessary governmental intervention.

The capitalist paradox is made possible by the “comfort factor” invoked by Schumpeter. (See this, for example.) It is of a kind with the foolishness of extreme libertarians who decry defense spending and America’s “too high” rate of incarceration, when it is such things that keep them free to utter their foolishness.

The capitalist paradox also arises from the inability and unwillingness of politicians and voters to see beyond the superficial aspects of legislation and regulation. In Bastiat‘s words,

a law produces not only one effect, but a series of effects. Of these effects, the first alone is immediate; it appears simultaneously with its cause; it is seen. The other effects emerge only subsequently; they are not seen; we are fortunate if we foresee them.

The unseen effects — the theft of Americans’ liberty and prosperity — had been foreseen by some (e.g., Tocqueville and Hayek). But their wise words have been overwhelmed by ignorance and power-lust. The masses and their masters are willfully blind and deaf to the dire consequences of the capitalist paradox because of what I have called the interest-group paradox [see above].

The paradox that is Western civilization:

The main weakness of Western civilization is a propensity to tolerate ideas and actions that would undermine it. The paradox is that the main strength of Western civilization is a propensity to tolerate ideas and actions that would strengthen it. The survival and improvement of Western civilization requires carefully balancing the two propensities. It has long been evident in continental Europe and the British Isles that the balance has swung toward destructive toleration. The United States is rapidly catching up to Europe. At the present rate the intricate network of social relationships and norms that has made America great will be destroyed within a decade. Israel, if it remains staunchly defensive of its heritage, will be the only Western nation still worthy of the name.

I wrote that almost five years ago. America network of social relationships and norms is (sadly) on schedule for destruction — unless there is a sharp and lasting turnaround in the governance of the country.

A paradox for (old-fashioned) liberals:

[A definition of old-fashioned liberalism is] given here by one Zack Beauchamp:

[L]iberalism refers to a school of thought that takes freedom, consent, and autonomy as foundational moral values. Liberals agree that it is generally wrong to coerce people, to seize control of their bodies or force them to act against their will….

Beauchamp, in the next paragraph, highlights the paradox inherent in liberalism:

Given that people will always disagree about politics, liberalism’s core aim is to create a generally acceptable mechanism for settling political disputes without undue coercion — to give everyone a say in government through fair procedures, so that citizens consent to the state’s authority even when they disagree with its decisions.

Which is to say that liberalism does entail coercion [how much is “undue” depends on whose ox is being gored]. Thus the paradox. (What is now called “liberalism” in America is so rife with coercion [link added] that only a person who is ignorant of the meaning of liberalism can call it that with a straight face.)

Socialism, communism, and three paradoxes:

The only substantive difference between socialism and communism, in theory, is that communism somehow manages to do away with the state. This, of course, never happens, except in real communes, most of which were and are tiny, short-lived arrangements. (In what follows, I therefore put communism in “sneer quotes”.)

The common thread of socialism and “communism” is collective ownership of “equity”, that is, assets (including the means of production). But that kind of ownership eliminates an important incentive to invest in the development and acquisition of capital improvements that yield more and better output and therefore raise the general standard of living. The incentive, of course, is the opportunity to reap a substantial reward for taking a substantial risk. Absent that incentive, as has been amply demonstrated by the tragic history of socialist and “communist” regimes, the general standard of living is low and economic growth is practically (if not actually) stagnant.

So here’s the first paradox: Systems that, by magical thinking, are supposed to make people better off do just the opposite: They make people worse off than they would otherwise be.

All of this because of class envy. Misplaced class envy, at that. “Capitalism” (a smear word) is really the voluntary and relatively unfettered exchange of products and services, including labor. Its ascendancy in the West is just a happy accident of the movement toward the kind of liberalism exemplified in the Declaration of Independence and Constitution. People were liberated from traditional economic roles and allowed to put their talents to more productive uses, which included investing their time and money in capital that yielded more and better products and services.

Most “capitalists” in America were and still are workers who make risky investments to start and build businesses. Those businesses employ other workers and offer things of value that consumers can take or leave, as they wish (unlike the typical socialist or “communist” system).

So here’s the second paradox: Socialism and “communism” actually suppress the very workers whom they are meant to benefit, in theory and rhetoric.

The third paradox is that socialist and “communist” regimes like to portray themselves as “democratic”, even though they are quite the opposite: ruled by party bosses who bestow favors on their protegees. Free markets are in fact truly democratic, in that their outcomes are determined directly by the participants in those markets.

The paradoxes and consequences of liberty and prosperity:

The soil in which the seeds of [America’s] decline were to be planted was broken in the Progressive Era of the late 19th and early 20th centuries. The seeds were planted and nourished by “leaders”, “intellectuals”, and “activists” from TR’s time to the present. The poisonous crop burst blossomed brightly in the 1930s and again in the 1960s, but it had not yet engulfed the land. It continued to spread slowly (and often unheeded) for several decades before racing across the land in recent years. Its poisonous vines are now strangling liberty and prosperity.

These are the paradoxes of liberty and prosperity: Without a moral foundation they lead to their own destruction.

If you value liberty, you do not countenance speech and actions that subvert it. If you value prosperity, you must be careful not to let it breed the kind of idleness (of mind and body) that gives rise to speech and actions that subvert liberty — and thus prosperity.

The Founders understood those things. They believed that the Constitution would preserve liberty and foster prosperity because they believed that Americans would remain religious and moral. They did not believe that Americans would undermine liberty by being soft on crime, by feeding masses (and elites) at the public trough (and at the expense of taxpayers), or by accommodating foreign aggression. They did not believe that Americans would countenance such things, nor that political leaders would suborn and join efforts to ostracize, suppress, and oppress those Americans who oppose such things.

