Bush and Obama adopt old economic ideas to build government power

Advising Bush and Obama from beyond the grave?

Could somebody tell me who convinced Mr. Spare Change You Can Believe In that running up the credit cards is a brilliant way to resolve our economic difficulties? He knows that the balance has to be paid, right? But maybe he's looking to His Excellency, the Shoe-Dodger, for economic pointers. After all, the both of them are pushing fascist policies almost in unison, as if the corporatist state is a baton being handed from one administration to the next.

If we follow Barack Obama's advice and diddle away $850 billion now on digging and filling holes, organic faerie-dust-powered cars, free-range IRS offices, and the inevitable pork frenzy, the supposed recovery is going to come with a hefty monthly payment plan.

That's especially true on top of the "hey, I've got six months to live" spending plan the feds have been on under George W. Bush, which put "taxpayers more than $1 trillion in the hole even before the astronomical costs of the economic bailout were taken into account, according to an annual report released Monday by the White House."

As you and I could probably guess (but it's a revelation to government policy makers) "stimulus" spending is no panacea anyway. To spend money, you have to tax it, borrow it or create it out of thin air -- and all of those approaches take purchasing power out of the pockets of the private sector. The general result is that stimulus spending stimulates nothing but government, leaving the economy worse than ever.

As Investors Business Daily editorialized:

In the marketplace, money naturally gravitates toward real needs, signaled by the willingness of people to pay for goods and services out of their own pockets.

In government spending, money follows power. It is channeled by key officeholders to favored constituencies. So when a national government tries to breathe life into an economy with massive spending, the result is massive economic inefficiency.

It's an undying Democratic Party myth that Franklin Roosevelt's New Deal spending helped end the Great Depression (or at least relieved suffering). The hard fact is that unemployment stayed well into the double digits until the early stages of World War II.

But maybe inflated government power is the ultimate goal. The Cato Institute's David Boaz points out that Democrats and Republicans alike have been pushing bailouts and subsidies that don't just prop up favored firms at the expense of other companies that would move in, pick up the pieces and create something new from the wreckage of the old; they also would put the state in a position to substitute the preferences of politicians and bureaucrats for the judgment of business people.

As the Nobel laureate Edmund Phelps wrote: "The fundamental corporatist idea was to retain the private income, private wealth and private ownership of firms that (were) so central to capitalism (and found in avant-garde examples of market socialism too) but to remove the brain of capitalism — to curtail and to modify the mechanism of experiments and discoveries undertaken by unorganized entrepreneurs and financiers on which capitalism relied. . . . Corporatism sought to interpose the interests of the whole society in a range of decisions affecting the directions taken in the business sector."

In some cases, it's about dictating what businesses manufacture or how they deal with employees and customers. Boaz points out that the health care companies are talking about agreeing to new regulations in return for a roll in the trough, and Obama's team wants to dictate terms "regarding foreclosures, lending, executive compensation, environmental effects and product lines" to bailout recipients.

Even more intrusive, though, it may even be about what policies and opinions businesses and business people are allowed to advocate.

Jonathan Cohn of the New Republic suggests that the federal government use its new power over the auto companies to fire a General Motors vice chairman who has expressed skepticism about the catastrophic effects of global warming, and congressional Democrats wanted to forbid the firms from filing lawsuits against state environmental regulations.

That's corporatism for you: Big, established corporations get taxpayers' money as long as any dissenting scientific or political opinions are suppressed.

As economics, none of this makes sense. It really is like losing your job and deciding you're going to make it all better by going on a shopping spree.

But as a means for growing the power of the state over the lives of Amricans, it's clever policy indeed.

Contact J.D.: civilliberties (at) tuccille.com