Maladjusted Managed Economies
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Posted: 01/22/08
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Maladjusted Managed Economies
By Thomas E. Brewton
The experience of the Soviet Union, Japan, and China should, but will
not, cause liberal activists to proceed with caution.
According to today's New York Times "Senator Hillary Rodham Clinton said that if she became president, the federal government would take a more active role in the economy, to address what she called the excesses of the market and of the Bush administration...
"Reflecting what her aides said were very different conditions today,
Mrs. Clinton put her emphasis on issues like inequality and the role
of institutions like government, rather than market forces, in
addressing them."
The logical end of Senator Clinton's prescription was first
articulated by the followers of Henri de Saint-Simon, who in 1829
addressed the following to the President of the French Chamber of
Deputies:
"The sole effect of [the free market place] system is to leave the
distribution of social advantages to a chance few who are able to lay
some pretence to it, and to condemn the numerically superior class to
deprivation, ignorance, and misery. [Socialists] ask that all the
instruments of production, all lands and capital, the funds now
divided among individual proprietors, should be pooled so as to form
one central social fund..."
Saint-Simonian socialists believed that their goal of socializing the
production of goods and services would most effectively be achieved
by abolishing all rights of inheritance, with property reverting to
the political state upon the owner's death. This, of course, is the
underlying logic of our own inheritance taxes and the fight to the
death by Democrats to preserve inheritance taxes.
Socialist China, with its rapid, centrally-controlled economic
growth, is an example of the painful imbalances that inevitably occur
when government planners intervene extensively in the workings of the
free marketplace. On the Mises.org website, Robert Blumen describes
the results. ( http://blog.mises.org/archives/007671.asp#more )
Similar problems befell the Soviet Union, whose central planners over-
allocated resources to production of armaments, the military forces,
and heavy industry to support a militaristic foreign policy. In
daily life, the citizenry had to wait hours in line for what little
consumer goods were produced; they were not as well off as the
lowliest of our welfare recipients.
Nor should we forget that Senator Clinton's prescription was the
avowed policy of Bill Clinton's economic advisors at the outset of
his first term of office in 1992. The model then was paternalistic
Japan, Inc., which wowed the President's Keynesian advisors with its
tight control of the economy. Government ministries worked closely
with the relative handful of giant industrial and trading
conglomerates like Mitsubishi. Mitsui, and Sumitomo, and with the
giant banks affiliated with these successors to the pre-World War II
ziaibatsu.
President Clinton's advisors told us that only government planners
were capable of foreseeing the kinds of new technologies in which
funds had to be invested if the United States were to survive in the
emerging global economy and to provide high-paying jobs to our
workers. For those ends, we had to emulate the ability of MITI and
other Japanese government agencies to direct the course of economic
development. Private business in the free marketplace, they said, was
too focused on short-term earnings and driven solely by the greedy rich.
Fortunately for us, and unfortunately for the Japanese, their economy
fell into a flat-line slump from which it has yet to emerge fully,
sixteen years later. That ended President Bill Clinton's grand
economic planning schemes, but clearly failed to teach anything to
liberal-progressive-socialists like Senator Hillary Clinton, who are
eager once again to pick up the reins of government economic control.
The problem for Senator Clinton and her fellow liberal-progressive-
socialists is that the wealth of any society, its Gross Domestic
Product (GDP), is simply the total of its output of goods and
services, produced by the accumulated savings of society that have
been invested in the instruments of production.
Liberal-progressive-socialists confuse GDP with government deficit
spending, funded by the Federal Reserve system's fiat money. GDP is
inversely related over the long term to the total volume of money
supplied to the economy by the Federal Reserve banks.
Government spending and over-expansion of the money supply produce
only one thing: inflation that robs workers of the value of their
savings and makes long-term capital investment uneconomic. It is the
underlying impetus toward economic maladjustment, the factor that
pushes individuals and businesses towards short-term gambling and
excessive debt.
Only the free marketplace, funded by individual and business savings,
is capable of allocating scarce economic resources to give us a
higher standard of living via increased efficiency and greater
productivity. Every government economic intervention reduces
efficiency and lowers our potential standard of living.
Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.
The New Media Alliance is a non-profit (501c3) national coalition of
writers, journalists and grass-roots media outlets.
His weblog is THE VIEW FROM 1776
http://www.thomasbrewton.com/
Email comments to viewfrom1776@thomasbrewton.com
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