The Founders, sadly, were wrong. The did not and could not foresee these events (and many more not mentioned):

    • A goodly fraction of Americans would spurn religion and become morally slack and complacent about the preservation of liberty.
    • Freedom of speech and assembly would be turned against liberty, to foster crime, lack of personal responsibility, and the accommodation of deadly enemies, within and without.
    • Firearms, always omnipresent in America for useful purposes, would become violent, murderous extensions of a growing tendency to toward psychological instability in a morally rootless populace.
    • Governments, political “elites”, and corporations would celebrate and reward (or fail to punish) persons based on the color of their skin (as long as it isn’t white or “yellow”)*, their pro-constitutional political views (which “exonerate” many whites), and their sex (preferably female or confused).
    • Abortion would become legal and support for abortion would be openly and boastfully proclaimed by political leaders and “elites”. Unborn human beings would be disposed of as inconveniences and treated like garbage.
    • Parents would lose control of the upbringing of their children, who might be cajoled into psychologically devastating treatments and surgeries by teachers and others under the rubric of “gender-affirming care”.
    • Women and girls would be forced to room with, shower with, and compete against males who “identify” as females (or “other”).
    • Intelligence and superior (non-athletic) skills would be denounced as unfair and “white supremacist” (with Asians counting as white).
    • Lawlessness and pathological deviancy would be rewarded (or not punished).
    • Leading politicians and “activists” would bay and howl for the confiscation of arms, under the rubric of “gun control”, when the underlying problem isn’t gun ownership by moral and mental depravity.
    • Political “leaders” would enable and allow a virtual invasion of the country, despite its negative consequences for the “little people” whom those “leaders” and other “elites” claim to champion.
    • The national government (and many others) would ignore science and invoke pseudo-science to force Americans into isolation, disrupt the economy, and burden the poorest Americans because of a virus that would have run its course naturally and less destructively than had it been combated scientifically.
    • The national government (and many others) would ignore science and invoke pseudo science to make Americans (especially poor Americans) poorer in an unnecessary and futile quest to “save the planet” from the use of fossil fuels, fertilizers, and other productive substances that the majority of the world’s populace will not refrain from using. (Regarding the state of science, see Maggie Kelly’s, “Professors Publish ‘Controversial’ Paper Defending Merit in Science”, The College Fix, May 2, 2023.)
    • Prosperity — a fruit of liberty — would foster the moral softness and the mental laxity that gives rise to addle-pated schemes such as those outlined above.
    • Vast numbers of Americans — having been indoctrinated in public schools, in left-dominated universities, and by the Democrat-allied media — would believe and subscribe to such schemes, which are made palatable by the application of double-speak labels to them (e.g., “defense of the homeland”, “combating misinformation”, “following the science”).
    • Government officials, including law-enforcement officers, would collude with and encourage the press and other purveyors of “information” to distort and suppress facts about much that is alluded to above, to discredit and hound a president (Trump) who opposed them, and to help elect and protect possibly the most corrupt president in America’s history (Biden) because it is through him that the left’s agenda is being implemented.
    • All of this (and more) would occur because almost-absolute power would accrue to the morally (and sometimes venally) corrupt politicians and their powerful enablers who advance and enforce such schemes.

….

In the best of possible worlds, there would be a voluntary return to something much closer to the America that the Founders envisioned. (Even a return to the post-New Deal 1940s and 1950s would do.) …

I don’t mean something like the turnaround in the House of Representatives following the elections of 1994 and 2010 (GOP gains of 12 and 15 percent). I mean something like the turnaround of 1930-1932 (total Democrat gains of 91 percent). In the wake of that turnaround, Democrats went on to control the House for the next 60 years (except for a post-World War II reaction of two years).

But the mass rejection of the GOP in 1930 and 1932 was a consequence of an economic upheaval, the Great Depression, that hit vast numbers of Americans and hit them suddenly and hard where it hurts: in the pocketbook. The policies that are now engulfing the land, onerous as they may be, are insidious by comparison — and are practically ignored or touted as “good things” by most media (including “entertainment” media).

Moreover, “woke” America is the laughing-stock of its enemies. And too weak [under the present regime] to stare them down. The growing unwillingness and inability of America’s “leaders” to deter and fight enemies really doesn’t matter to those enemies. In the end, the will to resist aggression and to accede to the wishes of aggressors depends on the will of the populace to stand together against aggression. That will, in turn, depends on broad (if not unanimous) allegiance to the survival and success of the nation.

There is no longer such an allegiance. The left hates what America long was and will not relent until that America is destroyed. The right hates what America is rapidly becoming at the hands of the left. A house divided against itself cannot stand.

I used to believe that an event that threatened the lives and livelihoods of all Americans would re-unite them. I no longer believe that.

I now believe that a national divorce — a negotiated partition of the nation — is a dire necessity. (Its precursor, a concerted secession, is legal under the Constitution.) It would allow a large fraction of Americans, perhaps half of them, to break free of the economic and social oppressions that emanate from Washington. It would also allow those same Americans to defend themselves against invaders from the south and overseas enemies instead of wasting their treasure on the left’s destructive agenda.

