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Wednesday, June 5, 2013

Damage Caused by Intervention in the Marketplace

You have heard the expression, “The government shouldn’t be picking losers and winners,” but why not?  Why shouldn’t the government intervene in the marketplace and subsidize businesses they like, and raise taxes on business they don’t like?  Isn’t that smart?  Don’t we all benefit?

Perhaps government intervention would be a good idea if perfect people populated government and they really did know what is best for everyone else.  If the people in government were omnipotent, all wise, all knowing, and as pure as the driven snow, government intervention into the marketplace might be a good idea.  It might actually work to the benefit of everyone, but alas, neither men (nor women) in government are angels.  They are just as imperfect, greedy, ambitious, ego-centric, and corrupt as you and I.  They are no wiser, no better, no smarter, no kinder, no more generous, and certainly no more perfect than any responsible citizen of this land.

The Founders understood that.  In fact, that was their genius that enabled them to create a republican form of government that would have very limited and specifically enumerated power over the lives of American citizens.  Because they read the Bible, they fully understood the fallen state of man.  It was this knowledge that gave them the determination to create a government of very limited power.  Their appraisal of the state of man has proven true.  Even though the Founders provided ample direction and instruction as to how the federal government should have limited power, corrupt man has devised ways around the restraints that the Founders imposed. 

Presidents from Woodrow Wilson to Franklin D. Roosevelt to Lyndon Johnson to Bill Clinton to Barack Obama have chaffed at the restrictions on power that the United States Constitution imposes on them.  They see it as an impediment to them doing good for the American people.  They reject the idea that all men are fallen and corrupt.  They reject the chains on power of government that the Constitution imposes.  And, in their appetite for expanding government, they have usurped the precious freedom bequeathed to us by our Founders. 

The double-talk language devised by corrupt men would be laughable, were it not for the danger they pose to our republic and the freedom you and I enjoy.  As far back as the beginning of the 20th century, those seeking a powerful, centralized government started talking about “a living Constitution” that could be interpreted just about any way you want it to be interpreted to advance your agenda.  This silly concept has been  taught with a straight face from grade school to graduate school for more than 60 years.  It was Orwellian before Orwell.

Today a political leader can say that he is totally committed to free speech and then vote for or propose restrictions on free speech in the name of political correctness.  He or she can assert that they fully support the right to keep and bear arms, and then vote for legislation that infringes on your personal right to keep and bear arms.  They can say that they are for freedom of the press, and then subpoena telephone records of journalists.  They can say that they support freedom of religion and then back legislation that essentially promotes freedom from religion.  They can say they are totally committed to the United States Constitution and the rule of law and then ignore the intent of those who drafted the Constitution.  They wage war without calling it war and without a Constitutionally mandated declaration of war by the United States Congress.

They try to fool the people by calling government spending “investments” and taxes “contributions.”  They convince themselves that they are compassionate when they vote to forcibly take money from others to give to someone they deem worthy of that person’s funds. 

They are not for freedom, nor do they have compassion.  They don’t believe in freedom of the press, or free speech, or the right to bear arms.  They believe in one thing and one thing only, power.  They seek power over the lives of others in the false belief that they are better, and smarter, and wiser than others and should decide how they live.  That is not freedom, it is political arrogance that leads to slavery.

One of the ways that these self-styled, all-wise men (and women) gain power over your life and mine is through policies that intervene directly into the business marketplace.  Using regulations, taxes and other vehicles of power, they tell us what kind of light bulbs we can use, how the cars we buy are to be constructed, how much water our commode can hold, how many windows we can have in our homes, and where we can and cannot pray.  They decide what individuals or companies will be taxed more heavily, or what companies will receive a subsidy.  They compel us to comply with laws that run counter to traditional morals and our personal religious beliefs.

The system is broken and it can’t be blamed just on the Democrats.  The Republicans, too, have been willing participants in this corruption.  Both parties have ignored the spirit and the intent of the Founders in order to give themselves more power, more benefits, and more personal recognition.  There are very few members of Congress, and even fewer individuals in the current Administration, that would receive the approbation of the Founders.  No, except for a very limited few like Senators Lee, Paul, Scott and Cruz, and a handful of tea party Republicans in the House, the Founders would have nothing but disgust for and disapproval of their actions.

