Bernie, It’s Government That "Rigs" The Economy
Note: The views expressed on Mises.org are not necessarily those of the Mises Institute.
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Bernie Sanders is no Ron Paul, but he has had great success in galvanizing masses of Americans – particularly young voters – by communicating a populist message of anger against Wall Street. Last night's surprise victory in Michigan is the latest example of Sanders's ability to tap into the distrust many Americans have of the current system.
Sanders is perhaps at his most effective when drawing direct parallels between the treatment of banking elites against those of average Americans. As the Senator said during a Democratic debate last month:
Goldman Sachs was one of those companies whose illegal activity helped destroy our economy and ruin the lives of millions of Americans. But this is what a rigged economy and a corrupt campaign finance system and a broken criminal justice is about. These guys are so powerful that not one of the executives on Wall Street has been charged with anything after paying, in this case of Goldman Sachs, a $5 billion fine.
Kid gets caught with marijuana, that kid has a police record. A Wall Street executive destroys the economy, $5 billion settlement with the government, no criminal record. That is what power is about. That is what corruption is about. And that is what has to change in the United States of America.
Overlooking the point about campaign finance, which seems quaint given the success of Donald Trump and the failure of Jeb Bush, Bernie’s larger point maintains some validity. The rules that are used to imprison and steal from Americans in Georgia, Montana, or Iowa are often very different than those enforced against the powerful people found in Washington, DC or New York City. For example, Bernie’s kid caught with marijuana has a police record, while Joe Biden’s son suffers no such consequences for being busted for cocaine use.
Unfortunately, as is the case with almost every half-decent point Bernie Sanders makes, he fails to recognize that this is the direct result of the government he advocates to expand. While Sanders supporters will immediately start chanting “white privilege”, the reality is that this is really about State privilege.
Of course, the government’s rigging of the economy obviously goes much further than Goldman Sachs executives not facing criminal consequences for their role in the financial crisis. It’s what happens when politicians, such as Sanders, try to score cheap political points among frustrated voters by championing foolish policies such as raising the minimum wage to $15 – having no care for the fact that it makes it much harder for any worker with a limited skill set to get a job.
Touching back on Sanders’s indictment of Wall Street regarding the financial crises, perhaps no entity is more responsible for “rigging” the economy than the Federal Reserve — which not only enabled much of Wall Street’s reckless borrowing in the lead up to the crisis, but actively sought to inflate the stock market (at the expense of risk-averse savers) following it. While, to his credit, Sanders has supported the full audit of the Federal Reserve long advocated for Ron Paul, he has fully advocated for the Fed to double down on these very same policies.
In fact, almost every example the left points to regarding a “rigged economy” can be directly linked to the State. Be it Pharma Bro and the broken pharmaceutical industry, or the cost of healthcare in America, or the burden of student loans being felt by Millennials across the country, the market is blamed for the sins of government. Capitalism is demonized for the evils of interventionism.
As Ludwig von Mises wrote in Human Action:
[Advocates of government intervention] blame the market economy for the consequences of the very anticapitalistic policies which they themselves advocate as necessary and beneficial reforms. They fix on the market economy the responsibility for the inevitable failure and frustration of interventionism.
Unfortunately this anti-capitalist mentality continues to dominate politics today. Until that changes, politicians like Sanders will continue to find success demonizing a rigged economy they bear personal responsibility for creating.