Absent a national divorce, everyone will go down with a sinking ship. Across the land there will be declining material comfort, rising criminality, rampant social acrimony, the suppression of views that threaten the grip of the ruling class, the oppression of persons who express those views, and a fascistic arrangement between politicians and favored corporations — those that subscribe to the quasi-religion of “climate change” and the “wokeness” that propels schemes that put skin color, sex (or lack of it), and other personal characteristics above truth, above merit, and above the rule of law.

Which leads me to promote “Can America Be Saved?“, if you haven’t yet read it.

Not-So-Random Thoughts (XXIII)

CONTENTS

Government and Economic Growth

Reflections on Defense Economics

Abortion: How Much Jail Time?

Illegal Immigration and the Welfare State

Prosperity Isn’t Everything

Google et al. As State Actors

The Transgender Trap


GOVERNMENT AND ECONOMIC GROWTH

Guy Sorman reviews Alan Greenspan and Adrian Wooldridge’s Capitalism in America: A History. Sorman notes that

the golden days of American capitalism are over—or so the authors opine. That conclusion may seem surprising, as the U.S. economy appears to be flourishing. But the current GDP growth rate of roughly 3 percent, after deducting a 1 percent demographic increase, is rather modest, the authors maintain, compared with the historic performance of the postwar years, when the economy grew at an annual average of 5 percent. Moreover, unemployment appears low only because a significant portion of the population is no longer looking for work.

Greenspan and Wooldridge reject the conventional wisdom on mature economies growing more slowly. They blame relatively slow growth in the U.S. on the increase in entitlement spending and the expansion of the welfare state—a classic free-market argument.

They are right to reject the conventional wisdom.  Slow growth is due to the expansion of government spending (including entitlements) and the regulatory burden. See “The Rahn Curve in Action” for details, including an equation that accurately explains the declining rate of growth since the end of World War II.


REFLECTIONS ON DEFENSE ECONOMICS

Arnold Kling opines about defense economics. Cost-effectiveness analysis was the big thing in the 1960s. Analysts applied non-empirical models of warfare and cost estimates that were often WAGs (wild-ass guesses) to the comparison of competing weapon systems. The results were about as accurate a global climate models, which is to say wildly inaccurate. (See “Modeling Is not Science“.) And the results were worthless unless they comported with the prejudices of the “whiz kids” who worked for Robert Strange McNamara. (See “The McNamara Legacy: A Personal Perspective“.)


ABORTION: HOW MUCH JAIL TIME?

Georgi Boorman says “Yes, It Would Be Just to Punish Women for Aborting Their Babies“. But, as she says,

mainstream pro-lifers vigorously resist this argument. At the same time they insist that “the unborn child is a human being, worthy of legal protection,” as Sarah St. Onge wrote in these pages recently, they loudly protest when so-called “fringe” pro-lifers state the obvious: of course women who willfully hire abortionists to kill their children should be prosecuted.

Anna Quindlen addressed the same issue more than eleven years ago, in Newsweek:

Buried among prairie dogs and amateur animation shorts on YouTube is a curious little mini-documentary shot in front of an abortion clinic in Libertyville, Ill. The man behind the camera is asking demonstrators who want abortion criminalized what the penalty should be for a woman who has one nonetheless. You have rarely seen people look more gobsmacked. It’s as though the guy has asked them to solve quadratic equations. Here are a range of responses: “I’ve never really thought about it.” “I don’t have an answer for that.” “I don’t know.” “Just pray for them.”

You have to hand it to the questioner; he struggles manfully. “Usually when things are illegal there’s a penalty attached,” he explains patiently. But he can’t get a single person to be decisive about the crux of a matter they have been approaching with absolute certainty.

… If the Supreme Court decides abortion is not protected by a constitutional guarantee of privacy, the issue will revert to the states. If it goes to the states, some, perhaps many, will ban abortion. If abortion is made a crime, then surely the woman who has one is a criminal. But, boy, do the doctrinaire suddenly turn squirrelly at the prospect of throwing women in jail.

“They never connect the dots,” says Jill June, president of Planned Parenthood of Greater Iowa.

I addressed Quindlen, and queasy pro-lifers, eleven years ago:

The aim of Quindlen’s column is to scorn the idea of jail time as punishment for a woman who procures an illegal abortion. In fact, Quindlen’s “logic” reminds me of the classic definition of chutzpah: “that quality enshrined in a man who, having killed his mother and father, throws himself on the mercy of the court because he is an orphan.” The chutzpah, in this case, belongs to Quindlen (and others of her ilk) who believe that a woman should not face punishment for an abortion because she has just “lost” a baby.

Balderdash! If a woman illegally aborts her child, why shouldn’t she be punished by a jail term (at least)? She would be punished by jail (or confinement in a psychiatric prison) if she were to kill her new-born infant, her toddler, her ten-year old, and so on. What’s the difference between an abortion and murder? None. (Read this, then follow the links in this post.)

Quindlen (who predictably opposes capital punishment) asks “How much jail time?” in a cynical effort to shore up the anti-life front. It ain’t gonna work, lady.

See also “Abortion Q & A“.


ILLEGAL IMMIGRATION AND THE WELFARE STATE

Add this to what I say in “The High Cost of Untrammeled Immigration“:

In a new analysis of the latest numbers [by the Center for Immigration Studies], from 2014, 63 percent of non-citizens are using a welfare program, and it grows to 70 percent for those here 10 years or more, confirming another concern that once immigrants tap into welfare, they don’t get off it.

See also “Immigration and Crime” and “Immigration and Intelligence“.

