Sunday, February 21, 2010

Don't Blame the Helmsman

A core tenant of progressives and many conservatives (but not necessarily republicans) is a rejection of what has been popularly dubbed as "corporate welfare"and "crony capitalism." Or, more specifically a rejection of the regimen of subsidies, tax breaks and favorable treatment of politically connected corporations and industries. Most anathema to progressives are the billions of dollars in tax breaks that the oil and coal industries enjoy. And conservatives tend to focus their ire on the farm subsidies which redistributes billions of dollars of public funds primarily towards large agro-corporations, like Monsanto. And even those who accepted the bank bailouts as needed, emergency measures are troubled by the extent to which the distribution of funds reflect political considerations and connections, rather than economic logic.

Beyond these shared reservations, most progressives and conservatives sharply diverge on what they attribute as the source of and solution to corporate welfare. Implied in the progressive position is that the problem lies in the helmsman and not the ship. In other words, the problem is the direction in which "incompetent and corrupt politicians" steer the federal government's redistributionist bodies. Many lamented, "If only we had a wise and honest helmsman, the federal government could direct capital towards good people, good companies and good industries." But, much to their dismay they see that President Obama has continued most of the policies of his predecessor.

In contrast, most conservatives believe that the problem does not lie in the helmsman, but in the ship itself. Rather than view unwise subsidies as an aberration, they view them as the predictable, if not inevitable outcome of the redistributionist state. In a republic in which lobbyists increasingly hold sway over elected officials, is it not to be expected that powerful interests and industries will greatly influence redistributionist policies to their own benefit? Even a "wise and incorruptible administration," like Obama's will act in the interests of the individuals and interests who made their ascension possible via their generous campaign contributions. And unfortunately with the recent ruling of the Supreme Court in regards to corporate campaign contributions, we can expect the influence that moneyed interests hold over the formation and execution of government policies to only grow.

The same principles hold true for the fiscally destructive policies we have witnessed under the Bush and Obama Administrations. Most people lay the blame of our massive deficit spending on the foolishness of the said leaders. However, I and many other libertarians believe that the problem lies in the interventionist ship and not the helmsman. In a society beset by an inflated sense of entitlement, is it not the surest strategy of attaining and maintaining power for a politician to maximize the number of groups and interests that they cater to? A successful politician will dare not challenge the subsidies that diverse groups enjoy, from the elderly, to oilmen, from farmers to homeowners and many more. And any politician who seriously sought to pay down our national debt by increasing taxes and reducing entitlement spending would simultaneous lose (so called) conservative and liberal votes and have a very short political career. So, with few exceptions politicians will increase spending, while lowering taxes, the end result being a national debt that has spiralled out of control.

The more I study the constitution and the words of the founding fathers, the more I am certain that they were very deeply skeptical about the good will of politicians and the wisdom of the public. Much of the checks and balances and limits on the power of the federal government present in the constitution were done so precisely to guard against the foolishness of politicians and the public that we are now witnessing. They foresaw that without clear limitations on the size and scope of the federal government, most politicians would not be able to resist the temptation of utilizing the state for the benefits of powerful individuals and interests. And without a clearly circumscribed government, much of the public would not be able to resist calling on their politicians to do (and spend) more and more for them. In other words, corporate welfare and massive deficit spending would not be possible without the continuous erosion of constitutionally mandated limits on the size and scope of the federal government.

The founding fathers understood that the expanded government power that could be positively wielded by a wise leader would one day be abused by a despotic or incompetent leader. So, it is sheer folly for progressives and conservatives alike to hope for the coming of an enlightened helmsman. But, we cannot simply blame politicians, because alas they are catering to the desires of the electorate. And the first lesson of economics is that while human desire knows no end, resources are painfully finite. So, the inevitable outcome of the democratic entitlement state is for politicians to steer the country into bankruptcy. But, don't blame the helmsman; for a captain can not be wiser than the ship of fools that he pilots.

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