I have a very intelligent friend who is completely taken by the leftist American paradigm. As is typical with leftists, he sees HUGE differences between the Republicans and Democrats, and he believes Obama to be the second coming of FDR (one would think that Obama would be anything but democratic and typical leftist, given the powers he has managed to consolidate into his executive nest, but I digress). Unfortunately, this individual has access to the internet, and I get frequent emails citing mainstream explanations of why the left is better than the right, and more than that, why government intervention in the marketplace is always a good thing. Putting aside the facts that the media is always biased in favor of government, that the limits to government are never drawn and therefore it is safe to assume these people do not believe there are any (since, given the “principles” that are posited, no limits to the government’s ownership of you or your property exists even though government is, in the philosophical sense, no more than a collection of people who band together to do things – but hey how did the government get the right to steal from you if you personally have no right to steal and all government power is derived from the delegation of personal rights to it? DON’T ASK SILLY QUESTIONS, MERE CITIZEN!), and that the economic and social paradigm that these people espouse is not only a very morally degraded and nonsensical utilitarianism but also correspondingly results in a violation all of the graces that they pretend accompany the neo-liberal social order as clearly shown by massive increases in government in the past half decade – oh wait, you can’t put those three things aside without wholly putting aside such ridiculous proclamations of statism. Whew! But let me exercise a bit of patience and take one of the links from these emails and use a bit of common sense to put it to bed. It looks like the charts will not copy over from the original site – and as that is the hand-wavy data that makes every liberal think he has won the argument, I would highly recommend visiting the page to ensure you can see where the data lines up with the hypothesis and why my charts are better. I will also try and add a special comment to the charts if I can get them to post in another part of this series.
Note: Unfortunately, this blog has a bandwidth limit, and I am forced to extend the inclusion of my charts over a few posts. With that in mind, I will try not to make the posts such that it is like drinking from a firehose, but I may have no choice…
Before we head into the confus
inged storm that is the leftist brain, I have an economics preamble. I know how interesting economics is for some, so I will make them as applicable to government policy as possible. With that, I would like to explain several foundational principles to economics, principles without which one may as well be talking about wishes that grow on gold-bearing trees. These economic laws are as much statements about the nature of reality as the law of gravity is, and when you encounter someone who is “talking economics” and ignores or violates any of the following principles, you can be 100% certain that he does not know what he is talking about (that includes some economists). If you pay attention when reading the article that we will be dissecting, you can see that these economic laws are often disobeyed or disregarded – meaning that the author speaks about government policy without any understanding of the economic consequences. So remember these, and you are well on your way to being a great economist and critiquing all different statist know-it-alls.
- Scarcity and opportunity cost exist. – We live in a world that has a limited amount of resources (a principle called scarcity). Any use of resources, given this fact, is a foregone alternative use of the same resources (if I spend an hour making pencils out of a tree, I cannot use the same hour or the same tree to create something else, for example). This means that for any activity I choose, I am not able to do others. Some goods are non-scarce (fire can be spread without having to take it from one place and put it in another, for example), but for the most part, the rule of opportunity cost limits what we can and cannot do with wealth. Further than this, any restrictions in the market will increase scarcity and push costs higher, resulting in a shortage in some way or other. This is a priori reality.
- Supply and demand exist. – This one is easy. Supply is the amount of stuff there is, while demand is the wants we have for stuff. These two are often inverse mirrors of each other, but generally when you increase demand, supply will decrease, and vice versa. Let me add a point that most of us do not learn in high school economics (and that many professional economists never learn). Supply creates its own demand. Put simply, this means that us having wants is not enough to create wealth. There must be a supply to create wealth, and from there we can satisfy our wants. Stimulating “demand” does nothing to increase wealth (though it may decrease wealth, since we turn to consumption rather than saving our money when our demands are stoked).