Milton Friedman, thinking like an economist, favored open borders only if the welfare state were abolished. But there’s more to a country than GDP. (See “Genetic Kinship and Society“.) Which leads me to…


PROSPERITY ISN’T EVERYTHING

Patrick T. Brown writes about Oren Cass’s The Once and Future Worker:

Responding to what he cutely calls “economic piety”—the belief that GDP per capita defines a country’s well-being, and the role of society is to ensure the economic “pie” grows sufficiently to allow each individual to consume satisfactorily—Cass offers a competing hypothesis….

[A]s Cass argues, if well-being is measured by considerations in addition to economic ones, a GDP-based measurement of how our society is doing might not only be insufficient now, but also more costly over the long term. The definition of success in our public policy (and cultural) efforts should certainly include some economic measures, but not at the expense of the health of community and family life.

Consider this line, striking in the way it subverts the dominant paradigm: “If, historically, two-parent families could support themselves with only one parent working outside the home, then something is wrong with ‘growth’ that imposes a de facto need for two incomes.”…

People need to feel needed. The hollowness at the heart of American—Western?—society can’t be satiated with shinier toys and tastier brunches. An overemphasis on production could, of course, be as fatal as an overemphasis on consumption, and certainly the realm of the meritocrats gives enough cause to worry on this score. But as a matter of policy—as a means of not just sustaining our fellow citizen in times of want but of helping him feel needed and essential in his family and community life—Cass’s redefinition of “efficiency” to include not just its economic sense but some measure of social stability and human flourishing is welcome. Frankly, it’s past due as a tenet of mainstream conservatism.

Cass goes astray by offering governmental “solutions”; for example:

Cass suggests replacing the current Earned Income Tax Credit (along with some related safety net programs) with a direct wage subsidy, which would be paid to workers by the government to “top off” their current wage. In lieu of a minimum wage, the government would set a “target wage” of, say, $12 an hour. If an employee received $9 an hour from his employer, the government would step up to fill in that $3 an hour gap.

That’s no solution at all, inasmuch as the cost of a subsidy must be borne by someone. The someone, ultimately, is the low-wage worker whose wage is low because he is less productive than he would be. Why is he less productive? Because the high-income person who is taxed for the subsidy has that much less money to invest in business capital that raises productivity.

The real problem is that America — and the West, generally — has turned into a spiritual and cultural wasteland. See, for example, “A Century of Progress?“, “Prosperity Isn’t Everything“, and “James Burnham’s Misplaced Optimism“.


GOOGLE ET AL. AS STATE ACTORS

In “Preemptive (Cold) Civil War” (03/18/18) I recommended treating Google et al. as state actors to enforce the free-speech guarantee of the First Amendment against them:

The Constitution is the supreme law of the land. (Article V.)

Amendment I to the Constitution says that “Congress shall make no law … abridging the freedom of speech”.

Major entities in the telecommunications, news, entertainment, and education industries have exerted their power to suppress speech because of its content…. The collective actions of these entities — many of them government- licensed and government-funded — effectively constitute a governmental violation of the Constitution’s guarantee of freedom of speech (See Smith v. Allwright, 321 U.S. 649 (1944) and Marsh v. Alabama, 326 U.S. 501 (1946).)

I recommended presidential action. But someone has moved the issue to the courts. Tucker Higgins has the story:

The Supreme Court has agreed to hear a case that could determine whether users can challenge social media companies on free speech grounds.

The case, Manhattan Community Access Corp. v. Halleck, No. 17-702, centers on whether a private operator of a public access television network is considered a state actor, which can be sued for First Amendment violations.

The case could have broader implications for social media and other media outlets. In particular, a broad ruling from the high court could open the country’s largest technology companies up to First Amendment lawsuits.

That could shape the ability of companies like Facebook, Twitter and Alphabet’s Google to control the content on their platforms as lawmakers clamor for more regulation and activists on the left and right spar over issues related to censorship and harassment.

The Supreme Court accepted the case on [October 12]….

the court of Chief Justice John Roberts has shown a distinct preference for speech cases that concern conservative ideology, according to an empirical analysis conducted by researchers affiliated with Washington University in St. Louis and the University of Michigan.

The analysis found that the justices on the court appointed by Republican presidents sided with conservative speech nearly 70 percent of the time.

“More than any other modern Court, the Roberts Court has trained its sights on speech promoting conservative values,” the authors found.

Here’s hoping.


THE TRANSGENDER TRAP

Babette Francis and John Ballantine tell it like it is:

Dr. Paul McHugh, the University Distinguished Service Professor of Psychiatry at Johns Hopkins Medical School and the former psychiatrist-in-chief at Johns Hopkins Hospital, explains that “‘sex change’ is biologically impossible.” People who undergo sex-reassignment surgery do not change from men to women or vice versa.

In reality, gender dysphoria is more often than not a passing phase in the lives of certain children. The American Psychological Association’s Handbook of Sexuality and Psychology has revealed that, before the widespread promotion of transgender affirmation, 75 to 95 percent of pre-pubertal children who were uncomfortable or distressed with their biological sex eventually outgrew that distress. Dr. McHugh says: “At Johns Hopkins, after pioneering sex-change surgery, we demonstrated that the practice brought no important benefits. As a result, we stopped offering that form of treatment in the 1970s.”…

However, in today’s climate of political correctness, it is more than a health professional’s career is worth to offer a gender-confused patient an alternative to pursuing sex-reassignment. In some states, as Dr. McHugh has noted, “a doctor who would look into the psychological history of a transgendered boy or girl in search of a resolvable conflict could lose his or her license to practice medicine.”

