25 Feb 2012

Seven Fat Years and Seven Lean Years

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Conservatives (really more accurately referred to as “liberals”) argue that the free market produces superior allocations of resources because of its natural access to superior information on supply and demand provided by the voluntary input of enormously large numbers of individual human beings. The free market consequently inevitably operates on the basis of better information than any possible small group of political leaders or experts can ever hope to possess. Beyond mere utility, the free market additionally has morality on its side. Human beings are morally entitled to exchange what is their own, whether goods, services, or currency, as they desire and think best. The alternative to freedom is always coercive force, and freedom is intrinsically morally better than coercion.

Progressives reject the free market, noting that it fails to make the idle prosperous, the incompetent and the unlucky successful, and the improvident and intoxicated equal in security and material success to the responsible and provident.

Since the free market never actually seems able to deliver heaven on earth, progressives proposed that government should intervene to establish a safety net to assure that no one, no matter how unlucky or ill-behaved, should be left without the necessities of human existence.

Progressives demand that we should all surrender some significant portion of our economic liberty and deliver control over the free market to government specifically because they believe that the rule of credentialed experts will deliver superior results.

The Progressive experiment, which has gone on for many decades now, has survived this long because of the capacity of capitalist enterprise to deliver prosperity and economic growth despite being shackled by ever-increasing levels of regulation and despite the diversion of substantial percentages of economic output to entitlements.

Our expert rulers, in reality, merely exchanged an ever-increasing slice of the entire economy for more political support. Their calculations were fraudulent and completely risible, burying information unfavorable to their ends, achieving balanced budgets by phony bookkeeping, and invariably relying on wildly optimistic projections to cause their plans’ mathematics to add up.

In good times, progressive experts have always spent more, added new programs, and constructed new bureaucratic empires, piling the promises for the future up to the stars. When the budget didn’t really add up, they simply placed their trust in the ability of the capitalist system to deliver enough growth, soon enough, to save them, and simply kicked the can of fiscal responsibility down the road to be dealt with later.

Now, of course, in both Europe and America, the music has finally stopped, the game is over. There is no more road to kick the can down. America and Europe have hit the point where the costs of government are dramatically impairing the free market’s ability to deliver prosperity and growth. The capitalist goose has been shaken and squeezed and strangled, but there is no increase in egg production occurring.

It seems perfectly evident to me that, if what the progressives believe, that the rule of scientifically trained experts can improve upon the results of the free market, those experts would have, in the course of all their training and elite education, encountered Chapter 41 of the Book of Genesis in which Joseph successfully interprets Pharaoh’s dream to mean that seven fat years will be followed in turn by seven lean years, and counsels Pharaoh to set aside a portion of his government’s revenues to cover future shortfalls during the seven lean year recession.

The current international economic crisis demonstrates vividly that contemporary progressive economic planning is not only inferior to free market results, it is decidedly inferior to Bronze Age Middle Eastern economic administration.

Essentially what has happened is that progressive establishment elites, those who claim the right to rule over all the rest of us on the basis of their superior wisdom, training, and credentials, have flown the Entitlement State airplane right into the ground. They wrecked the economies of a large number of nations by creating a crisis through market interference and mismanagement. They have issued too many promises and threaten to bankrupt their nation’s economies far into the future.

The current recession proves, once and for all, that the wise men of progressivism were never very wise at all, and that their claim of a right to overrule liberty and the free market on the basis of superior wisdom and morality is not well-founded.

When you steer the cart off the road, you don’t get to take the wheel again and continue driving. It is time for a change of driver.

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SDD

Lord Keynes, whom liberals invoke when they want to justify their fiscal interventions such as the “stimulus” bill, would be appalled to see how his name is being used today. The General Theory assumes that government will run surpluses during the seven fat years (actually a recession has occurred about every six years over the last century) in order to run deficits during the recession years (< two years in average duration). This, of course, never happens because liberals (and many faux-conservatives) never exhibit the discipline that Keynes implies.

Arthur Brooks makes this point brilliantly when he analogizes liberals to children who fail the "marshmallow test".
http://online.wsj.com/article/SB10001424052970204880404577229220571408412.html?KEYWORDS=ARTHUR+C+BROOKS

It is simply astounding to watch liberals ignore the lessons of the recent housing bubble. Having brought about chaos because they insisted that they knew better than the markets what level of home ownership was optimum, they turn around and proclaim that the lesson that should be learned from this is that we simply need MORE and WISER men (read: Democrats) making those decisions. I cannot tell you today exactly what ugly consequences the Dodd-Frank monster will unleash, but there will be many. History shows that market forces have a way of ultimately prevailing over the mandates of the Wise Men.



Kimball J Corson

Progressives do not reject free markets but rather embrace them for all the reasons well recounted in the first paragraph, EXCEPT where for various reasons a free market does not or cannot function properly or well.Then intervention is necessary, whether it is to eliminate abuse in or to that unfree market or to address a defect in the operation of that market itself. Unfortunately, intervention is sometimes necessary and it is incredibly naive to believe otherwise, as many wish were the case. Reality matters.



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