Maladjusted Managed EconomiesBy Thomas E. BrewtonThe experience of the Soviet Union, Japan, and China should, but will  not, cause liberal activists to proceed with caution.According to today's New York Times "Senator Hillary Rodham Clinton said that if she became president,  the federal government would take a more active role in the economy,  to address what she called the excesses of the market and of the Bush  administration..."Reflecting what her aides said were very different conditions today,  Mrs. Clinton put her emphasis on issues like inequality and the role  of institutions like government, rather than market forces, in  addressing them."The logical end of Senator Clinton's prescription was first  articulated by the followers of Henri de Saint-Simon, who in 1829  addressed the following to the President of the French Chamber of  Deputies:"The sole effect of [the free market place] system is to leave the  distribution of social advantages to a chance few who are able to lay  some pretence to it, and to condemn the numerically superior class to  deprivation, ignorance, and misery. [Socialists] ask that all the  instruments of production, all lands and capital, the funds now  divided among individual proprietors, should be pooled so as to form  one central social fund..."Saint-Simonian socialists believed that their goal of socializing the  production of goods and services would most effectively be achieved  by abolishing all rights of inheritance, with property reverting to  the political state upon the owner's death.  This, of course, is the  underlying logic of our own inheritance taxes and the fight to the  death by Democrats to preserve inheritance taxes.Socialist China, with its rapid, centrally-controlled economic  growth, is an example of the painful imbalances that inevitably occur  when government planners intervene extensively in the workings of the  free marketplace.  On the Mises.org website, Robert Blumen describes  the results. ( http://blog.mises.org/archives/007671.asp#more )Similar problems befell the Soviet Union, whose central planners over- allocated resources to production of armaments, the military forces,  and heavy industry to support a militaristic foreign policy.  In  daily life, the citizenry had to wait hours in line for what little  consumer goods were produced; they were not as well off as the  lowliest of our welfare recipients.Nor should we forget that Senator Clinton's prescription was the  avowed policy of Bill Clinton's economic advisors at the outset of  his first term of office in 1992.  The model then was paternalistic  Japan, Inc., which wowed the President's Keynesian advisors with its  tight control of the economy.  Government ministries worked closely  with the relative handful of giant industrial and trading  conglomerates like Mitsubishi. Mitsui, and Sumitomo, and with the  giant banks affiliated with these successors to the pre-World War II  ziaibatsu.President Clinton's advisors told us that only government planners  were capable of foreseeing the kinds of new technologies in which  funds had to be invested if the United States were to survive in the  emerging global economy and to provide high-paying jobs to our  workers.  For those ends, we had to emulate the ability of MITI and  other Japanese government agencies to direct the course of economic  development. Private business in the free marketplace, they said, was  too focused on short-term earnings and driven solely by the greedy rich.Fortunately for us, and unfortunately for the Japanese, their economy  fell into a flat-line slump from which it has yet to emerge fully,  sixteen years later.  That ended President Bill Clinton's grand  economic planning schemes, but clearly failed to teach anything to  liberal-progressive-socialists like Senator Hillary Clinton, who are  eager once again to pick up the reins of government economic control.The problem for Senator Clinton and her fellow liberal-progressive- socialists is that the wealth of any society, its Gross Domestic  Product (GDP), is simply the total of its output of goods and  services, produced by the accumulated savings of society that have  been invested in the instruments of production.Liberal-progressive-socialists confuse GDP with government deficit  spending, funded by the Federal Reserve system's fiat money.  GDP is  inversely related over the long term to the total volume of money  supplied to the economy by the Federal Reserve banks.Government spending and over-expansion of the money supply produce  only one thing: inflation that robs workers of the value of their  savings and makes long-term capital investment uneconomic.  It is the  underlying impetus toward economic maladjustment, the factor that  pushes individuals and businesses towards short-term gambling and  excessive debt.Only the free marketplace, funded by individual and business savings,  is capable of allocating scarce economic resources to give us a  higher standard of living via increased efficiency and greater  productivity.  Every government economic intervention reduces  efficiency and lowers our potential standard of living.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