In the space of a few years, these sorts of severe legal prohibitions—usually known as “anti-reparative” and “anti-conversion” laws—have spread to many more jurisdictions, not only across the United States, but also in Canada, Britain, and Australia. Transgender ideology, it appears, brooks no opposition from any quarter….

… Brown University succumbed to political pressure when it cancelled authorization of a news story of a recent study by one of its assistant professors of public health, Lisa Littman, on “rapid-onset gender dysphoria.” Science Daily reported:

Among the noteworthy patterns Littman found in the survey data: twenty-one percent of parents reported their child had one or more friends who become transgender-identified at around the same time; twenty percent reported an increase in their child’s social media use around the same time as experiencing gender dysphoria symptoms; and forty-five percent reported both.

A former dean of Harvard Medical School, Professor Jeffrey S. Flier, MD, defended Dr. Littman’s freedom to publish her research and criticized Brown University for censoring it. He said:

Increasingly, research on politically charged topics is subject to indiscriminate attack on social media, which in turn can pressure school administrators to subvert established norms regarding the protection of free academic inquiry. What’s needed is a campaign to mobilize the academic community to protect our ability to conduct and communicate such research, whether or not the methods and conclusions provoke controversy or even outrage.

The examples described above of the ongoing intimidation—sometimes, actual sackings—of doctors and academics who question transgender dogma represent only a small part of a very sinister assault on the independence of the medical profession from political interference. Dr. Whitehall recently reflected: “In fifty years of medicine, I have not witnessed such reluctance to express an opinion among my colleagues.”

For more about this outrage see “The Transgender Fad and Its Consequences“.

“They Deserve to Die”?

In “Prosperity Isn’t Everything” I quoted Megan McArdle’s observations about how thing have gotten better and worse for Americans. Here’s some of what she wrote:

By the standards of today, my grandparents were living in wrenching poverty. Some of this, of course, involves technologies that didn’t exist—as a young couple in the 1930s my grandparents had less access to health care than the most  neglected homeless person in modern America, simply because most of the treatments we now have had not yet been invented. That is not the whole story, however. Many of the things we now have already existed; my grandparents simply couldn’t afford them.  With some exceptions, such as microwave ovens and computers, most of the modern miracles that transformed 20th century domestic life already existed in some form by 1939. But they were out of the financial reach of most people….

[Not] everything has gotten better in every way, all the time. There are areas in which things have gotten broadly worse….

  • … Substance abuse, and the police response to it, has devastated both urban and rural communities.
  • Divorce broke up millions of families, and while the college educated class seems to have found a new equilibrium of stable and happy later marriages, marriage is collapsing among the majority who do not have a college degree, leaving millions of children in unstable family situations where fathers are often absent from the home, and their attention and financial resources are divided between multiple children with multiple women.
  • Communities are much less cohesive than they used to be, and while the educated elite may have found substitutes online, the rest of the country is “bowling alone” more and more often—which is not merely lonely, but also means they have fewer social supports when they find themselves in trouble.
  • A weekly wage packet may buy more than it did sixty years ago, but the stability of manufacturing jobs is increasingly being replaced by contingent and unreliable shift work that is made doubly and triply difficult by the instability of the families that tend to do these jobs. The inability to plan your life or work in turn makes it hard to form a family, and stressful to keep one together….

Charles Murray writes candidly but not unsympathetically about the plight of low-income white Americans in Coming Apart: The State of White America, 1960-2010:

Drawing on five decades of statistics and research, Coming Apart demonstrates that a new upper class and a new lower class have diverged so far in core behaviors and values that they barely recognize their underlying American kinship—divergence that has nothing to do with income inequality and that has grown during good economic times and bad.

The top and bottom of white America increasingly live in different cultures, Murray argues, with the powerful upper class living in enclaves surrounded by their own kind, ignorant about life in mainstream America, and the lower class suffering from erosions of family and community life that strike at the heart of the pursuit of happiness.

Along comes Kevin D. Williamson of the National Review to pour scorn upon low-income whites. Williamson’s article, which appeared in the print edition of March 28, 2016, was originally titled “The Father-Fuhrer,” a reference to Donald Trump. The online version is called “Chaos in the Family, Chaos in the State: The White Working Class’s Dysfunction.” Written before Trump had clinched the GOP nomination, the piece is a transparent attempt to discredit Trump by discrediting a key source of his support: low-income whites in chronically depressed regions of the country.

Here’s a key passage:

The truth about these dysfunctional, downscale communities is that they deserve to die. Economically, they are negative assets. Morally, they are indefensible. Forget all your cheap theatrical Bruce Springsteen crap. Forget your sanctimony about struggling Rust Belt factory towns and your conspiracy theories about the wily Orientals stealing our jobs…. The white American underclass is in thrall to a vicious, selfish culture whose main products are misery and used heroin needles. Donald Trump’s speeches make them feel good. So does OxyContin. What they need isn’t analgesics, literal or political. They need real opportunity, which means that they need real change, which means that they need U-Haul.

Disgusting.

Scott Grier, writing in The Daily Caller (“National Review Writer: Working-Class Communities ‘Deserve To Die’,” March 12, 2016), seems to share my disgust. He closes with this:

While Williamson blames the people living in run-down white communities for their own woes, he does not apply the same principle to run-down minority communities. In his book and articles on the failures of Detroit, for instance, the National Review writer blames “progressivism” and unions for ruining the predominately African-American city.

