Tuesday, September 2, 2014

The Symptoms of Big Government

If you are any kind of conservative or libertarian you probably want to end deficit spending.  You'd like to end the pay-as-you-go entitlement programs that politicians voted for a generation ago and that we have to pay for.  And you'd like to end the Federal Reserve Board's policy of stimulating the economy with cheap money to create jobs.

I'm all in favor of balancing the budget -- but not by increasing taxes.  I'm in favor of putting the obligations of the entitlement programs front and center -- but not if it means increasing payroll taxes on the American worker.

And I froth and the mouth about the Keynesian consensus that the Fed can and should goose the economy to stimulate employment.  But I look at the Fed as a relief pitcher that the government calls in when it's got the economy in a jam with all the bases loaded.  There is no substitute under the present political economy for a central bank as the lender of last resort to lend money during a liquidity crisis.

The real problem is that we get liquidity crises like the Crash of 2008 because of big government.  So long as government is goosing the housing market with loans to sub-prime borrowers we are going to need the Fed to come and clean up the mess while continuing to pay a trillion a year in pensions and a trillion a year in health care.  And so long as we have wars we are going to need the Fed to help the government finance the war.

So long as the American people believe in programs like Social Security and Medicare in which rich older Americans stand under a geyser of benefits paid for mostly by younger, poorer Americans then it doesn't matter what we do about balancing the budget or facing up to the real future costs of the programs.  And we will need the Fed to come in and clean up the mess with a blast of inflation every ten years or so.

And frankly, I don't see that changing in my lifetime or the lifetime of my children.  The basic reality of all politics, from a guerrilla insurgency to a continental empire, is that the government buys support by offering loot to its supporters.  In the United States government offers pensions for people and subsidies to special interests.  And anyone that raises an objection is anathematized as someone that wants to hurt "seniors" or the "poor" or the "traditionally marginalized" or "working families."  If you ask a senior about Medicare or Social Security they will remind you that they already paid for their benefits.

We are not going to change big government by treating the symptoms.  We have to treat the disease, and the disease is the idea that the welfare and security of the American people are founded upon a government safety net.  Until that idea fails and is replaced by another idea then we are stuck with the current system.

It's pretty obvious how we would get to a place where things change.  First the American people would have to believe that the current system had failed.  They will only do that when enough Americans personally suffer horribly from the failures of the current system.

When a sizable minority of Americans get really riled up because they have been unjustly treated by the current system then they will be ready to become foot-soldiers in a movement to change things.

But frankly, the American people are probably more likely to support a system of total government control of everything than to vote for a system that dismantles the current system and returns America to freedom and limited government.

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