The Founders saw our system of government as one that would be populated by citizen statesmen—men who would temporarily interrupt their productive lives to serve for a short period in public office.  The very last thing they would have wanted is a permanent and powerful legislature and a President who acts more like a king or potentate than a servant of the people.  They would decry the fact that many Congressmen and Senators, and even the President, has never held a productive job in the free market.   The Founders would be offended to see Senators and Congressmen who view their elected positions as a career, not as a temporary calling.  They would be greatly disappointed to learn that today’s Congressmen and Senators do not understand their role is to serve others and to protect the Constitution.  The Founders would be shocked by the ignorance of judges, and elected officials, as to the meaning and intent of the Constitution itself.  With special perks like chauffeurs, special parking (on Capitol Hill and at every DC airport), private elevators, special dining rooms, scores of aides, big salaries, and benefits that a king would desire, today’s Congressmen and Senators are the Princes and Dukes and royalty that the Founders feared. 

And what does nearly unlimited power in the hands of imperfect, sinful people always result in?  The answer is corruption.  Or as Lord Acton said, “Power corrupts, and absolute power corrupts absolutely.”  The men and women in Congress did not create our government of laws or our republic.  When they vote to go beyond the intent of the law, and needlessly intervene in your life and mine, and in the marketplace, they betray their oath of office to “protect and defend the Constitution of the United States of America.”

And, oh what damage they do.

Let’s go back to my original question.  Why shouldn’t the government pick winners and losers in the marketplace?  The answer to that question is that each and every time the government intervenes in the marketplace and provides subsidies to an individual company or an industry, it…

  1. Benefits a select few companies at the expense of…
  2. Other companies who are either barred from entry into the marketplace, or severely disadvantaged, and ultimately results in…
  3. Lowering the standard of living for all citizens

The exact same thing happens when government targets a particular industry for excessive taxes, or intervenes into the marketplace in such a way as to distort the free market so that either labor or business has an unfair advantage over the other.  When government provides special benefits to a business, it delays and hurts innovation because it makes it much more difficult for competition to enter the marketplace. 

All monopolies or cartels, business or labor, are the direct result of government intervention into the marketplace.  Monopolies cannot long exist in a free market because competition will always find a way to break a monopoly.  Monopolies, like government mail delivery, only exist because competition is directly barred by the so-called express statutes.  There is little doubt that, in the absence of a government created monopoly, service would improve and the price of mail delivery would decline sharply. 

Cartels, like the airline industry cartel, are created by government picking winners and losers.  Once the airline cartel was broken, prices declined sharply, the number of passengers increased, and the number of flights increased sharply.  The rich may complain that the luxuries of the past under the cartel are greatly missed, but millions of American citizens laud the access they have to high quality, convenient, low cost, and safe airline travel.  The market place has once again triumphed, providing better service at lower prices.

Ultimately, the consumer always suffers when government, specifically politicians, barge into the marketplace, whether their intentions are benign or self-serving.  Like a house fire, the end result is always the same, whether the fire was set by an arsonist, or occurred due to the ignorance of a fool with matches. 

To be sure, politicians promote subsidies of farmers, sugar growers, tobacco, automobiles, etc. for venal reasons, as well as for well-intentioned ones.  While some may honestly believe that it is only fair and right to vote for such subsidies, far too often they vote for subsidies, and for laws that restrict entry into the marketplace, as a means of currying favor, and ultimately to receive campaign contributions.  It is a corrupt practice, and one the Founders would scorn.  But today’s politicians, Democrats and Republicans, have this money laundering scheme down to an art form.  It provides a way to give incumbents of both parties a clear advantage over challengers, so that they can continue in their political careers.

