John Stossel: Obama shares FDR's arrogant conceit
John A. Quayle
blueoval57 at VERIZON.NET
Mon Dec 29 16:54:37 MST 2008
Manchester Union Leader
Obama shares FDR's arrogant conceit
By JOHN STOSSEL
Barack Obama wants to use the recession to remake the U.S. economy.
"Painful crisis also provides us with an opportunity to transform our
economy to improve the lives of ordinary people," Obama said.
His designated chief of staff, Rahm Emanuel, is more direct: "You never
want a serious crisis to go to waste."
So they will "transform our economy." Obama's nearly trillion-dollar plan
will not merely repair bridges, fill potholes and fix up schools; it will
also impose a utopian vision based on the belief that an economy is a thing
to be planned from above. But this is an arrogant conceit. No one can
possibly know enough to redesign something as complex as "an economy,"
which really is people engaging in exchanges to achieve their goals.
Planning it means planning them.
Obama and Emanuel want us to believe that their blueprint for reform will
bring recovery from the recession. Yet we have recovered from past
recessions without undertaking a radical social and economic transformation.
In fact, reform would impede recovery.
This is not the first time a President chose reform over recovery. Franklin
Roosevelt did it with his New Deal, and the result was long years of
depression and deprivation. Roosevelt's priorities were criticized not just
by opponents of big government but by none other than John Maynard Keynes,
the British economist whose theories rationalized big government. Before
FDR had been in office a year, Keynes wrote him an open letter, which was
printed in The New York Times:
"You are engaged on a double task, Recovery and Reform -- recovery
from the slump and the passage of those business and social reforms which
are long overdue. For the first, speed and quick results are essential. The
second may be urgent, too; but haste will be injurious. " (E)ven wise and
necessary Reform may, in some respects, impede and complicate Recovery. For
it will upset the confidence of the business world and weaken their
existing motives to action. "Now I am not clear, looking back over the last
nine months, that the order of urgency between measures of Recovery and
measures of Reform has been duly observed, or that the latter has not
sometimes been mistaken for the former."
Note Keynes's concern. Government interventions, such as the cartelizing of
industry through the National Recovery Administration, "will upset the
confidence of the business world and weaken their existing motives to
action." In other words, investors will not take the risks necessary for
recovery if their profits and freedom are subject to unpredictable
government action. Economic historian Roberts Higgs calls this phenomenon
Keynes's letter apparently had little influence on Roosevelt, who stuck to
his plan. In his second inaugural address a few years later, FDR feared
that signs of recovery had jeopardized his reform plans by removing the
sense of emergency: "To hold to progress today, however, is more difficult.
Dulled conscience, irresponsibility and ruthless self-interest already
reappear. Such symptoms of prosperity may become portents of disaster!
Prosperity already tests the persistence of our progressive purpose."
What a shame. Free people enjoying their lives make it harder for the
administration to forcibly impose its utopian vision on them.
Obama wants to act quickly. In the name of stimulating the economy, he
plans to spend hundreds of billions of dollars the government does not have
to convert the economy from carbon-based fuels to "green" alternatives.
Even if that were a good idea -- and it's definitely not -- it would not
bring recovery. Any money the government spends must be taxed, borrowed or
conjured out of thin air by the Federal Reserve, and that will reduce sound
private investment. Obama has no real wealth to inject into the economy. He
can only move around existing money while inflation robs us of purchasing
power. Meanwhile, private investors who might have produced a better
engine, battery, computer, cancer treatment or other wealth-creating and
life-enhancing innovations hold back for fear that big government will
undermine productive efforts.
The way to a lasting recovery is to greatly lighten the burdens of
government. Then free Americans will save and invest.
Grand interventionist reforms go in precisely the wrong direction.
John Stossel is co-anchor of ABC News' "20/20" and the author of "Myths,
Lies, and Downright Stupidity."
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