A Liberal Glimpses the Truth, Albeit Dimly

A Liberal Glimpses the Truth, Albeit DimlyBy Thomas E. BrewtonNew York Times columnist Bob Herbert denounces spending borrowed  money, apparently unaware that he is stepping on the party line.Mr. Herbert is about as far left in his liberal-progressive ideology  as any writer in today's mainstream media.  Yet he has glimpsed  enough of the truth to identify consumption floated by excessive debt  as a cause of our present economic woes.Read the whole column: Stop Being Stupid.http://www.nytimes.com/2008/12/27/opinion/27herbert.html?_r=1&emc=eta1All conservatives, I believe, will wholeheartedly second Mr.  Herbert's assertion that, "Somehow, over the past few decades, that  has become the American way: to pay for things - from wars to Wall  Street bonuses to flat-screen TVs to video games - with money that  wasn't there."There are, however, important points of divergence reflecting Mr.  Herbert's economic paradigm.The picture that Mr. Herbert conveys is of an economy that is, and  should be, collectivized and managed by a coterie of experts in  Washington; an economy in which individual people and businesses are  incapable of making beneficial decisions for themselves; an economy  in which only the government has the right to and the ability to make  proper choices for use of scarce economic resources.A few phrases from his column illustrate the point:"... top government officials and financial titans who were supposed  to be guarding the nation's wealth..."We shipped American jobs overseas by the millions and came up with  the fiction that this was a good deal for just about everybody. We  could have and should have taken the time and made the effort to  think globalization through...""We," he says, meaning apparently the Federal government, should  regulate the process of business globalization.  Just after World War  II when countries were still devastated by the war, this was known as  currency control, under which no one could exchange his local money  for foreign currency or make any kind of investment outside his  country without the approval of government ministers.  When currency  controls finally were lifted, international trade bloomed and  standards of living rose rapidly."There is broad agreement that we have no choice but to go much more  deeply into debt to jump-start the economy. But we have tremendous  choices as to how we use that debt."We should use it to invest in the U.S. - in a world-class  infrastructure (in its broadest sense) to serve as the platform for a  world-class, 21st-century economy, and in a system of education that  actually prepares American youngsters to deal successfully with the  real world they will be encountering."We need to invest in a health care system that improves the quality  of American lives, enhances productivity..."We need to care for our environment (if long-term survival means  anything to us)..."And, finally, we need to start living within our means and get past  the nauseating idea that the essence of our culture and the be-all  and end-all of the American economy is the limitless consumption of  trashy consumer goods."The elitist perspective of liberal-progressivism is clearly revealed  in Mr. Herbert's phrase "limitless consumption of trashy consumer  goods."  Since the inception of socialist doctrine in Revolutionary  France of the early 19th century, socialist intellectuals have  maintained that ordinary citizens are offered too many choices of  consumer goods.  The assumption is that bureaucratic regulators can  manage the economy more efficiently than individual people and  businesses and that one means of making the economy more efficient is  to limit the numbers of products and services offered to the citizenry.It's true that a free-market economy produces a profusion of  products, some of which are trashy.  But that is an inseparable part  of the liberties for which the colonists fought in 1776.  The right  of entrepreneurs to produce things that consumers will buy (apart  from criminally connected items) was one of the intentions of the  Bill of Rights, which endeavored to protect private economic and  political liberties from arbitrary government action of the type  favored by liberal-progressives.  Think of the Boston Tea Party,  sparked by a British order requiring Boston citizens to purchase  taxed tea from a handful of merchants selected by the crown.Mr. Herbert uses the familiar liberal-progressive-socialist term  "investment" for expansion of government regulation, for example a  nationalized, socialized health care system.Investment, by definition, is expenditures intended to increase  future production efficiency and output.  Socialized medicine does  nothing of the kind.  It merely transfers money from wealthier people  to poorer people, as determined by Federal bureaucrats, while  overlaying the process with costly regulations administered by tens  of thousands of paper shufflers who add not a whit to the real GDP.   In farming terms, this is known as eating your seed corn.Liberals as a whole, perhaps not Mr. Herbert, assume that greater  funding for teachers' unions will improve our students' level of  academic achievement.  In reality, Federal funding for education  since the inception of President Johnson's Great Society has produced  a steadily declining quality of education.  The only beneficiaries  have been the teachers' unions and the liberal-progressive- politicians whose election campaigns the unions finance.American education before the Great Society was incomparably better,  in fact among the best in the world.  Education then was a strictly  local matter, controlled by local school boards that were free to  hire and fire teachers on the basis of competence.  And schools were  free to expel disruptive students who were interfering with the  opportunity of other students to get an education.Mr. Herbert's liberal-progressive-socialist paradigm makes it  impossible for him to connect the economic dots that form a complete  picture of economic reality.  This, no doubt, because the liberal- progressive-socialist economic paradigm is an entirely theoretical  construct that must be forced into a box labeled social justice,  i.e., redistribution of wealth to make us all equally poor.Mr. Herbert seems not to recognize that his derogation of rampant  consumption funded by debt runs into a head-on collision with one of  the most basic doctrinal elements in liberal-progressive-socialism:  the belief that consumption is the driver of the economy and that  full-employment levels of consumption depend upon government deficit  spending.At bottom, all of the economic phenomena of which he complains  originate in welfare-state, social justice programs funded by Federal  deficit spending, which is financed by the Federal Reserve's  limitless expansion of the fiat money supply, with its inevitable  inflationary effects.History for centuries records the same set of phenomena attendant  upon paying for government expenditures with fiat money that cannot  be converted into a valuable commodity like gold.  Prices rise faster  than wages, because inflation negatively impacts business costs,  which retards job creation and wages increases.  As prices rise  (think of the housing boom), money becomes worth less, leading people  to save less.  In the early stages of rapidly increasing fiat money  expansion (where we are now), interest rates decline, leading people  to take speculative risks to attain investment returns high enough to  offset the effects of inflation.  Because money steadily loses  purchasing power, people are encouraged to borrow increasing amounts  of money to fund consumption, expecting to be able to repay the debt  in the future with ever cheaper money.The bottom line is that Mr. Herbert unknowingly is damning the  economic orthodoxy of his own liberal-progressive-socialism:   Keynesian economics.  In the 1930s, John Maynard Keynes propounded a  discredited theory still advocated by liberals like Paul Krugman,  which denounced savings as the cause of the Depression and  recommended massive government deficit spending to offset private  saving.In Keynesian doctrine, consumption expenditures, for anything from  digging and filling useless holes to funding anti-business  regulation, is the route to economic salvation.  This is the nature  of President Bush's earlier economic stimulus plan and of the  incoming Obama administration's $ trillion stimulus plan.Thomas E. Brewton is a staff writer for the New Media Alliance, Inc.  The New Media Alliance is a non-profit (501c3) national coalition of  writers, journalists and grass-roots media outlets.His weblog is THE VIEW FROM 1776http://www.thomasbrewton.com/Email comments to viewfrom1776@thomasbrewton.com

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