- That which is seen is not the entire picture. – When a policy or route of action is chosen, effects become noticeable as to the supposed efficacy of the action. However, other effects of the action may not be readily apparent to us. Say that a little boy goes around breaking windows. We can see that this will create more work for the glazier, because he will have to fix the windows. This means more money is exchanging hands, and many people think that the little boy breaking windows is creating jobs or wealth! What we don’t see is that the resources that were used to create the window are now gone, and more have to be created/mined/found. We also don’t see that the owner of the window with broken windows now has to spend money to have his window fixed – money that he may have been saving to buy a suit. There are now less resources out there, which very minimally drives the cost of windows up. What we see is not always the full picture. It may seem like the boy is doing the local economy a favor, but in reality he is destroying wealth.
- Value is subjective. – What you value I may not, and what I value, you may not. If I wish to buy a dozen eggs from you, I value the eggs more than the $2 that I pay you for them, and you value the $2 more than you value the eggs you sell me. Value is not created by the amount of time one puts into a project (you can easily think of art projects that take an extreme amount of time, effort, and resources, but no one wants to buy, for example), but by what people will pay for the item in question.
- Currency is not wealth. – Printing green paper tickets does not make a civilization more wealthy. In the short term, the incentive that new additional currency provides can cause people to allocate resources to a particular end or other, but in the long term, following the law of supply and demand, increasing the supply without the demand to support it will lead to the value of a good decreasing.
- The law of unintended consequences exists. – Every time a regulation is enacted, there are effects that are not foretold, since none can see the future or the entirety of the implications of their every act. We find a great example in the regulations that required all new cars to have airbags, a law designed to keep people more safe on the roads. This drove (ahem) the cost of cars up, which led to fewer people buying new cars. Ergo, more old cars were on the roads, and the death toll actually went up for the first few years the regulation was in effect. The law of unintended consequences meant that this regulation had the exact opposite effect of those that were intended.
I think that is a good start. Shall we? Give that baby a read-through, and make sure you really look at his charts.
For the purposes of this page, “liberalism” can be taken as the political/economic system the US had from the inauguration of Franklin D. Roosevelt to that of Ronald Reagan; that is, from 1933 to 1980, just under half a century.
Right off the bat, this is suspiciously smelly – the “good” times start with the classical leftist president and end with the classical rightist president. I don’t want to spend a large amount of time on it, but not a single policy FDR enacted was economically solvent, simply for the fact that FDR did not know a shred of economics, Keynesian or otherwise. His main biographer and formerly one of his greatest worshipers, John T. Flynn, explained this a few times in his writings on the man. FDR did have economic advisers, but many of them were industry captains seeking protectionism for their own benefit (things sure don’t change, it seems). Further, Herbert Hoover is the true architect of the New Deal and other government spending. So our analysis should start with Hoover, or earlier. It doesn’t, presumably because Hoover is on the “right” and this writer has an agenda. Or it could start in 1913 with the income tax and Federal Reserve, but let’s leave the surprises as to my analysis for later since you have never heard anything about them and I don’t make each of them crystal clear weekly on my blog. I digress. FDR’s interventionism will be debunked as we go. I would rather concentrate on the Republican demigod they call The Gipper. Ronald Reagan is often used as a pinata for the left and a saint to the right. Honest analysis shows the legend (myth?) to be very similar to the men he stands in historical line with on the throne we call the presidency. He is very much status quo, against cutting government, and within the range of Keynesian thought that most every president has been since FDR. “They” say he wanted low taxes. He cut them once, only to raise them 11 times, while tax receipts remained essentially the same due to the closing of various deductions and exemptions. “They” say he cut spending. He doubled the size of the Department of Education, Foreign Aid, and farm programs, while Social Security and Medicare grow by over $100 billion while he was in office (that is a lot back then, kids, even if it means little now). He also grew spending by 68% while he was in office. “They” say he reduced debt. He tripled the gross federal debt in only 8 years, while the previous two presidents only doubled it and over 31 years lapsed in seeing the first tripling. “They” say he is a dangerous deregulator. He deregulated a bit in banking, energy, and shipping, but massively increased health and safety regulations and car efficiency