Spot on. As I say in “Prosperity Isn’t Everything,”

Let’s begin with social norms, which are the basis of social ties. If you and I observe the same social norms, we’re likely to feel bound in some way, even if we’re not friends or relatives. This, of course, is tribalism, which is verboten among those who view all of mankind as brothers, sisters, and whatevers under the skin — all mankind except smarty-pants Americans of East Asian descent, Israeli Jews and American Jews who support Israel, Southerners (remember the Civil War!), and everyone else who is a straight, non-Hispanic white male of European descent. To such people, the only legitimate tribe is the tribe of anti-tribalism.You may by now understand that I blame leftists for the breakdown of social norms and social ties. But how can that be if, as McArdle says, “the college educated class seems to have found a new equilibrium of stable and happy later marriages”? The college-educated class resides mostly on the left, and affluent leftists do seem to have avoided the rot.

Yes, but they caused it. You could think of it as a non-suicidal act of terror. But it would be kinder and more accurate to call it an act of involuntary manslaughter.  Leftists meant to make the changes that caused the rot; they just didn’t foresee or intend the rot. Nor is it obvious that they care about it, except as an excuse to “solve” social problems from on high by throwing money and behavioral prescriptions at them — which is why there’s social rot in the first place.

The good intentions embedded in governmental acts and decrees have stealthily expanded and centralized government’s power, and in the process have sundered civil society….

The undoing of traditional mores began in earnest in the 1960s, with a frontal assault on traditional morality and the misguided expansion of the regulatory-welfare state. The unraveling continues to this day. Traditional morality is notable in its neglect; social cohesion is almost non-existent, except where the bonds of religion and ethnicity remain strong. The social fabric that once bound vast swaths of America has rotted — and is almost certainly beyond repair.

The social fabric has frayed precisely because government has pushed social institutions aside and made dependents of hundreds of millions of Americans. As Ronald Reagan said in his first inaugural address, “In this present crisis, government is not the solution to our problem, government is the problem.”

Now for an ironic twist. Were the central government less profligate and intrusive, Americans would become much more prosperous.

Clearly, Kevin Williamson wants to distance himself from people who don’t share his elevated norms. In that respect, he’s no different from a sneering, leftist-voting yuppie. If he were truly conservative, he’d have compassion for the people about whom he writes.

But Williamson has shown himself to be a faux conservative: all economic efficiency and no heart.

Prosperity Isn’t Everything

There is no denying that per-capita income rises with specialization and trade; for example:

  • A is a farmer with land that’s good for growing fruit trees; B is a farmer with land that’s good for raising cattle.
  • The total output of both apples and butter will be greater if A specializes in growing apples and B specializes in making butter than if both A and B grew apples and made butter.
  • A and B can then trade apples for butter so that of them is better off than he would have been in the absence of specialization and trade.

Sometimes A and B live in different cities, different States, and different countries. If the raison d’etre of specialization and trade is the maximization of income, it would be foolish to exclude international trade while allowing inter-State and inter-city trade. (Note that the preceding sentence begins with if.)

The combination of specialization, trade, invention, innovation, and entrepreneurship has wrought much good. Here’s Megan McArdle’s testimony:

By the standards of today, my grandparents were living in wrenching poverty. Some of this, of course, involves technologies that didn’t exist—as a young couple in the 1930s my grandparents had less access to health care than the most  neglected homeless person in modern America, simply because most of the treatments we now have had not yet been invented. That is not the whole story, however. Many of the things we now have already existed; my grandparents simply couldn’t afford them.  With some exceptions, such as microwave ovens and computers, most of the modern miracles that transformed 20th century domestic life already existed in some form by 1939. But they were out of the financial reach of most people.

If America today discovered a young couple where the husband had to drop out of high school to help his father clean tons of unsold, rotted produce out of their farm’s silos, and now worked a low-wage, low-skilled job, was living in a single room with no central heating and a single bathroom to share for two families, who had no refrigerator and scrubbed their clothes by hand in a washtub, who had serious conversations in low voices over whether they should replace or mend torn clothes, who had to share a single elderly vehicle or make the eight-mile walk to town  … that family would be the subject of a three-part Pulitzer prizewinning series on Poverty in America.

But in their time and place, my grandparents were a boring bourgeois couple, struggling to make ends meet as everyone did, but never missing a meal or a Sunday at church. They were excited about the indoor plumbing and electricity which had just been installed on his parents’ farm, and they were not too young to marvel at their amazing good fortune in owning an automobile. In some sense they were incredibly deprived, but there are millions of people in America today who are incomparably better off materially, and yet whose lives strike us (and them) as somehow objectively more difficult.

Much of that is true of my parents, who were of the same generation as McArdle’s grandparents. More of it is true of my maternal grandmother, who was born in 1880, wed in 1903, bore and raised ten children, and was widowed at the age of 60. I remember well the years before she reached the age of 70; until then she cooked on a wood-fired range, pumped water from a well in her backyard, and went to the outhouse for calls of nature. And yet, the following things, and much more, came to pass in her lifetime: alternating-current electricity, a telephone in most homes (though my grandmother lacked one until she was in her 70s), automobiles (though she never learned to drive), airplanes (she first flew at the age of 93), movies, radio, movies with sound, television (she never owned one), radar, penicillin, vaccinations against various debilitating diseases, electric typewriters, and early transistorized computers.

Because my dominant memories of my grandmother and her way of life in a small village are boyhood memories, it’s tempting to characterize them as nostalgic and somewhat romanticized. But I know that she was more or less typical of the residents of her village. Though she was far from rich, she wasn’t poor by the standards of the village. She certainly didn’t feel impoverished or resentful about her lack of material goods.

