The usually reliable Thomas Sowell seems to have recovered from his unaccountable bout of considering President Obama clean and articulate, and last week was back on the case of Congressional Republicans, urging them to eschew the me-too-ist/Democrat-Lite legislative approach of the last eight years.
The Optimistic Conservative could not second this motion more. The gargantuan debt spending package being slaved over in the Senate is just that: a proposal to go into substantially greater debt than the nation is in right now – in spite of the fact that the mismanagement of debt is what got us to our current financial condition in the first place.
The debt spending package (popularly known as the “stimulus” package, but not here at the Optimistic Conservative) is an enormous gamble on a theory that has not proven valid in the past. It IS a gamble, a Vegas-style high-rollers’ gamble, and we need to keep that in mind. The advocates of the spending bill, including the president, go into this hoping it will have the effect they seek. It is an experiment. It is a throw of the dice. When the principle of economic “pump-priming” through government spending was tried in the past, under FDR, it did not have the intended effect. The concept being applied to this spending bill is that FDR simply didn’t spend enough. A then-poorer US government did not take on enough new debt to properly stimulate the economy through spending.
But government can never simulate (yes, I mean simulate here) the way the free market functions, for the purpose of encouraging business start-ups and growth. The reason is that government is the opposite of the concept of risk. Government is, by its very nature, prescription. Government represents certainty, and people must know what that certainty will be, because in general, they cannot legally outthink it. They do not bet on or against it. They do not take risks on government, as they do on unguided market factors like demographic trends, the tastes and interests of consumers, and the expected prices of commodities. Yet those risks are precisely what produce the opportunity for profit and incentive, and create the conditions for long-term economic health.
Government is arbitrary, where the market has trends. An entrepreneur can outguess the market, but he can only wait to know what government intends to do. Until he does, he must hedge a significant amount of his overall financial picture; and that typically means such pragmatic measures as saving, not hiring, not expanding, and putting money in “safeguards” like gold.
Ultimately, government offering jobs to business contractors is analogous to the “give a man a fish” clause of the old adage. Michael Steele, new RNC chairman, seemed to be getting at this in a This Week conversation cited today by Commentary blogger Jennifer Rubin:
STEELE: …You’ve got to look at what’s going to create sustainable jobs.
What this administration is talking about is making work. It is creating work.
STEPHANOPOULOS: But that’s a job.
STEELE: No, it’s not a job. A job is something that — that a business owner creates. It’s going to be long term. What he’s creating…
STEPHANOPOULOS: So a job doesn’t count if it’s a government job?
STEELE: Hold on. No, let me — let me — let me finish. That is a contract. It ends at a certain point, George. You know that. These road projects that we’re talking about have an end point.
As a small-business owner, I’m looking to grow my business, expand my business. I want to reach further. I want to be international. I want to be national. It’s a whole different perspective on how you create a job versus how you create work.
The Optimistic Conservative would couch his argument as follows: Offer an entrepreneur a government contract, and you employ him for the life of the job. Lower his taxes, lower his customers’ taxes, relax the expenses of regulation and fees, and you create the conditions in which he will keep himself employed, and employ others, for life.
The president and Congress propose, with the debt spending bill, to borrow against the tomorrow of all of us, in order to give some of us a fish today. What we should demand, rather, is that they let us fish for ourselves, on our own schedule and volition. Congress can’t “do nothing” to bring this about: it needs to make the Bush tax cuts permanent, reduce (or eliminate) the capital gains tax, eliminate the federal gas tax, and take other measures like relaxing Sarbanes-Oxley and lifting a number of federal regulations on business.
Today the fisherman has to pay steep fees up front, before he even starts fishing; is restricted by thousands of rules in where he can fish, and how; and then if he does catch fish, has to hand a sizable percentage of his catch over to the federal government. What you get with this kind of regulation and taxation regime is less fishing. If we want more of it, we need to unleash the fisherman. This measure, unlike taking on collective debt to hand out fish in an approved manner, has the merit of being “stimulative,” every time it is tried.
Fish image courtesy of http://www.webstockpro.com/Stock-Photos-catfish/