Robert Wenzel and the March Toward Socialism

[MJ]

Robert Wenzel and the March Toward Socialism
William Anderson

Paul Krugman does not like to say that government control of the economy is socialism, and maybe he is correct. After all, the Nazi government controlled prices, picked "winners and losers," and directed production.

Producers got to own the property (in name, at least) and those favored producers got to be profitable, but at the expense of those people and companies that were not politically connected or simply were scorned by Hitler and his gang. We called that "Fascism." Another term might be "Crony Capitalism."

Today, we have a regime that tries to pick winners, rewards friends, and direct production to those lines favored by Washington. Call it what you will, but Robert Wenzel in this post calls it socialism. And I think he is correct.

xxx

Tuesday, January 18, 2011
Barack Obama versus Ludwig von Mises
Posted by Robert Wenzel at 7:11 AM

President Obama has an Op-Ed in today's WSJ calling for a review of all government regulations. In his commentary surrounding this review, the views of the president and those of the great economist Ludwig von Mises could not be in greater contrast.

President Obama begins his Op-Ed by writing:

For two centuries, America's free market has not only been the source of dazzling ideas and path-breaking products, it has also been the greatest force for prosperity the world has ever known. That vibrant entrepreneurialism is the key to our continued global leadership and the success of our people.

But throughout our history, one of the reasons the free market has worked is that we have sought the proper balance. We have preserved freedom of commerce while applying those rules and regulations necessary to protect the public against threats to our health and safety and to safeguard people and businesses from abuse.

From child labor laws to the Clean Air Act to our most recent strictures against hidden fees and penalties by credit card companies, we have, from time to time, embraced common sense rules of the road that strengthen our country without unduly interfering with the pursuit of progress and the growth of our economy.

This "balance" that the President speaks of can be viewed as a "middle-of-the-road" policy. It is not unbridled free markets, but free markets with restraints. This is what Professor Mises said about such a middle-of-the-road policy:

There is simply no other choice than this: either to abstain from interference in the free play of the market, or to delegate the entire management of production and distribution to the government. Either capitalism or socialism: there exists no middle way.

Mises' view may appear at first harsh, but upon reflection it can be understood that he is making a very important point. Mises is saying that any intervention in the economy leads to other interventions, until the full economy is engulfed in a sea of regulation, which we can not call anything but socialism. Indeed, President Obama, in a way, is acknowledging Mises view, when he calls for a review of regulations.
The President writes:

Sometimes, those rules have gotten out of balance, placing unreasonable burdens on business­burdens that have stifled innovation and have had a chilling effect on growth and jobs

But how can it be any other way, when we attempt a middle-of-the-road policy? Consider an obvious situation, price controls. Once price controls are placed on an economy shortages will develop. The  regulation won't stop there. The government then generally steps in to relieve the shortages by rationing goods, but the price controls and rationing lead to black markets, which results in a police force formed to "protect" against the black market. To be effective, the police force must expand surveillance of citizens to catch the black marketeers. The black marketeers counter by using even more clever ways of operating, which leads to even more loss of privacy, as the police use ever more intrusive methods to attempt to catch them. Interventionism never stops at the first regulation. Indeed, every new regulation is like a starter pistol being shot off, signaling for more regulations.

In the United States, we have had many starters guns that have gone off resulting in a  growing police state that comes at us from many directions. The drug enforcement authorities, in their attempt to support the interventionist prevention of certain drugs from being distributed and sold in the United States, have grown into such a monster that now banks must report all cash transactions over $2,000 and report any "suspicious" activity.

From the securities industry to pharmaceutical industry and all other industries, rules and regulations continue to grow, but for every new regulation their is an attempt by free market operators to find ways around the regulations and thus new regulations are implemented to prevent this circumvention. And thus we have the creep toward socialism that Mises warns of. It doesn't happen overnight. It is a creep. But, it only goes in one direction, toward more regulation, not less.

President Obama is fooling himself, and the people, if he thinks his order to review policies will result in a halt in this creep. Yes, for propaganda purposes, regulators may eliminate one or two rules here or there, that are particularly silly, but the government isn't going to stop banks from reporting cash transactions, and the government isn't going to tear down the regulations that make it extremely difficult for a company to go public with the trading of its shares, nor stop intervening in the economy in most of the multitude of other ways it does.

This declaration by President Obama is simply a propaganda scheme because the people are beginning to realize what Ludwig von Mises warned about, that the creep is always toward more regulation and ultimately socialism. There is no middle-of-the-road policy. The new regulations to plug holes in the old regulatory scheme will just keep on coming.

President Obama's Op-Ed is an attempt to misdirect the people from the inevitable march towards socialism, and away from free markets, when interventionism is chosen as the path,  But the fact that he has chosen to even create the illusion that he is going to stop the trend towards more regulation is an indication that he understands it is going on and that the people understand it is going on, he is, in fact, acknowledging that Mises is right and his Op-Ed is really something of a tribute to Mises, a statue, if you will.

http://www.economicpolicyjournal.com/2011/01/barack-obama-versus-ludwig-von-mises.html

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