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The Myth of Good Government
by Llewellyn H. Rockwell, Jr.
One of the great and most persistent errors of classical liberals is to believe in "good government," a government that does "what it is supposed to do."
Then there is no such thing as good business either.
There is nothing the state can do, which society needs done, that cannot be done far better by the market.
There are things that government has done better. It depends upon the people running and working in the given government. It's a matter of heart.
Another point that is just as telling: no state empowered to do what is supposedly necessary will restrain itself to those things. It will expand as much as public opinion will tolerate.
Big business is the same type of risk. Again, it depends upon the people within the government or the business. It isn't something inherent in government, per se.
Sometimes the point is easier to see when looking at foreign governments, such as the tragic case of China. The government is embarking on an explosive venture to dump $586 billion into "infrastructure" over two years. The reason is the classic Keynesian excuse: the spending is needed to stimulate investment. Never mind that this trick has never worked in all of human history. This is instead a grand plan to loot the private sector on behalf of the Communist Party, which will then spend the money bolstering its power.
Deficit government spending has never helped during a slowdown, you say? Governments that dish out food to hungry people during a slowdown is helping, my friend whether or not your heart is soft enough to sympathize.
No country knows more about the failures of this type of central planning than China. Every form of collectivism has been tried out on these poor souls, and tens of millions lost their lives in the course of Mao's insane collectivist experiments. That this new plan is being enacted in the name of Lord Keynes rather than Karl Marx is irrelevant. The effects are the same: expand power and reduce liberty.
This is suggesting that Mao was the end-all-be-all of the people's government. It's a ridiculous position.
China's recovery from communism is one of the most inspiring stories in the history of economic development. The country went from being a suffering and impoverished land of catastrophe to being modernized in just 15 years. The state shrunk in scope nearly by default as the private sector grew and grew. This wasn't the plan. It was the de facto result of the new tolerance of free economic activity. The state went into protective mode to keep its power, and did nothing to stop the swell of private enterprise. The result was glorious.
That's ignoring the pitfalls of huge environmental degradation China has heaped upon itself during the last two decades under this move toward laissez faire. It hasn't all been glorious.
Keep in mind this critical point. China's restoration as a civilized society came about not due to some central plan, but by its absence. The fact that the state did not intervene led to prosperity. Again, it wasn't a policy or a constitution or a law that made the difference. There was no switch from a communist-style government to a night-watchman state. Because the state abandoned its posts under public opposition and contempt, society could flourish.
So, let's say someone became rich enough to buy the Rocky Mountains of Colorado or perhaps a capitalist corporation did and in fact just started buying them up. Let's say that the people's federal government gave up all title to all lands in Colorado. Let's say that all the governments in Colorado did the same. Then the corporation decides to take down the Rocky Mountains. Would this be fine because it would be free enterprise? Would it be right for the people to just let the markets work after the fact to self-correct? What kind of environmental damage would it do? What changes in the weather would result? What would the Great Plains be like? What would happen to the watershed? Does that not matter to the whole of the people before the corporation is allowed to do whatever the Hell it wants?
Look at the idiotic coalmining industry in Appalachia. They are doing mountaintop removal mining. How is the market going to self-correct that, Lew? Are the people just supposed to wait for nature to heal the scars?
You talk about liberty, but what about freedom from other people ripping the top of mountains off one after another after another until there won't be any mountains? Do you have something against mountains? One supposes you were and remain against the Clean Water and Clean Air acts. You're against preventing people from strip mining. You're against preventing people from clear cutting. You're against anybody telling you what to do, but when you drive your car, do you stop at the red lights because you're afraid to get caught running the lights or because you agree with the state's regulation of traffic? What do you do when you're driving along, say to yourself and your passengers "God damned central planning traffic engineers"?
You're against anyone coercing you to do anything or to not do anything. However, you aren't against coercion, period. You're not against it when it comes time to enforce what you want. It's just that it's wrong of others to want to enforce what they want when it differs from what you want (so-called laissez-faire capitalism). You're fine with pulling out the guns and blasting away when anyone steps on laissez-faire capitalism. That's hypocrisy, Lew Rockwell.
But the state never went away. It's just that its depredations have been spotty and unpredictable. Had history taken a better course, the central state would have melted away completely, and law would have devolved to the most local levels. Sadly for the Chinese, the state persisted in its old structure, even as the private sector grew and grew. The state still had its hand in the large industries such as steel and energy, and, of course, it controlled the banking sector.
So, you're for government dissolving to the grassroots. What happens when capitalists want to combine and combine to the point of monopoly? That's capitalism becoming the state. Are you going to put a limit on capitalists in terms of how large they may become in holdings relative to others?
The government never became good (an impossibility). It was and is bad. It was just less bad than in the past because it did less. But all states lie in wait for a crisis. The earthquake in the southwest provided one great excuse for intervention. But nothing except war compares with an economic crisis as a great excuse for state expansion. Chinese officials can count on support from Western "experts" here, and the thoroughly disgusting US response to our own economic downturn has provided an awful model for the world. Think of it: the Communist Party in China is now citing the US as the main reason for its plot to loot the private sector and bolster its own power at the expense of the country.
What is the government in the U.S. but a limited, representative, republican democracy of the people? It is controlled largely by big business. You haven't said though how you would limit the size of business?
