Blogs For Victory

Then follow along with Obamunism…which is just warmed-over New Dealism:

If anyone in Washington were to be so wacky as to seek to extend the pain of a recession, what course would they follow? On Page 26 of “America’s Great Depression,” Rothbard presents that very catalog of idiocy.

“Here are the ways the adjustment process can be hobbled:” he writes.

“1) Prevent or delay liquidation. Lend money to shaky businesses, call on banks to lend further, etc.

“2) Inflate further. Further inflation blocks the necessary fall in prices, thus delaying adjustment and prolonging depression. Further credit expansion creates more malinvestments, which, in their turn, will have to be liquidated in some later depression. A government ‘easy money’ policy prevents the market’s return to the necessary higher interest rates.

“3) Keep wage rates up. Artificial maintenance of wage rates in a depression ensures permanent mass unemployment. Furthermore, in a deflation, when prices are falling, keeping the same rate of money wages means that real wage rates have been pushed higher. In the face of falling business demand, this greatly aggravates the unemployment problem.”

In addition to “minimum wage laws,” don’t we now have “living wage” ordinances, “project labor agreements,” and, for our unionized government employees, “automatic step and seniority raises” in addition to cost-of-living adjustments that boost the pay of government employees as well as welfare recipients … even when the cost of living is falling?

“4) Keep prices up,” Rothbard continues, cataloguing precisely the wrong things to do if you want a recession to end. “Keeping prices above their free-market levels will create unsalable surpluses, and prevent a return to prosperity.

“5) Stimulate consumption and discourage saving. We have seen that more saving and less consumption would speed recovery; more consumption and less saving aggravate the shortage of saved-capital even further. Government can encourage consumption by ‘food stamp plans’ and relief payments.”

Note that “America’s Great Depression” was published in 1963. How’s Rothbard doing at predicting Obamanomics, so far? (About the only thing he seems to have missed are “Cash for Clunkers” and the fledgling “green jobs” boondoggle.)

Government “can discourage savings and investment by higher taxes,” Rothbard continues, “particularly on the wealthy and on corporations and estates. As a matter of fact, any increase of taxes and government spending will discourage saving and investment and stimulate consumption, since government spending is all consumption. …

“6) Subsidize unemployment: Any subsidization of unemployment (via unemployment ‘insurance,’ relief, etc.) will prolong unemployment indefinitely, and delay the shift of workers to the fields where jobs are available.”

We got in to this mess because of massive government interference in the market – by direct subsidy of failure, or by setting up the regulatory system in favor of a few, large corporations with strong political connections. We can’t get out of this mess by the same means – in other words, what government corruptly created, government cannot corruptly cure.

There is, though, a government effort to be made, here: we can eliminate taxes and regulations which hamper new start ups or the expansion of existing firms…especially in mining, farming and manufacturing; we can provide credit for people who are willing to put their own sweat equity in to such start ups; we can allow the “too big to fail” concerns to fail, as they deserve; and if anyone really has a hankering after government spending, then we can use it to do things like finance the building of high speed rail, improvement of ports and other such hard infrastructure programs which are not bridges to nowhere of Congressional pork. Finally, and most importantly, the government can balance the budget – regardless of how much alleged pain it costs: we cannot afford any longer to steal from the future to buy votes in the present.

Our economy is not the failure of the free market – its the failure of a Big Government which has interfered in one stupid way after another…which has injected purely political considerations in to areas where economics and/or morality are supposed to rule. Government’s job is to protect us from invaders, defend us from domestic criminals and ensure that each American gets a fair shake – anything out side those areas is fraught with risk and should be avoided. If it is felt to be unavoidable, then when government does go in to matters of economics or morality, it should farm out the execution of the effort to private entities (so, government paid health care should be handled by charity hospitals; government aid to education should go directly to parents and students to spend as they see fit; etc, etc, etc).

We can keep at this, and continue to flounder, or we can change course – and become prosperous, again.