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



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 
"regime uncertainty."

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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