Two current reviews in the NYTimes book section: "The Ascent of Money" by Naill Ferguson and "Unintended Consequences- How War in Iraq Strengthened America's Enemies" by Peter W. Galbraith.// I see a gloomy future contrasted by the razzle-dazzle of the holiday season. American psychosis. It may make for more honest Lent. On Dec 5, 9:21 pm, "M.A. Johnson" <[EMAIL PROTECTED]> wrote: > The Wizards of WashingtonbySheldon Richman,December 5, 2008Remember that > scene in The Wizard of Oz when Toto reveals the “great and powerful wizard” > as nothing but a homunculus operating an imposing thunder-and-lightning > machine? “Pay no attention to that man behind the curtain,” he bellows, not > knowing enough to quit even when he’s exposed. > The government’s response to the current economic turmoil reminds me of that > scene. We are assured by the awe-inspiring U.S. Treasury and Federal Reserve > that if we trust them with essential control of the American economy, all > will be set right. > Behind the curtain, however, are just a bunch of bureaucrats who couldn’t > possibly put the economy right because no one can know how to do that. They > would be better able to give a cowardly lion courage, a tin man a heart, or a > scarecrow a brain. > Sloppy metaphors to the contrary, an economy is not an engine that > occasionally needs a mechanic to go under the hood to tune it up. An economy > is people pursuing their preferences by engaging in endless varieties of > exchanges with others while coordinating disparate plans founded on unspoken > expectations. It’s an amazingly orderly process when it is allowed to operate > in peace and without government intervention. > Unfortunately, governments rarely let it operate in peace. Government > planning is power, and with only a few exceptions, most people attracted to > top government jobs want to wield power. While they are incapable of fixing > an economy if that means restoring it to its consumer-serving function they > are capable of skewing it to their own purposes. > Government interference with the economic process represents a substitution > of political for consumer objectives. In a freely functioning economy absent > government privileges and burdens entrepreneurs work to arrange the > productive process ultimately to satisfy consumers’ subjective preferences. > This idea is implicit in the very conceptsproduction, investment, and > labor.Their fruits must have value in the eyes of consumers or they are not > productive. > Thus when government “creates jobs” or saves companies by taking money from > the private sector, it is not truly productive activity. Rather, the > government has preempted the economic process, forbidding it to serve > consumers so that it can instead serve the objectives of politicians and > bureaucrats. > President-elect Obama’s chief of staff-designate, Rahm Emanuel, says, “You > never want a serious crisis to go to waste. Things that we had postponed for > too long, that were long-term, are now immediate and must be dealt with. This > crisis provides the opportunity for us to do things that you could not do > before.” Emanuel here unwittingly affirms Robert Higgs’s thesis in Crisis and > Leviathan: government will use a crisis (real, exaggerated, or imagined) to > expand its power. And Emanuel clearly grasps Higgs’s corollary: when the > crisis subsides, the new powers will not be shed. Some will remain in force; > others will be put on the shelf to await the next crisis. > The current financial turmoil is a textbook illustration of Higgs’s > principle. In just the last few months the Fed and Treasury have engaged in > activities they had not dared engage in before, such as bailing out > investment banks and insurance companies and buying shares in banks. The > precedent has been set. Next time, such activity will be even easier. > None of this will fix the economy. The federal government as of late November > had committed more than $7 trillion to the financial system in loan purchases > and guarantees of various sorts. But Treasury borrowing only moves money from > point A to point B, while Fed policy creates money out of thin air. Every > dollar the Treasury borrows is a dollar the private sector can’t invest in > consumer-oriented projects, and every dollar the Fed creates distorts the > economy by transferring purchasing power from the people to privileged > interests. The resulting economy is built on false signals and expectations > which can’t be sustained without government support. That is hardly the route > to sustainable economic growth. > When you recall that today’s economic turmoil is the direct result of earlier > distortions from government policies guarantees to lenders, so-called > affordable-housing policies, et cetera it is clear that ground is being > seeded for the next crisis. > At our peril do we pay no attention to those men behind the > curtain.http://www.fff.org/comment/com0812c.asp --~--~---------~--~----~------------~-------~--~----~ Thanks for being part of "PoliticalForum" at Google Groups. For options & help see http://groups.google.com/group/PoliticalForum
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