In an article I published earlier this month, I looked at the mindset common to most big-government centralizers, pointing out that they believe themselves more intelligent and better able to run your life than you.
Nowhere do we see this tendency toward arrogance more than in the field of economics. Ask virtually any politician or policy wonk and he will tell you that with just the right program, government can create ideal economic outcomes. Keep in mind they get to define “ideal.”
Sen. John Kerry put the “I know better than you” attitude of a central planner on full display during a 2009 speech on the Senate floor.
“A tax cut is non-targeted. If you put a tax cut into the hands of either a business or an individual today, there is no guarantee they’re gonna invest their money. There’s no guarantee they’re gonna invest their money in the United States. They’re free to go to invest anywhere that they want, if they choose to invest… The fact is; none of those people are guaranteed to invest that money in any of the new projects that we are… So government, yes government, has the ability to make a decision that the private sector won’t necessarily make today.”
Both sides do it. Liberals have their “stimulus” programs, minimum wage laws and taxes designed to redistribute wealth to the poor and middle class. Conservatives play the game with targeted tax cuts, subsidies, spending programs and corporate welfare that benefit their particular constituencies, along with ”incentives” to “create jobs.” Meanwhile, the Federal Reserve manipulates currency and interest rates while hundreds of bureaucrats crank out reams of regulations.
Granted, some of these policies create better results than others. But at the core, the notion that centralized planners can run an economy takes political class arrogance to its highest level. No person, or group of people, can manage and control an economy made up of 350 million individuals efficiently. Virtually every policy they implement to solve one problem creates a myriad of new problems. Nobody can anticipate the unintended consequences of a given action. But that doesn’t diminish the arrogance of the ruling class. They really believe they can do it better, because they can outsmart 350 million Americans engaging in voluntary exchange. Of course, politicians and bureaucrats don’t care about unintended consequences, because they remain largely invisible. As long as they can point to some success and garner votes, the overall negative effects become largely irrelevant.
The utter failure of central planners in the former Soviet Union should lead us to cast aside the silly notion that government can create economic utopia. The Russian people endured long lines, perpetual shortages and a standard of living as bad as most “third-world” countries. Soviet economists Nikolai Shmelev and Vladimir Popov describe what happened in a simple case when the government raised the price paid for moleskins, leading hunters to get and sell more.
State purchases increased, and now all the distribution centers are filled with these pelts. Industry is unable to use all of them, and they often rot in warehouses before they can be processed. The Ministry of Light Industry has already requested Goskmosten twice to lower purchasing prices, but the “question has not been decided” yet. And this is not surprising. Its members are too busy to decide. They have no time: besides setting prices on pelts, they have to keep track of another 24 million prices.
Shmelev and Popov went on and wandered dangerously close to the truth.
No matter how much we wish to organize everything rationally, without waste, no matter how passionately we wish to lay all the bricks of the economic structure tightly, with no chinks in the mortar, it is not yet within our power.
But notice the qualifying words: “not yet.”
When faced with the utter failure of central planning all over the world, central planners still insist they can do it. Those other guys just went about it the wrong way. We, the new generation of central planners, are smarter and wiser. And we will get it done.
The arrogance of the ruling class.
The economic impact of government tinkering is bad enough, but the effects reach much deeper. You see, in order for the ruling class to run the economy, they must resort to force in order to get the everyday citizen to behave in the desired manner. Centralized planning allows no tolerance for voluntary exchanges outside of the prescribed system. Ultimately, economic centralization leads to ruling class tyranny. Economist Gustav Cassel describes this nefarious evolution.
The leadership of the state in economic affairs which advocates of Planned Economy want to establish is, as we have seen, necessarily connected with a bewildering mass of governmental interferences of a steadily cumulative nature. The arbitrariness, the mistakes and the inevitable contradictions of such policy will, as daily experience shows, only strengthen the demand for a more rational coordination of the different measures and, therefore, for unified leadership. For this reason Planned Economy will always tend to develop into Dictatorship.…
The existence of some sort of parliament is no guarantee against planned economy being developed into dictatorship. On the contrary, experience has shown that representative bodies are unable to fulfill all the multitudinous functions connected with economic leadership without becoming more and more involved in the struggle between competing interests, with the consequence of a moral decay ending in party — if not individual — corruption. Examples of such a degrading development are indeed in many countries accumulating at such a speed as must fill every honorable citizen with the gravest apprehensions as to the future of the representative system. But apart from that, this system cannot possibly be preserved, if parliaments are constantly over-worked by having to consider an infinite mass of the most intricate questions relating to private economy. The parliamentary system can be saved only by wise and deliberate restriction of the functions of parliaments.…
Economic dictatorship is much more dangerous than people believe. Once authoritative control has been established it will not always be possible to limit it to the economic domain. If we allow economic freedom and self-reliance to be destroyed, the powers standing for Liberty will have lost so much in strength that they will not be able to offer any effective resistance against a progressive extension of such destruction to constitutional and public life generally. And if this resistance is gradually given up — perhaps without people ever realizing what is actually going on — such fundamental values as personal liberty, freedom of thought and speech and independence of science are exposed to imminent danger. What stands to be lost is nothing less than the whole of that civilization that we have inherited from generations which once fought hard to lay its foundations and even gave their life for it.
We will never limit the arrogance of members of the ruling class. So we must restrict their actions. Decentralize authority and insists those in leadership positions act only within the narrow confines of their carefully prescribed powers. In the case of the federal government, follow the admonition of Thomas Jefferson.
“In questions of power, let no more be heard of confidence in man, but bind him down from mischief by the chains of the Constitution.”