We are living through a time in which all common sense and logic has been sacrificed for blind hope and misplaced faith. According to the current gospel, peddled by the Messiah and even his anti-Christ enemies (the Republicans ironically), in a crisis in which millions are being thrown out of jobs, debts are being called in and people are being forced to cut back and save more, naturally we must see to it that these forces are prevented.
So we pump public funds into failed banking institutions that took risks imprudently and followed a business model in which short-term windfalls were rewarded over long-term viability and sustainability…all at the cost of the taxpayers and the financial companies that would have been able to find value and profitability in the assets that would have been liquidated had the banks been allowed to fail. We do the same with the auto industry, bailing out our failing companies, and specifically the UAW – the union that pushed the companies towards failure by demanding the massive salaries and benefits that bankrupted the companies in the first place. We reward debtors who purchased homes they could never afford by forcing lenders to rewrite mortgage contracts and allowing the government to purchase mortgage debt to keep interest rates low, with the government thumbing its nose at those who had responsibly paid off their mortgages. We relieve people who took on too much credit card debt by forcing lenders to lessen their fees (the fees necessary to compensate them for the risk involved in allowing people to finance their purchases through debt) by putting restrictions on “unfair” charges, inevitably causing those who were more responsible in paying off their debts to pay higher rates of interest.
When it comes to the protection of failing bureaucracies, it looks as if all of the states in the nation will be forced to bail out California (amongst others) when the federal government comes in and helps ameliorate their debts created by reckless spending. More importantly, the responsible states will not only be sacrificing their money, but their sovereignty to the federal government, due to the fiscal idiocy of the other states.
Even looking to something as fundamental as our progressive tax structure, whereby those who generate more income are penalized through higher levels of taxation (and forced to subsidize) those who earn less income, in every single case the people that are in the wrong are rewarded, while the people that are right or at least not responsible for these problems are penalized. Given the rate at which our national debt is expanding, the burden of these current problems unfortunately will be borne on the backs of future generations of Americans as well.
At length I have spoken in the past about how economically destructive these policies are, merely exacerbating problems instead of allowing markets and the individuals that make up the markets to adjust. I have explained that many of these problems were created by the government in the first place. I have also spoken to the fact that the holes that we are digging in attempting to stave off our problems, in the wasted future resources and diverted current resources being put towards government-planned projects, the massive amounts of money and debt creation by the federal government and also in our move overall towards a collectivist society.
But fundamentally, what I am seeing is that there is something far more insidious at play. What this crisis has illuminated to me is that because everything the government does has the force of law, it allows it to embody all of the worst traits of fallible man, writ large. More specifically, practically every single thing the government does and has done is about taking things from one group of people or more often all people and redistributing them to other people. Since the government can tax, it has the legal authority to rob you of your wealth and give it to someone else. Since the government can regulate, it has the power to help certain companies and harm the ones it doesn’t like. Since all can vote for government officials, government can allow 50% + 1 of the people to destroy the rights of all people; or allow 99% of people to subjugate the rights of the other 1%.
What I have come to realize is that unfortunately, our Founding Fathers did not think through deeply enough how far men were from angels, because the Founders were imperfect just like the people that they built the government for. They did not understand that while they tried to protect us from democracy, given the power to amend the Constitution, democracy could be implemented, with certain classes plundering other ones and bankrupting the nation in the process. Were the document to lay out in clear language any number of restrictions separating the public sphere from the private, this would simply lead to innovation amongst the people in subverting law and usurping power. Unfortunately, they didn’t understand the fatal flaw that they designed a framework in which the people got the government they deserved, not the government that was best. I do not mean to decry their efforts, but merely point out that as great as the Constitution they crafted was, it still could not ensure that people did not corrupt or disregard it.
As some have argued, were the populace to be more educated, our government would be better policed and regulated by the people it is supposed to help protect, and closer to the kind of paradigm that was intended by our forefathers. However, the government through public education gets to indoctrinate the citizens from day one. Even for those who are home-schooled or receive a private education, they still might be deluded into voting for bad candidates — just look at the New York Times crowd or the Ivy League (I know, I can’t believe I am emerging from it with a clear head either). And an educated populace might be even more adept at using the government to serve its interests as is.
I have always found that more influential than any of these institutions are the people that we grow up with and live with – our families, our friends and our mentors. And this is why I believe that our role as free-thinking individuals is so important, and that we must seize this moment in which the world is upside down, when good is treated as bad and moral is treated as immoral to seek to open the eyes of our fellow men. We need to educate by teaching in theory, demonstrating in practice and appealing in good sense and morality to the fact that this system whereby everyone plunders everyone else in the end leads to our demise; into a land devoid of all values, corrupted and whithered like so many empires that came before us.
