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January 12, 2009

Inherent Faith in Government Is the Root of the Problem


Most Americans are raised by the government. They are usually raised for more than 12 years in public schools that they are forced to pay for, and, for the financially restricted, forced to attend. Even if they are lucky enough to have a choice in education, they grow up bombarded by pervasive laws – and not just the necessary types that regulate traffic and criminal activity, but the types that ban certain “unhealthy” cooking, prohibit smoking on private property and order the use of helmets and seatbelts.


It is therefore not surprising that many – too many – Americans reach adulthood with a built-in, assumed, inherent faith in a notional all-knowing and compassionate government. For these Americans, questioning the role of government in certain areas is very much like questioning the essence of life itself.


“How would I survive my retirement years if you eliminate Social Security?” Umm, maybe you could choose to put money aside for yourself? After all, the massive Ponzi scheme that you call Social Security did not exist for most of our country’s history, and we did just fine.


“Well, who would ban smoking in bars if government didn’t?” No one. Yes, yes, my friend, there is such a thing as an inability to ban anything that is inconvenient to you. Patronize bars that voluntarily disallow smoking, thereby encouraging market demand for non-smoking bars.


“But . . . the country would fall apart if government wasn’t given an exclusive role in mail delivery!” Who would you trust most with a business contract, your grandmother’s vase and divorce papers: FedEx, DHL, UPS or the United States Postal Service?


Naturally, differing attitudes toward government have spilled over into the political arena and are easily reflected in political affiliation. Notably, Democrats and Republicans do not only differ in the usual political questions such as health care and the minimum wage. They are also divided in their view of the nature of government itself.


Polls show, for instance, that Republicans are more likely than Democrats to label most members of Congress as corrupt, and to believe that most members of Congress are willing to sell their vote for either cash or a campaign contribution. Democrats are also significantly more likely than Republicans to believe that most members of Congress are more interested in helping people than helping their political careers.


During the 2006 congressional election season, Democratic campaigns and liberal blogs were abuzz with allegations that the incumbent Republican Congress was “the laziest Congress ever” and was working less than full-time. Such accusations, of course, only appeal to those who believe that it is indeed a good thing for Congress to “do a lot.” And due to a government-dominated society, too many embrace that belief.


But of course, as any good economist would know, government non-intervention (or “laziness”) is almost always economically beneficial (except when intervention occurs for the purpose of undoing previous government intrusions, such taxes and regulations that damaged the economy). As of this past summer, the Dow Jones has seen 90 percent of its gains of the last 111 years when Congress was in recess. Likewise, in the past 45 years, the S&P went up 1.6 percent per year when Congress was “at work,” but skyrocketed to 17.6 percent when Congress was “lazy” or out of session.


These differences result from the fact that the potential for government action gives rise to a great amount of uncertainty. No one knows the industries that will be arbitrarily regulated and those industries that will be rewarded for their political contributions. Furthermore, the inherent belief of too many Americans in the permanent necessity of government action continuously pushes members of Congress to do something. Inevitably, the resulting interference in the free market will then cause an economic loss in the name of public service.


Virtually all economists agree that free trade is good. Most economists also agree that the minimum wage causes unemployment, that high taxes discourage investment and growth, that excessive regulation hurts business and that subsidies hurt both consumers and those producers without political connections. But it doesn’t matter what the economists think. What matters is that many Americans have grown up with the assumption that government must somehow act. This leads to feel-good, yet economically destructive action that involves putting up trade barriers, raising the minimum wage, raising taxes on the rich who create jobs, over-regulating businesses and subsidizing key political supporters such as farmers.


Too many Americans have grown up believing that it is the government’s job to play a big activist role in society and in the economy. This ideology is more or less dependent on the (false) assumption that government is an inherently good institution filled with inherently good people who wake up everyday wondering how they can act to improve a constituent’s life.


Thus, if individual responsibility and the true free market are to make a comeback in America, their proponents cannot bypass the root of the problem. There are a number of ways to combat this inherent view of government as a nanny. Helping to secure the freedom of school choice might be a good place to start.

© 2009 North Star Writers Group. May not be republished without permission.


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