Today, however, relatively poor people in America have far, far more in the way of material goods than my grandmother ever dreamt of owning, yet they are anxious and even miserable, because… Here’s McArdle’s view:

[Not] everything has gotten better in every way, all the time. There are areas in which things have gotten broadly worse….

  • … Substance abuse, and the police response to it, has devastated both urban and rural communities.
  • Divorce broke up millions of families, and while the college educated class seems to have found a new equilibrium of stable and happy later marriages, marriage is collapsing among the majority who do not have a college degree, leaving millions of children in unstable family situations where fathers are often absent from the home, and their attention and financial resources are divided between multiple children with multiple women.
  • Communities are much less cohesive than they used to be, and while the educated elite may have found substitutes online, the rest of the country is “bowling alone” more and more often—which is not merely lonely, but also means they have fewer social supports when they find themselves in trouble.
  • A weekly wage packet may buy more than it did sixty years ago, but the stability of manufacturing jobs is increasingly being replaced by contingent and unreliable shift work that is made doubly and triply difficult by the instability of the families that tend to do these jobs. The inability to plan your life or work in turn makes it hard to form a family, and stressful to keep one together….
  • Widespread credit has democratized large purchases like furniture and cars. It has also enabled many people, particularly financially marginal people, to get into serious trouble.  Debt magnifies your life experience: when things are going relatively well, it gives you more options, but when things are going badly, it can turn a setback into a catastrophe—as many, many families found out in 2008….

This list illustrates why public policy seems to be struggling to come up with a plan of attack against our current insecurities. The welfare state is relatively good at giving people money: you collect the taxes, write a check, and now people have money. The welfare state has proven very bad at giving people stable jobs and stable families, a vibrant community life, promising career tracks, or a cure for their drug addiction. No wonder so many hopes now seem to be pinned on early childhood education, far in excess of the evidence to support them: it is the only thing we have not already tried and failed at.

But I think this list illustrates the poverty of trying to measure living standards by staring at median wages. Many of the changes of the last century show up in that statistic, but others, like the time no longer spent plucking chickens, or the joys of banishing lye from the pantry, appear nowhere.  Nor do the changes in job and family structure that have made the lives of people who are indisputably vastly materially richer than my young grandparents were, nonetheless feel much more precarious.

Where did it all go wrong? And I do believe that it went wrong. I say that as a man who has lived more than his three-score and ten years, remains in good health, lives comfortably, has a loving wife of 52 years, has two fine children and twelve joyous grandchildren, and is by nature an optimistic achiever who isn’t easily thrown off course by a setback.

It didn’t go wrong because of globalization, though globalization may have hastened the rot. It didn’t go wrong because of prosperity per se, though it was helped by the fevered pursuit of prosperity. It went wrong because of the fraying of the social ties that bound much of America for so long — even with the Civil War and its decades-long residue of bitterness.

Why did those ties fray? And why are they now weaker than than have been since the eve of the Civil War?

Let’s begin with social norms, which are the basis of social ties. If you and I observe the same social norms, we’re likely to feel bound in some way, even if we’re not friends or relatives. This, of course, is tribalism, which is verboten among those who view all of mankind as brothers, sisters, and whatevers under the skin — all mankind except smarty-pants Americans of East Asian descent, Israeli Jews and American Jews who support Israel, Southerners (remember the Civil War!), and everyone else who is a straight, non-Hispanic white male of European descent. To such people, the only legitimate tribe is the tribe of anti-tribalism.

You may by now understand that I blame leftists for the breakdown of social norms and social ties. But how can that be if, as McArdle says, “the college educated class seems to have found a new equilibrium of stable and happy later marriages”? The college-educated class resides mostly on the left, and affluent leftists do seem to have avoided the rot.

Yes, but they caused it. You could think of it as a non-suicidal act of terror. But it would be kinder and more accurate to call it an act of involuntary manslaughter.  Leftists meant to make the changes that caused the rot; they just didn’t foresee or intend the rot. Nor is it obvious that they care about it, except as an excuse to “solve” social problems from on high by throwing money and behavioral prescriptions at them — which is why there’s social rot in the first place.

The good intentions embedded in governmental acts and decrees have stealthily expanded and centralized government’s power, and in the process have sundered civil society. Walter Williams puts it this way in “Culture and Social Pathology” (creators.com, June 16, 2015):

A civilized society’s first line of defense is not the law, police and courts but customs, traditions, rules of etiquette and moral values. These behavioral norms — mostly transmitted by example, word of mouth and religious teachings — represent a body of wisdom distilled over the ages through experience and trial and error. They include important thou-shalt-nots, such as thou shalt not murder, thou shalt not steal and thou shalt not cheat. They also include all those courtesies that have traditionally been associated with ladylike and gentlemanly conduct.

The failure to fully transmit these values and traditions to subsequent generations represents one of the failings of what journalist Tom Brokaw called “The Greatest Generation.” People in this so-called great generation, who lived during the trauma of the Great Depression and fought World War II, not only failed to transmit the moral values of their parents but also are responsible for government programs that will deliver economic chaos….

For nearly three-quarters of a century, the nation’s liberals have waged war on traditional values, customs and morality. Our youths have been counseled that there are no moral absolutes. Instead, what’s moral or immoral is a matter of personal opinion. During the 1960s, the education establishment began to challenge and undermine lessons children learned from their parents and Sunday school with fads such as “values clarification.” So-called sex education classes are simply indoctrination that undermines family and church strictures against premarital sex. Lessons of abstinence were considered passe and replaced with lessons about condoms, birth control pills and abortions. Further undermining of parental authority came with legal and extralegal measures to assist teenage abortions with neither parental knowledge nor parental consent….