So much for being a beacon of liberty in a dark world! Instead, the US is helping to shut out the lights and bolster decrepit despotisms. This is surely one of the great ironies of the current political moment. Instead of teaching the world about liberty, the US's newly empowered unitary executive is christening various forms of dictatorship.
If your system were to be in place and a number of people decided they didn't like it and came together to pool their earnings to buy up land to transform it into collectives, would you make it illegal for them to buy the lands? If their system were to out do yours, showing it up, and more and more people started wanting to join in the sharing-all system, would you say you are justified in conspiring with your fellows to band together to violently fight the collectivists to stop them from winning peacefully on the merits even if they weren't stopping you from doing your capitalist thing?
There can be no question that China's spending will not improve economic growth. It will instead extract $586 billion from the private sector and spend on political priorities. Never forget that no government has wealth of its own to spend. It must come from taxation, monetary inflation, or debt expansion that must be paid later. And government's spending choices will always be uneconomic relative to how society would use that wealth. That is to say, it will be wasted.
It is a flat out lie that "no government has wealth of its own." A collective government has wealth of its own that belongs to each and all equally. Why do you spread such intellectually dishonest talk?
But won't the spending spur investment? It can create local boomlets, but they will be temporary. To the extent that the new spending causes a spending response from investors and consumers, this is more evidence of an uneconomic use of scarce resources. If the money is used to prop up failing companies, that's particularly bad since it is an attempt to override market realities, an attempt that is about as successful as trying to repeal gravity by throwing things up in the air.
Why are there scarcities except that there are people who enjoy that system? There is enough nutritious food to feed everyone alive, yet thousands of children die each day due to malnutrition. It isn't because capitalism would rush in to feed the poor. Too bad for them, right? They just have to die, because of an economic law you claim exists but that I dispute. The only problem in the world is selfishness. Selfishness is the evil.
The nature of the state – and the core of its rationale for existence – is the conviction that it stands apart from and above society, to correct the failings of the market and individuals. A presumption of superiority is at the very claim of the state, whether it is minimal or totalitarian. Who is to say when and where it should intervene? Well, think about it. If the state is inherently wiser than and superior to society, standing in judgment over what is working and what is not working, the state alone is also in a position to decide when it should intervene.
The state and society can be one and the same. In fact, it is. You are just assigning arbitrary connotations so you may selectively construct a house of cards. You don't believe in "government of, by, and for...." Who's going to engineer those traffic lights you obey? I bet you honk your horn when someone disobeys the state's traffic laws too. Some capitalist private enterprise will regulate the traffic better, because there is the profit incentive to stimulate innovation. Is that your view? Sure it is. You want more middlemen who take a cut to take just another layer of cuts, since the traffic lights are already manufactured by capitalists.
No government is liberal by nature, said Ludwig von Mises. This is the great lesson that people who advocate "limited government" have never learned. If you give the government any jobs to do, it will presume the right to police its own conduct and then inevitably abuse its power. That is true in China and it is true in the US.
Is everyone to genuflect, because Ludwig von Mises name has been mentioned? Your whole system is built upon self-centeredness. You insist that because there are self-centered souls in the world, the system has to be centered on self-centeredness. Well, there are plenty of people who are going to wake up from that sleep. Your ideas are no good. They are fated to the dustbin of history. Laissez-faire capitalism is not the best idea, far from it. It is not going to come out on top, because it is not the best idea. It is dying because it isn't fit to survive in the marketplace of ideas. It doesn't matter that society hasn't jumped off the cliff of laissez-faire capitalism to give it a try, to trust it as God. The people have headed in the direction of "let-do" selfishness and each time, they recoil at the stench. Sure, coercive socialism has been co-opted by dictators. The people know that. They also are learning though that there are people in history who tried to bring forth voluntary socialism and were shut down by the greedy ones who fear the success of voluntary socialism undermining the greedy one's positions. There are though those who are living proof that communism (not Marxism) works for decade after decade just fine if left unmolested.
It was the science of economics that first discovered the radical incapacity of the state to make any improvements in the social order. It turns science on its head to invoke economics as a reason for the government to loot and pillage in the name of "stimulating investment." Stimulation here, there, and everywhere amounts to a diminution of freedom, security of property, and prosperity.
Keynes famously praised Nazi economic policies in the introduction to the German edition of his worst book, the General Theory. After a century of horrors, free men and women, in China, the US, and the world surely deserve better.
November 15, 2008
Llewellyn H. Rockwell, Jr. [send him mail] is founder and president of the Ludwig von Mises Institute in Auburn, Alabama, editor of LewRockwell.com, and author of Speaking of Liberty.
Let's not be overly simplistic here. Just because Keynes praised Nazi economic policies doesn't mean that he agreed with everything the Nazis did. It doesn't mean he agreed with all of the Nazis economic policies either. The Germans did go from the Weimar Republic to a rather impressive production machine. That production machine was built on the backs of many slaves. Keynes knew that. Was he advocating for that aspect?
By the way, I'm no Keynesian. Obviously though, neither am I a Libertarian Capitalist. I'm not a Capitalist at all. Neither am I a Marxist. What am I? I'm a Christian.
You see, Jesus was a political economist without par then, since then, and going into the future indefinitely. When one stacks up your positions against Jesus's, yours are nothing.
Why don't you do the requisite soul searching to discover why. (No question mark)