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Townhall...
The Economy Needs No
Conductor
by John Stossel
Apr 18, 2012
We spend too much time waiting for orders -- and money -- from
Washington.
The collapse of the housing bubble gave politicians a license to do
what they wanted to do all along: spend. The usual checks on
extravagance, weak as they are, were washed away. Budgets? We’ll worry
about that later. Inflation? We’ll worry about that later.
As I point out in my brand new book, “No, We Can’t: Why Government
Fails -- and Individuals Succeed,” a true free market doesn’t require
much. It’s not like an orchestra in need of a conductor. What it needs
is property rights, so no one can take your stuff. Then people trade
property to their mutual advantage. Resources move around without the
need for a central, coercive government telling people which resources
should go where -- or telling them that they must get permission to do
what they think is advantageous.
Given time, an economy, unless crippled by further government
intervention, will regenerate itself. But during the recession,
Keynesians in the administration said government had to “jump-start”
the economy because businesses weren’t hiring. An economy, however, is
not a machine that needs jump-starting. It is people who have
objectives they want to achieve.
If the economy continues to recover, President Obama will claim he
caused that. It wouldn’t be the first time a “leader” ran in front of a
crowd and claimed to have led the way. But politicians don’t deserve
credit for what free people do.
Despite politicians’ talk of “giving” money to this or that (remember
those tax rebate checks with President George W. Bush’s name emblazoned
on them?), government has no money of its own. It has to take it from
the private sector. Grabbing those scarce resources stifles the real
economy.
One of the most important questions in politics should be: “Would the
private sector have done better things with that money?”
A healthy economy does not just create jobs of any kind, it creates
productive jobs. The pharaohs of ancient Egypt created plenty of jobs
building pyramids, but who knows how much better the lives of ancient
Egyptians (especially the slaves) might have been had they been free to
engage in other work? They would all have had better housing, more food
or snazzier headdresses. Even as smart a person as economist John
Maynard Keynes seemed to forget about that when he wrote in his
“General Theory” back in 1936, “Pyramid-building, earthquakes, even
wars may serve to increase wealth.”
By that logic, government could create full employment tomorrow by
outlawing machines. Think of all the work there’d be to do then!
Think about the two other methods to “increase wealth” that Keynes
lumped in with pyramid-building: earthquakes and war. Now, sure, after
a war or earthquake, there’s plenty of construction to be done. After
the Haitian earthquake, Nancy Pelosi actually said, “I think that this
can be an opportunity for a real boom economy in Haiti.” New York Times
columnist Paul Krugman made a similar error. On CNN, he said if “space
aliens were planning to attack and we needed a massive buildup to
counter the space alien threat ... this slump would be over in 18
months.” Before that, he said the 9/11 attacks would be good for the
economy.
This is Keynesian cluelessness at its worst.
Isn’t it obvious that without a catastrophe those same workers and
resources could have done productive work -- with the overall standard
of living higher as a result? There is something wrong with mainstream
politics and economics when some of its most respected practitioners
overlook this point.
The economic philosopher Frederic Bastiat called their mistake the
“broken window fallacy.” If I break your window, it’s easy to see that
I gave work to a glass-maker. But what we don’t see is this: You would
have improved your circumstances with the money you paid the
glass-maker. He merely restored your previous condition. That money
could have created different jobs, perhaps more productive ones.
They’re unseen.
People favor government projects because they notice the seen, not the
unseen.
Creating jobs is not difficult for government. What is difficult is
creating jobs that produce wealth.
The private sector does that.
Read this and other articles at Townhall
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