Economies Don’t Die – Monty Pelerin’s World : Monty Pelerin’s World.
This country will die. History will record the cause as due to an event worse than the Great Depression. That diagnosis will be wrong.
Economies do not die except when they are murdered. Free markets are self-equilibrating, healing themselves unless they are prevented from doing so.
The very purpose of government intervention is to produce outcomes that otherwise would not occur. Intervention is always an attempt to overcome the natural equilibrium at which an economy would settle. Its very purpose is to thwart the intentions of individuals who make up the economy. Intervention is intended to alter the natural healing process.
Every so-called “economic” problem can be traced back to prior political intervention(s). Political actions deemed necessary today result from damages inflicted by prior government interventions.
Damages and distortions are cumulative. Once begun, politicians are unable/unwilling to stop intervening as the pain of allowing the economy to return to equilibrium increases with each intervention. Eventually an economy’s ability to grow and recuperate is impaired:
- Prices become inflated and distorted by liquidity and regulatory interventions. They no longer reflect true supply and demand.
- Capital is mis-allocated as a result of false interest rate signals. Eventually this capital is seen as unprofitable and is abandoned.
- Cheap lending and low lending standards encourage imprudent and eventually unsustainable levels of debt.
These distortions decrease an economy’s efficiency. General economic metrics like GDP eventually grow more slowly as a result, prompting calls for more political intervention. Eventually the distortions and disincentives grow to a point where standards of living and economies stagnate and then retrogress.
These relationships are as old as civilization itself. Politicians know, but they find it politically advantageous to ignore. The political class believes itself to be superior and entitled. They consider themselves to be above the law. For them, citizens are sources of plunder, to be exploited so that they may hold onto power and wealth.
The economic crisis is coming. It will occur because feckless, venal “leaders” consider the personal cost of stopping their actions to be greater than continuing. That may be true for them, but it is not true for the country.
Sadly, much of the electorate is as corrupt as the political class as Angelo M. Codevilladiscusses below. The economic collapse is inevitable. It may also be deserved.
Democracy has no cure for a corrupt demos. Politicians’ misdeeds taint them alone, so long as their supporters do not embrace them. But when substantial constituencies continue to support their leaders despite their having broken faith, they turn democracy’s process of mutual persuasion into partisan war.
Consider: In 1974 President Richard Nixon lied publicly and officially to cover up his subordinates’ misdeeds. His own party forced him to resign. In 1998 President Bill Clinton lied under oath in an unsuccessful attempt to cover up his own. But his party rallied around him and accused his accusers. In 2013 President Barack Obama lied publicly and officially to secure passage of his most signature legislation. But when the lies became undeniable, his party joined him in maintaining that they had not been lies at all.
The point is that Nixon’s misdeeds harmed no one but himself because no one excused them. But Clinton’s and Obama’s misdeeds contributed to the corruption of American democracy because a substantial part of the American people chose to be partners in them.
The difference between the mentalities of Republicans circa 1974 and of Democrats twenty-five and forty years later is the difference between a society before and after democratic corruption. Forty years ago, just as in our time, the President of the United States headed a coalition of groups with material and ideological interest in his Administration. But, back then, the beneficiaries of power were willing enough to subordinate their interests to the greater good of maintaining the bounds of democratic partisanship. In our time, however, the constituents of Democratic Administrations so identify their own status and benefits with “the greater good” that the very notion of bounds to their own partisanship makes no sense.
Today’s Democrats argue that, some deceptive language aside, President Obama had every right to implement his view of medical care for America, as well as other things, because he was elected twice having promised something of the sort. But, in 1974, Republicans could have argued that Nixon had been elected twice, the second time by the largest margin in US history, specifically to undo the 1960s. In fact, Nixon’s lies about what he knew of his subordinates’ misdeeds were entirely irrelevant to the purpose for which he had been elected. Why should the Republican constituencies who had worked so hard have given up on the Nixon Administration? Why did Barry Goldwater, Mr. conservative himself, go to the White House to tell Nixon he had to resign?
Quite simply because he knew – everyone seemed to know, then – that respect for the truth is what enables a democratic society that resolves its differences by mutual persuasion, and that absent that respect society devolves into civil war. Nixon’s lie had not imperiled the workings of American government. But it had transgressed the essential principle. Thenceforth, no one could take him at his word. All would have to regard him as acting for himself or his party, alien to the rest. And if his party stuck with him, the rest of America would have to regard that party as alien.
Bill Clinton’s 1998 lie under oath, and then on national television proved so by DNA analysis of his own sperm, placed him precisely in Nixon’s position. But his party, by sticking with him, reversed the essential principle to which the Republicans of 1974 had adhered. Its constituencies had worked hard to reverse Ronald Reagan’s 1980s. They had raised taxes, institutionalized abortion, and vastly expanded government. By this time, they had convinced themselves that the rest of America is composed of inferior people. Why should they have jeopardized their position just because their man had fellatio in the Oval Office and lied about it?
Thus by placing their own material and ideological interests above the truth, the Democrats took upon themselves a license to lie – not just about personal matters, which was their argument at the time – but about whatever might serve their purpose.
Obama’s premeditated, repeated, nationally televised lies about the “Affordable Care Act” are integral, indeed essential, to his presidency and to the workings of the US government. The outcome of two national elections depended on it.
Even more significant is his contention that he never said what he said, and that what he said was true anyhow. In interpersonal relations, such a contention is an insult that makes civility impossible; because to continue to treat with someone who makes such affronts is self-degradation of which few are capable. In political life, such an insult is a declaration of war.
The deadly problem is that Barack Obama is not just an individual, nor even the head of the US government’s executive branch. He is the head of the party to which most government officials belong, the party of the media, of the educational establishment, of big corporations – in short of the ruling class. That class, it seems, has so taken ownership of Obama’s lies that it pretends that those who are suffering from the “Affordable Care Act” don’t really know what is good for them, or that they are perversely refusing to suffer for the greater good.
This class, in short, has placed itself as far beyond persuasion as Obama himself. Democracy by persuasion having become impossible, we are left with democracy as war.