Live Like no one else….
It was not their irritating assumption of equality that annoyed Nicholai so much as their cultural confusions. The Americans seemed to confuse standard of living with quality of life, equal opportunity with institutionalized mediocrity, bravery with courage, machismo with manhood, liberty with freedom, wordiness with articulation, fun with pleasure – in short, all of the misconceptions common to those who assume that justice implies equality for all, rather than equality for equals.
~`Trevanian from the novel “Shibumi”~
Floyd Dell once said, “There is no human reason why a child should not admire and emulate his teacher’s ability to do sums, rather than the village bum’s ability to whittle sticks and smoke cigarettes. The reason why the child does not is plain enough – the bum has put himself on equality with him and the teacher has not”. This week I will talk about the government’s lack of fiscal responsibility and their justification for spreading the wealth in a vain attempt to level the playing field. What America needs is a voice that is now a rare breed, a proponent of Andrew Jackson “small-government egalitarian”.
We look back at the progenitor of Big Government spending, Franklin Roosevelt, and his descendant’s, the current big-government liberals eager to right the wrongs of the world by expanding the size of the government — argue against small-government conservatives. The supposedly more progressive side wants the stimulus package to take the form of government spending, while their opponents want bigger tax cuts for businesses and more prosperous Americans.
What America needs is small-government egalitarianism that would promote tax cuts, but only if they were aimed at ordinary Americans. The so-called Libertarian progressivism distrusts big increases in government spending because that spending is likely to favor the privileged. Case in point, was the Interstate Highway System such a boon for the urban poor? How has rebuilding New Orleans done much for the displaced and disadvantaged of that city? Small-government egalitarianism suggests that direct transfers of federal money to the less fortunate offer a surer path toward a fairer America.
I must say though that political divisions have not always pitted big-government egalitarians against small-government conservatives. Going back to the 19th century, the fans of big government, like Alexander Hamilton and Henry Clay, saw public projects as a means of strengthening the nation rather than reducing inequities. Their policies, like tariffs and canals, often enriched the prosperous more than the poor. Conversely, the post-Era of Good Feelings Democratic Party was built around Andrew Jackson’s small-government egalitarianism. Jackson’s fight against the prosperous Philadelphian Nicholas Biddle and the Second Bank of the United States epitomized his desire to reduce privilege by reducing the size of government.
Where the shift actually began was at the beginning of the 20th century, President Woodrow Wilson campaigned on a “New Freedom platform,” opposing Teddy Roosevelt’s big-government Progressivism. While Roosevelt wanted the government to manage monopolies, Wilson wanted trust-busting and less protectionism. Wilson perceptively noted the dangers of too much government: “If the government is to tell big business men how to run their business, (Like GM and Chrysler are suffering thru now) then don’t you see that big business men have to get closer to the government even than they are now?”
A lot of my readers will notice that the current political discourse labels people as either anti-government or pro-equality, common sense or human compassion should not require the abandonment of sensible skepticism about expanding the size of the state. Many of my favorite causes, like fighting land use regulations that make it hard to build affordable housing, aid the poor by reducing the size of government. In the wake of Hurricane Katrina, I also argued that it would be far better to give generous checks to the poor hurt by the storm than to spend billions rebuilding the city, because those rebuilding efforts would inevitably help connected contractors more than ordinary people. Thousands of people were re-located to safety in other cities, millions went to rebuild New Orleans and a majority of the transplant never went back.
We can see the same as with this bailout fiasco of the US economy. Liberal politicians scared the American public into agreeing it was necessary to save jobs and stimulate the economy. Well their plan is an utter failure because the liberals are now claiming that the money needs to be spent on public works rather than tax cuts. The big-government skeptics point out that the government can’t spend hundreds of billions of dollars on infrastructure projects both wisely and quickly. Good infrastructure spending doesn’t happen on a dime, and applying a “use-it-or-lose-it” rule to speed up spending will lead to a lot of waste. The country could certainly invest more, in both human and physical capital, but that spending should follow the rule that benefits must exceed costs. Good investments need plenty of time to plan and implement, which pretty much rules them out as good fiscal stimulus. Moreover, since many of these projects will disproportionately benefit the prosperous, many of them can be financed with user charges.
As a side bar to this cosmic tragedy, only in Washington can a politician proclaim “We have saved or created 100,000 new jobs” while totally ignoring the fact that over 2,000,000 jobs were lost during that same time period.
Targeted tax aid for poorer Americans would be far more egalitarian than most kinds of infrastructure spending, like broadband technology. Sensible infrastructure projects wouldn’t disproportionately employ the least-skilled Americans. Forgoing the payroll tax for households earning less than $75,000 a year is surer progressivism than bridge-building. Unfortunately economics has little say about how egalitarian society should be. That is a question for moral philosophers and the democratic process. However, economics does tell us to choose efficient means of redistribution, and cash transfers almost always involve less waste than the alternatives. Reducing the payroll tax not only avoids the problems inherent in trying to spend infrastructure money quickly, but it can also directly target aid to the poor, who need help more and will spend the cash more quickly. Now that’s the kind of small-government egalitarianism that would have appealed to Andrew Jackson.
We seem to be in a roller coaster of highs and lows driven purely by politicians that can not understand basic economic principles. Even as early as last week the Obama administration admitted their bailout wasn’t working and they now want to spend more faster than ever in some misguided attempt to build a “Ship of State” in the middle of an economic desert. Spending for the sake of spending alone is a sign of panic that signals the policymakers have come to their wit’s end.
Luckily government spending is not the only option available on the table. Permanent tax cuts AND lowering interest rates would effectively put the money back where it belongs, in the hands of the people who earn it. Our economy is cyclical in nature and one of the main reasons infrastructure building is futile is that the length of time required beginning and completing them by the time that government expenditure on these items begins to positively affect the economy, the end of the downturn is already near and thus makes the spending irrelevant.
In A Farewell to Alms by Gregory Clark, the author demonstrates how successful societies discount the future only by a small margin. The question is, how much do we discount our future?
