Wanna Strong Economy? Get to Work

July 20, 2014 Columnists , News Stories 1310 Views
Wanna Strong Economy? Get to Work

Twenty-five years ago, David Kelley wrote a book, A Life of One’s Own, challenging the growing paradigm that those who assumed no responsibility could make a claim on the resources, labor, and therefore lives of those who were making pro-social decisions. He wasn’t objecting to personal decisions to help out of love or efforts to help those who could not help themselves. The problem was government, bound by the rule of law, trying to provide welfare without politically-incorrect discretion. In spite of what idealists teach, government is not the embodiment of perfect wisdom. It is a seat of power, distorted by the pitches and machinations of interest groups. “The reality of collective decision-making is not the easy unanimity that communitarians envision but rather the spectacle of lobbying and legislative deals, political arm-twisting and influence peddling that greets us on the evening news.”

Kelley described America’s transition, from a bastion for rugged individualists to a society where the poor are “infantilized [in an environment] structured to mimic responsibility without exposure to real consequences,” as the nationalization of philanthropy. The arguments advancing the transformation “were the same as those of the socialists who wanted to nationalize economic industries: They complained on the one hand of ‘wasteful duplication’ inherent in competition and, on the other, of the lack of conscious, deliberate oversight of the allocation of resources. The socialists thought that a national government could rationally plan how to allocate capital and other resources within a single, monopolistic system of production.”

Borrowing from William Mitchell and Randy Simmons, he described what has evolved into a welfare industry. Indeed, it does serve the needy to some extent; but both the public and private sectors are now burdened by a huge bureaucracy. As with other industries in our mixed economy, some providers persist in productive efforts while more and more compete against them with subsidies arranged by rent-seeking lobbyists and other logrollers.

Another problem from government intervening to redistribute resources is that the process is sanitized. Kelley illustrated, “We would recognize it as a monumental act of presumption [if somebody were to go door-to-door] demanding a place to live, or help with his medical bills, or a contribution to his retirement fund or to his kids’ education.” In the current system, “those with the ability to produce are obliged to serve, while those with needs are entitled to make demands.” On the flip-side, those receiving help no longer enjoy the perk of knowing they’re getting it because somebody loved them and believed they had enough potential to justify a willing sacrifice. When the money is free, there is no incentive to get off the joy ride.

Nowadays, the three no-no’s for anybody not wanting to live a life of poverty are (1) becoming an addict, (2) having a child out of wedlock, and, of course (3) refusing employment. Kelley was more succinct. He said poverty is the natural state of man. It is the result of prolonged failure to exert oneself, whether self- or government-induced. Civilizations have come, gone, and persist to this day in which people do little more than gather food, beat drums, string beads, contract harmful diseases, and die. Life spans remain in the forties or lower for several Third-World countries. Ayn Rand tried to convey the importance of production in economies by distinguishing between producers and parasites or “second-handers.” Without producers, there’s not much left to share but nuts, berries, and viruses.

By de-emphasizing production in its attempts to fix economies, government unnecessarily curbs the creation of wealth. Perverse incentives break down morals, those behaviors that were supposed to be respectful of self and society. In 1960, only 5 percent of American babies were born out of wedlock. In the early 1980s, only about 70,000 children were receiving federal benefits for disabilities. People were able to invest funds at appreciable interest rates before they had to pay in to the Ponzi scheme of Social Security. On the subject, Kelley cited a brash remark Franklin D. Roosevelt made about making the middle class pay into Social Security not for economic reasons, but to create for contributors “a legal, moral, and political right to collect their pensions,” and thus keep his program immune from legislative action.

He also quoted Hillary Clinton promoting nationalized healthcare by arguing, “When Franklin Roosevelt proposed Social Security, he didn’t go out selling it with actuarial tables. He basically said, ‘Look, here’s the deal: you pay, you’re taken care of, you have Social Security in your old age.” Kelley said this is just one example of politicians encouraging Americans to be “blithely indifferent to economic reality” while getting the warm and fuzzies over expressions like, “We’re all in this together.”

As a parting shot, Kelley was optimistic. “The cynics have been proven wrong time and again, most recently in the collapse of communism. That system was backed by forces much more powerful than lobbies and bureaucratic inertia. The Soviet state had its secret police. It owned all the media; indeed it owned the entire economy. Yet it collapsed when the central sanctifying myth—the myth of a workers’ paradise to be created by collective ownership and economic planning—had lost all credibility. The welfare state has likewise been sustained by nothing more than myth, and it is likewise vulnerable to collapse.”

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