We need to engage in debate, unafraid of saying what we feel in our hearts and in our minds is right. We need to sharpen our arguments against our challengers so that we can swiftly, calmly and rationally show them the errors of their ways and turn them into our friends, or at least respectful enemies. We need to explain that our actions affect more than just those around us, but also our future: our children, and our children’s children. We need to preach that as Reagan put it “Freedom is never more than one generation away from extinction. We didn’t pass it to our children in the bloodstream. It must be fought for, protected, and handed on for them to do the same.” We need to argue that principles and values do matter, and that the consequences of sidestepping them are fatal. We need to scream at the top of our lungs that all progress comes from individuals, not coercive powers that dictate to free men that they must build pyramids or dingy fuel-efficient cars.
As things get worse and worse, people will first most likely react angrily. They will be looking for heads to roll. But we must keep our heads. We must be there with the answers, because it is only when people have lost everything that they will be willing to listen to the voices they dismissed before. If socialism can come into fashion so quickly from the height of what people thought was capitalism, then why can’t Liberalism supplant socialism just as quickly?
Until that day however, we must continue to advocate our principles in the face of angry, irrational intolerant sophists. We must keep fighting the good fight even if it means being hated. Derision and ridicule should be met with satisfaction, because it will mean that our detractors can only react emotionally to our reasoned arguments.
There is no shame in being hated by a group that is wrong theoretically, practically and morally. We must continue along, emboldened in the face of tyranny. We must defeat the gravest of evils with the greatest of goods: freedom.
As you may have come to expect at this point, I am not entirely fond of the education I have received at Columbia University. One of the major reasons for this is because of the bias inherent in almost every class I have taken here, from the most seemingly apolitical math course to the inherently political social science course. An example of the type of indoctrination one receives at an Ivy League institution was center stage this week in one of my courses.
Having completed a discussion on torts, we moved on to its application in emissions regulation. Emissions prove highly relevant because one party may cause damage to another party’s property because of the pollution one gives off. However, according to my professor, there is a solution to this that is equitable for all sides. My professor proclaimed, “It is the job of future economists like yourselves to solve these types of problems…otherwise what’s the point of studying economics?”
What was my professor’s solution? Well, since the typical Pigouvian tax wouldn’t work, of course we could follow the “market-based” solution of tradable carbon credits. The logic that my teacher put forth seemed infallible – the government can set the emissions level they so choose, and by creating carbon credit shares tradable on an open market, firms could buy or sell off their right to emit based upon their polluting needs. At the aggregate level, pollution will be reduced. Regardless of the initial allocation of carbon shares, trading will allow companies to emit at the level they so choose. Not only this, but the government won’t even intervene in this free market, and there will be total transparency to boot. Even more remarkable to my professor was the fact that this market was able to set the price, without necessary fixing by the regulator. Hooray for the central planners!
To be fair, my teacher did say that it is not necessarily easy to figure out the optimal level of emissions. But leaving out the fact that of course no government official nor any person period can know the optimal level of emission (especially given that this differs for every single individual), there are myriad other reasons why this solution is not “market based,” or socially beneficial. First, the market for carbon credits is being determined by government fiat. The government determines how many shares should be initially allocated to companies, and enforces the market on private companies. To whom does the burden ultimately fall to either pay for producing pollution, or build new plants that emit less? Why the consumer of course. This was not mentioned in the lecture. The question then becomes, are the social benefits of an emissions cap and market imposed by the government greater than the cost consumers will bare as a result of these policies? This writer happens to think not. Not to mention, of course there are going to be certain businesses that will increase their profits off of the push to decrease emissions as well, meaning government intervention will divert the natural flow of capital to specific sectors in the market.
There is of course as always the philosophical issue as well. Why should the government be in the business of controlling emissions? Of course, I’m sure any good politician, or economist for that matter would make the argument that it is for the public good. However, as always, I would argue that the free market provides a better alternative. First, if people are outraged by the emissions in their communities, they can take their cases to the courts and seek compensation from the company. If one’s private property is damaged, it is their right to seek just compensation, and the job of the courts to arbitrate in these disputes. Second, if this proves insufficient, and the company truly is tearing a community apart, the people in the community can boycott the company, making it financially impossible for the company to operate, and thus forcing the company to change its production techniques to emit less pollution. In an age where information is more readily accessible and transmittable than ever before, it should be easier than ever to rally people against a company. For those who challenge this, even with multinational companies, if the consumers are so angry at the producers for their treatment of the environment, it should be worth the effort of citizens to take shots at the bottom line of the polluting producer, or to rally lawyers and interest groups against the firm, as the firm like any defendant is deemed innocent until proved guilty. Further, if there was ever a time that citizens could rally against corporations easily, given the speed at which information can be disseminated today, people are more easily able to rally behind their causes than ever before.
Unfortunately, the professor of this particular class believes that if a divine central planner could accomplish the aforementioned “elegant” solution, this would be perfectly acceptable as well. It is all about “efficiency,” and “optimal allocations” to university professors. But there is never the question of right and wrong. Simple morality, and respect for natural rights is not a factor. It is always the obligation of politicians and economists to solve our problems, not private individuals. The left is able to veil their interventionism in the cloak of the free market. As long as academia continues to pander about the virtues of government, our future leaders will continue to make the mistakes of their predecessors.