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Lurking behind so many of these arguments is what we might call the magic money fallacy. People seem to think that money from the federal government just materializes out of nowhere. In fact, resources must come from somewhere. They can be taxed away from the productive private sector. They can be borrowed from the productive sector to be used in the coercive, non-competitive sector, and paid back later with tax money. Or the Federal Reserve can just create money out of thin air—write “$1 trillion” on a piece of paper, thus producing inflation.
Not only is the money not free, it is often forcibly diverted to politically chosen purposes. That’s the reality that these books gloss over in gauzy talk of “community” and “government economic intervention on behalf of a common or national good.” As the economist Thomas Sowell has famously written, “The first lesson of economics is scarcity: There is never enough of anything to satisfy all those who want it. The first lesson of politics is to disregard the first lesson of economics.”
Some of government’s accomplishments cited in these books bring to mind Foundation for Economic Education president Lawrence Reed’s point: “Have you ever noticed how statists are constantly ‘reforming’ their own handiwork? Education reform. Health-care reform. Welfare reform. Tax reform. The very fact that they’re always busy ‘reforming’ is an implicit admission that they didn’t get it right the first 50 times.”
So government is hailed for ending slavery and Jim Crow, but the long government enforcement of those repressive laws is passed over. In the last chapter of To Promote the General Welfare, Paul Light of New York University identifies the federal government’s greatest accomplishments from 1945 to 2000. Several actually involve lifting the burden or reducing the power of government—devolving responsibility to the states, freeing trade, limiting nuclear weapons, reforming government operations, making government more transparent, deregulating sectors of the economy, reforming welfare, cutting taxes, even restraining spending. It’s hardly a triumph of big government for government to correct its longstanding errors.
There is a Pollyannaish view of state power running through the liberal defense of centralization. A government with the power to establish, oversee, subsidize, or regulate education, transportation, communications, money, health care, and housing has sufficient power to do much harm. There is no consideration in these books of the federal government’s shameful treatment of Indians. Nor do we hear about the incarceration of Japanese-Americans during World War II. Nor the role of the Federal Reserve and government regulatory agencies in creating and prolonging the Great Depression and the Great Recession. While both books praise the Progressives who ushered in many of government’s advances, neither notes the Progressives’ unsavory attitudes about race and eugenics, nor their twin disasters of alcohol Prohibition and drug prohibition. Any honest accounting of whether big government promotes the general welfare must at some point grapple with murderous big-government mistakes.
For instance, war. World War I just may have been the biggest disaster in history. It not only took 16 million lives, but as Jim Powell put it in a book title, “Woodrow Wilson’s Great Blunder Led to Hitler, Lenin, Stalin, and World War II.” Yet you won’t find WWI discussed in To Promote the General Welfare. Dionne does mention it, mostly to lament that it “unleashed a deep cynicism about public life and grand aspirations.” As well it should have. World War II, which grew out of the Progressive Wilson’s great blunder and cost 60 million lives, goes similarly unexamined.
The real conflict in political theory, contra these authors, is not between individualism and community. It’s between voluntary association and coerced association. The case for big government should be cross-examined by looking at costs as well as benefits, risks as well as achievements, what is not seen along with what is seen, and the repeated horrors that have stemmed from leaving state power unconstrained. No wonder statists are getting nervous.