Wednesday, October 26, 2011

Government Protection Racket

Everywhere we turn these days, we find constant reminders of the lousy economic numbers in this country; and while economists refuse to talk about a 'double-dip recession' that hasn't yet met their strict definition, we all know it's here.  Many of us know the culprit as well.  It's not evil corporations or the wealthy 1%.  It's not even really the bankers, though they certainly haven't gone out of their way to help the situation. In fact, it's those in government telling us that something must be done for our protection, when the only thing that they're really trying to protect are the cushy jobs that most of them will have to attempt to keep, some 12 months from now.  

Government is something that we created in this country over 200 years ago to do for ourselves together what we could not do alone.  It was not instituted to do things we have apparently now become too lazy to do for ourselves. Look at the Government's latest answer to fixing the economy if you'd like an example, as the Senate passes legislation seeking tariffs against the Chinese for flooding the US with 'cheap goods', and preventing our own from being competitive.  Really?

Isn't that the same government that's telling us that the biggest problem is that consumer demand for goods is down?  Do they think that demand will improve if the costs of those goods are increased through tariffs on produced in China or the sale of more expensive goods from elsewhere (even the US)?  What will happen to a cost of living calculation that's already little more than pointless fiction, since it doesn't include the costs of food and energy, if we add to it what will now be the higher costs of imported goods?  

Politicians complain that the Chinese are pumping money into their own economy to artificially prop it up (which seems rather disingenuous of those who passed two different Stimulus plans and would like to see a third passed).  But so what?  What's wrong with taking advantage of China spending their money to makes its goods cheaper to buy until they can no longer afford to do so?  Aren't we glad that China is using this money to prop up their exported goods, rather than using it to build fleets of ships, squadrons of airplanes, and silos full of missiles?  If they think that the best use of their national treasure is an attempt to sustain something that cannot be sustained forever, let them.  In fact, let's applaud and encourage them to continue to do so while enjoying the fruits of ignorance that allow us to buy more and cheaper stuff with our own money. 

Of course placing tariffs on goods coming out of China will likely spur retaliatory ones on US goods being shipped to China and lead to a trade war, but what's wrong with that?  Well for one thing and like so many other times, Washington will be fighting the last war and not the one one we're facing.  We are no longer in a position of strength to bully other nations on the world stage.  The economy is a house of cards and the windbags in Washington are doing little more than seeking to blow it down.  For another, these are the same policies that proved a dismal failure during the Great Depression when they signed in 1930 the Smoot-Hawley Tariff Act into law.  Rather than helping the economy recover, this bit of odious political economic theory in fact extended the damage of the Depression far beyond what it should have.  Is repeating one of the poorer examples of legislative governance in this country's history the only way that we can prove its lunacy? 

Perhaps what we need to be asking ourselves more often is whether much of the very protection that the government is attempting to provide is what's stifling the economic recovery that it claims to be seeking.  Cheap energy is a necessary component to fueling a recovery for example, but the govt refuses to issue permits for drilling on land and sea in this country.  When Canada offers to ship us less expensive oil that it's choosing to recover from its own lands, we refuse to allow them permission to build a pipeline across the US for processing.  Such thinking not only ignores the necessity of obtaining such energy from a friendly source, but the large number of good paying jobs that will result from looking for it, getting it out of the ground, and building the pipeline across this country to move it to refineries.  What kind of protection is that?

The president demonizes the TEA party movement seeking a return to a limited government as defined by the Constitution that it was created under.  He finds sympathy however, for an Occupy movement that seeks not equality of opportunity but equality of result.  Doesn't this kind of equality stifle the very spark of potential genius this country was built on under a pile of stinking egalitarian mediocrity?  In the rush to seek some imagined progressive government utopia of uniform opportunity, are we instead getting a conformity mandated by the force of law?  In the seemingly constant incremental surrender of individual freedom, could we be dooming ourselves to stagnation instead?  Have we exchanged a true diversity of ideas for little more than a divergent set of paths to failure?  While decrying a lack of competitive edge in this country, has government itself instilled a placidity whose only goals are illusionary props to self-esteem?

This protection by legislation and regulation is not only doomed to failure by the faulty thinking it comes from, but by the imperfect assumptions it's based on and the defective methods involved in writing it.  What makes all of it even worse however, are the inevitable strong-arm tactics that will be used to enforce what are little more that crooked, flawed, and unsound policies for no other reason than that those in power believe that they know what's best for you.  Growing up in Chicago around the stories of mob influence during the days of another flawed government mandate, Prohibition, we knew what to call this kind of protection.  Used very effectively by criminal enterprises that often seemed far more organized that our government (then or now), we called them Protection Rackets.    


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