The View From 1776

Induced Self-Interest

In a centrally managed, liberal-progressive economy, it’s useless to abstain from seeking a place in the line for government handouts.  If you don’t get into the line someone else will take your place.

The Obama campaign has criticized Congressman Paul Ryan for seeking Federal handouts for his district, even though he voted against legislation authorizing the handouts.  Had he refrained from doing so, however, it would not have changed the overall condition of the economy or public morals one whit.  Some other Congressional district would eagerly have grabbed what Congressman Ryan’s district did not get.

In short, though liberal-progressivism speaks in terms of helping the little guy, it actually corrupts public morals and induces greed and self-interest.  The big special interest groups, primarily labor unions, trample the little guy in the rush to the pig trough.  Public employee labor unions in every jurisdiction push for more benefits, while cities and states face bankruptcy from skyrocketing union pension and health care liabilities.

Another egregious example of the phenomenon is Wall Street’s continual clamor for easier money from the Federal Reserve.  The moment the stock market falters, money managers and brokers push for more quantitative easing, i.e., the Fed’s pumping more fiat, phony dollars into the money supply.

Since the October, 1987, crash, in which the Dow Jones stock market average dropped 22.6%, the largest percentage drop on record, Wall Street has counted on the Federal Reserve’s coming to the rescue.  That so-called “Fed put” has contributed mightily to expansion of the money supply and a concomitant reduction of the dollar’s purchasing power.

Quantitative easing by the Fed has done nothing whatever to benefit the bulk of the nation’s citizens.  We experience the slowest economic recovery in history.  Unemployment, including people who have given up trying to get a job, is somewhere between 11% and 17% of the potential labor force.

Only banks, brokers, and money managers have benefitted.  But it’s hard to blame them, when liberal-progressivism’s economic doctrine is Keynesian macroeconomics, the secular religious faith that more fiat money is the solution to every problem.  Wall Street is simply taking what is being offered.

In a free-market economy, as Adam Smith noted in 1776, each person’s seeking to maximize his own wellbeing will, as if directed by an invisible hand, maximize the total of society’s wellbeing.

In a managed economy, with special interest groups competing with each other for government handouts or special tax and regulatory preferences, the opposite is true.  Higher government taxes and government borrowing to fund deficit spending both crowd out private business from access to capital markets and reduce the incentive to expand production and to hire more workers. 

People increasingly are driven to dependence upon the government for their needs, as the purchasing power of their savings declines.  Independent initiative and self-reliance come to be regarded as quaint relics of an earlier age.  People under French socialism in the early 1800s, Alexis de Tocqueville observed in Democracy in America, came to be self-centered and heedless of the general welfare.

Such is the goal of liberal-progressivism and the Democrat/Socialist Party.