If it were only the economic decline threatening our future, there might be hope. It’s the moral decline that spells our doom.

The undoing of traditional mores began in earnest in the 1960s, with a frontal assault on traditional morality and the misguided expansion of the regulatory-welfare state. The unraveling continues to this day. Traditional morality is notable in its neglect; social cohesion is almost non-existent, except where the bonds of religion and ethnicity remain strong. The social fabric that once bound vast swaths of America has rotted — and is almost certainly beyond repair.

The social fabric has frayed precisely because government has pushed social institutions aside and made dependents of hundreds of millions of Americans. As Ronald Reagan said in his first inaugural address, “In this present crisis, government is not the solution to our problem, government is the problem.”

Now for an ironic twist. Were the central government less profligate and intrusive, Americans would become much more prosperous.

*     *     *

Related posts:
Social Norms and Liberty
Whiners — Left and Libertarian
The Adolescent Rebellion Syndrome
“Intellectuals and Society”: A Review
Government vs. Community
The Left’s Agenda
The Left and Its Delusions
The Destruction of Society in the Name of “Society”
The Spoiled Children of Capitalism
Politics, Sophistry, and the Academy
Society and the State
Are You in the Bubble?
The Culture War
Ruminations on the Left in America
God-Like Minds
Non-Judgmentalism as Leftist Condescension
An Addendum to (Asymmetrical) Ideological Warfare
Democracy, Human Nature, and the Future of America
1963: The Year Zero
Society
How Democracy Works
“Cheerful” Thoughts
How Government Subverts Social Norms
Turning Points
The Twilight’s Last Gleaming?
How America Has Changed

The Illusion of Prosperity and Stability

For reasons I outlined in “The Price of Government,” the post-Civil War boom of 1866-1907 finally gave way to the onslaught of Progressivism. Real GDP grew at the rate of 4.3 percent annually during the post-Civil War boom; it has since grown at an annual rate of 3.3 percent. The difference between the two rates of growth, compounded over a century, is the difference between $13 trillion (2009’s GDP in 2005 dollars) and $41 trillion (2009’s potential GDP in 2005 dollars).

As I said in “The Price of Government,” this disparity

may seem incredible, but scan the lists here and you will find even greater cross-national disparities in per capita GDP. Go here and you will find that real, per capita GDP in 1790 was only 4.6 percent of the value it had attained 218 years later. Our present level of output seems incredible to citizens of impoverished nations, and it would seem no less incredible to an American of 1790. In sum, vast disparities can and do exist, across nations and time.

The main reason for the disparity is the intervention of the federal government in the economic affairs of Americans and their businesses. I put it this way in “The Price of Government”:

What we are seeing [in the present recession and government’s response to it] is the continuation of a death-spiral that began in the early 1900s. Do-gooders, worry-warts, control freaks, and economic ignoramuses see something “bad” and — in their misguided efforts to control natural economic forces (which include business cycles) — make things worse. The most striking event in the death-spiral is the much-cited Great Depression, which was caused by government action, specifically the loose-tight policies of the Federal Reserve, Herbert Hoover’s efforts to engineer the economy, and — of course — FDR’s benighted New Deal. (For details, see this, and this.)

But, of course, the worse things get, the greater the urge to rely on government. Now, we have “stimulus,” which is nothing more than an excuse to greatly expand government’s intervention in the economy. Where will it lead us? To a larger, more intrusive government that absorbs an ever larger share of resources that could be put to productive use, and counteracts the causes of economic growth.

One of the ostensible reasons for governmental intervention is to foster economic stability. That was an important rationale for the creation of the Federal Reserve System; it was an implicit rationale for Social Security, which moves income to those who are more likely to spend it; and it remains a key rationale for so-called counter-cyclical spending (i.e., “fiscal policy”) and the onerous regulation of financial institutions.

Has the quest for stability succeeded? If you disregard the Great Depression, and several deep recessions (including the present one), it has. But the price has been high. The green line in the following graph traces real GDP as it would have been had economic growth after 1907 followed the same path as it did in 1866-1907, with all of the ups and down in that era of relatively unregulated “instability.” The red line, which diverges from the green one after 1907, traces real GDP as it has been since government took over the task of ensuring stable prosperity.

Only by overlooking the elephant in the room — the Great Depression — can one assert that government has made the economy more stable. Only because we cannot see the exorbitant price of government can we believe that it has had something to do with our “prosperity.”

What about those fairly sharp downturns along the green line? If it really is important for government to shield us from economic shocks, there are much better ways of getting the job done that they ways now employed. There was no federal income tax during the post-Civil War boom (one of the reasons for the boom). Suppose that in the early 1900s the federal government had been allowed to impose a small, constitutionally limited income tax of, say, 0.5 percent on gross personal incomes over a certain level, measured in constant dollars (with an explicit ban on exemptions, deductions, and other adjustments, to keep it simple and keep interest groups from enriching themselves at the expense of others). Suppose, further, that the proceeds from the tax had a constitutionally limited use: the payment of unemployment benefits for a constitutionally limited time whenever real GDP declined from quarter to quarter.

Perhaps that’s too much clutter for devotees of constitutional simplicity. But wouldn’t the results have been worth the clutter? The primary result would have been growth at a rate close to that of 1866-1907, but with some of the wrinkles ironed out. The secondary result — and an equally important one — would have been the diminution (if not the elimination) of the “need” for governmental intervention in our affairs.

Related posts:
Basic Economics
The Economic and Social Consequences of Government