standards (the latter estimated to have had an effect of doubling the rate of death among drivers switching to small cars to comply – there I go again getting off topic with the law of unintended consequences). “They” say he cut government jobs. Net, there was a 230,000 increase in federal jobs after his reign. “They” say he is pro free trade. Many studies have shown that he was the most aggressive and protectionist president since, funny enough, Herbert Hoover. The case for protectionism in international trade is actually one of the strongest, and on that account he is generally more “liberal” than even the most praised of progressive presidents. And let’s not even get into his foreign policy. Typically, it was leftist presidents that engaged the U.S. on the world stage shooting people and bombing cities. Reagan is one of the architects of the change that led to the neo-conservative right militarism that has all but taken over today’s Republican party. So even there, this man was a merger of left and right…
Let me stop with it before you get bored and get to the point: the author of this column has an axe to grind about left versus right, and is doing so by invoking the same tired we’re-the-good-guys-they’re-the-bad-guys narrative that people imagine when they don’t read anything outside of that government harlot they call the mainstream media. He cannot think outside this box, and he will be limited in his analyses accordingly. It is not a sure bet, but you can deduce from this point alone that the author will cherry-pick data to make the blue team look good and the red team look bad – even when the data is not very easy to foist on the other party. You must remember that we have a Congress and a president, and it is not always the case that the Congress is on the same team as the president, making argument about who-did-what a bit difficult. Generally though, over 90% of the time, a president’s budget is approved by Congress. But yes, let us entertain this blame game. Keep in mind: Reagan was not the deregulating, small-government, complete-switch-from-the-usual-way-of-things guy that the mainstreamers pretend he was. He slightly slowed the growth of government, but saw it increase on many avenues and was ultimately a warrior for the state – which seems to be this authors drink of choice (as though the state is democratic/liberal!). In fact, he did much to advance social and infrastructure spending, a goal that many democratic presidents were unable to fulfill.
Here are a few trends to show the mundane and status quo nature of Reagan’s “crazy Republican golden age” policies. To ensure that you don’t get more bored than you probably already are, I will avoid commentary on each of the graphs. You’re welcome:
Except on this one, I gotta comment. Holy shit, do you see that?!
Yep, looks like the trends that suggest drastic changes in domestic policy, those that Reagan supposedly stood for, are simply not there. Reagan was a pretty typical 20th century president, despite the rhetoric and worship/demonizing that many engage in depending on their alignment within the American political “spectrum.”
In truth, it is not limited to Reagan and FDR espousing somewhat similar views. Democrats and Republicans have historically aligned on all sorts of government programs and a mere suggestion of repeal to either side would be met with scorn and gnashing of teeth. Both sides refuse to question a vast majority of government policy, including:
- Free education to all
- Licensure laws
- Immigrants weaken our economy
- Gun control laws
- Social Security
- The NDAA & PATRIOT Act
- Allowing prison rape
- Financing programs via debt
- Respect for the government
- The income tax
- Safety standards on vehicles and consumer products
- Scarcity being the source of wealth as opposed to abundance
- Subsidies to corn farmers, sugar farmers, manufacturing, alternative energy, birth control, tech, medical organizations, scientific research
- Tariffs and import/export policy
- “Free” trade
- The war on drugs
- The EPA, CPA, CIA, FBI, NSA, DHS, HHS, DoE, DoT, DoA, TSA, DEA, NLRB, IRS
- Over 770 military bases worldwide
- Fractional reserve banking
- The Federal Reserve system
- The electoral college
- The role of government in creating jobs
And it goes on and on. A great historical example is the Department of Education. In the 60s, the DoE was considered a useless addition to the government bureaucracy by all but a few leftist congressmen. Soon enough, the policy orthodoxy developed to the point that not even the most radical “small-government” Republican would question the DoE’s existence. The progression in American history has been both sides of the aisle marching toward state solutions to everything. The differences are minimal between the two parties. Sure, you may have Romney wanting a 27.5% marginal income tax while Obama thinks it should be 31.2%, but the truth is that the parties work together far more often than they get their dukes out and actually disagree about something substantial. And you can be sure that when they are working together, it is not the majority of people who benefit, it is the state or an industry or company…
That should be enough for you to digest today. I will continue this little tryst between my new lefty friend and me within a few days, when you have settled down from your “But the (left)/(right) is way different from the (right)/(left)!!!” shenanigans.