But all this political wheeling and dealing hurts.  American citizens suffer.  When one industry is subsidized, or given special favors, or protected through legislation, the outcome is always higher than marketplace prices for those goods and services.  Why?  Because when Congress provides protection, or subsidizes a special group of companies, other companies who may well provide better goods and better services are not able to compete on a level playing field.  Moreover, in reality, the marketplace is far better than a few bureaucrats and politicians deciding which businesses and industries should prosper and which should fail.  Government intervention kills jobs, restrains the advance of technology, increases the cost of consumer goods and services, and generally has a negative impact on the entire economy.

Each and every time government provides subsidies for goods or services that could not otherwise be produced in the marketplace, American citizens pay higher taxes and higher taxes mean a lower stander of living.  The standard of living you enjoy is not based on your gross income, it is based on your purchasing power.  If a car artificially costs more due to excessive government regulations, or due to laws that enable labor to unfairly charge higher wages and benefits, your standard of living goes down.  When the cost of anything you buy at the grocery store is higher due to government regulations, your standard of living declines.

For instance, today the price of gasoline is artificially inflated by government taxes.  These taxes have little to do with paying for highway maintenance.  They are designed to make driving more costly so that you will buy a smaller car, use less fuel, use mass transit, etc.  It all sounds good, but the net effect is that your standard of living just went down, and your freedom was limited.  You and only you should decide what kind of car you should drive, based on the options available in a free market, unencumbered by social engineering regulations dreamed up by politicians and bureaucrats.

When the government intervenes and builds non-marketplace services like mass transit, it imposes a permanent burden on every citizen and lowers the standard of living of all Americans.  The annual financial shortfall incurred for building and operating a non-marketplace service hurts every American, because that shortfall must be made up every year in tax revenues.  The more taxes you pay, the lower your standard of living.

It all boils down to this.  Government should not pick winners and losers because government is inherently incompetent and corrupt.  Government intervention will always benefit a few at the expense of many.  Crony capitalists, such as Jeffrey Immelt of General Electric, are always too willing to accommodate the corrupt politicians on both sides of the aisle.  Such crony capitalists eagerly accept and lobby for subsidies of foolish things like windmills to make a buck.  At the bottom line, businessmen, laborers, politicians, and every citizen is cursed with the problem of sin that corrupts their values, their morals, and promotes greed and a lust for power. 

The marketplace itself is not moral, but it does fiercely constrain bad ideas and bad men from succeeding.  Yes, it is true, for a while a dishonest businessman can succeed, but ultimately he will fail because the marketplace exposes dishonest practices through competition.  Not all regulations are bad, but the cost of the regulation must never be more than the cost of the perceived problem.  Far too often, rules, regulations, licenses, certifications, and the like are put into place at the behest of crony capitalists who endeavor to use government to protect them from competition.  Low cost and high quality are the hallmarks of the free market, while high costs and shoddy products are the symbol of socialism.  This is not speculation.  Just think about the quality of goods and services provided under the old Soviet Union.  The Soviet Union is not a bad example of socialism in practice, as its advocates claim, it is reality.

Politicians, who are susceptible to believing that they are experts on everything, are easily conned into believing in such fantasies as global warming.  They are willing to ignore science, if it advances their goals.  They understand that by creating another real or imagined crisis they can gain more power over the lives of American citizens.  Therefore, the truth or fiction of the crisis is not very important to them.   Providing they see an opportunity to expand their rule over the American people, they are content.  They never take their eye off the goal, which is more power over your life and mine.

Until and unless both parties quit electing men and women who have no true allegiance to the United States Constitution, our freedom and our republic will continue to decline.  Some on the left, like Nancy Pelosi and Harry Reid, clearly understand their goal—an all-powerful government that doesn’t look a whole lot different than the Cuban government of Fidel Castro.  Others, like John McCain, simply combine self-service with ignorance of the Constitution.  While their intent may be good, like the fool with matches, they undermine our republic, and stand in the way of patriots like Ted Cruz, Rand Paul, Mike Lee, Tim Scott and others. 

My goal and yours must be to accept no counterfeit Republican candidates in 2014 and beyond.  We don’t need candidates with deep party loyalty, we need men and women with a deep commitment to the United States of America and to the principles and ideals of the Founders.  Anything less will lead to disaster.

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