Mises Daily Articles
Buchanan and Market
In all the commentary on Patrick J. Buchanan's new book (The Death of the West, NY: Thomas Dunne Books, 2002), has anyone discussed his silly economic fallacies and highly interventionist policy agenda? This is the conservative book of the year, the core thesis of which (the West needs higher rates of population increase to keep up with the Third World) impacts very strongly on economic issues.
What then does Buchanan propose?
The Family Wage: Buchanan says (p. 232) he favors amending the Civil Rights Act "to allow employers to pay higher wages to parents than to single people…. This should apply to single dads and moms…. Employers should be given tax incentives to pay higher wages to parents."
Does he really believe that employees want to pay higher salaries to people with children but are currently not doing so for fear of lawsuits? If anything, the pressure runs in the opposite direction, married people suing because single people are paid more.
Does he not understand that wages and salaries are determined by the supply and demand for an individual's contribution to the productivity of the firm? Can he not grasp that employing federal law to raise the price of parent-labor would reduce, not increase, its marketability, and thus create incentives not to be married and have children?
Corporate Taxation: Buchanan says (p. 233) that "the burden of corporate taxation should be shifted off family businesses and farms onto the larger corporations. As Ronald Reagan used to say, corporations don't pay taxes, people do. Corporations only collect taxes. Let the Fortune 500 do the collecting."
Huh? Buchanan is demanding that if a corporation is really successful at marketing its product and running a tight ship, and then becomes a Fortune 500 company, the government should only then start demanding that it function as a proxy for the IRS!
Reagan employed his quip as a case against taxing all corporations. His point was to say that corporations in the abstract aren't doing the paying. They are being forced to collect from individuals, and its comes out of workers' wages and salaries. Buchanan's suggestion will only lower the incomes of people who work for the best companies.
New Revenue: Buchanan says (p. 233): "If new revenue is needed to pay for these family tax cuts, it can be obtained through taxes on consumption and duties on imports."
Now there's an idea! Prevent the Death of the West through higher prices on consumer goods!
Women in the Workforce: Buchanan says (p. 33): "As men's jobs in manufacturing, mining, farming and fishing are no longer needed, or are shipped overseas, the skills and talents of women are now more desirable. Businesses, large and small, offer packages of pay and benefits to lure talented women out of the home and keep them out of the maternity ward."
Here we go again demonizing business, and with the weirdest theory ever: the conspirators behind economic development are really out to smash the employability of the male sex in favor of the female sex. It takes a heated imagination to dream up this stuff.
A major reason moms went to work was inflation and taxes, which caused the real standard of living of the American family to decline. The first year when both mom and dad were more likely to be working, rather than not, was 1985, and the biggest growth in this trend occurred at the same time real family income took its biggest postwar hit. To resist that impulse (and many do) requires a high income or deep convictions. In any case, it is going to take far more than a few taxes credits to restore the belief that one income is enough to provide for the family. Making government more intrusive won't help; intrusive government is the problem.
In any case, does he not know that the rap against high tech is that unfairly employs too many guys, that its work isn't really designed for women? Does he believe that women on farms sit around and coddle the young'ns while Dad does all the work? Not so in any farm I've ever seen. Of course business is pleased to employ anyone who will assist in its desire to serve the consuming public. But women, like men, all face a choice. Is it really so hard to imagine that people can make choices consistent with their own best interest?
Evils of Riches: Buchanan says (p. 34): "The richer a nation becomes, the fewer its children, and the sooner it begins to die"; and (p. 37): "When the income tax rate for the wealthiest was above 90 percent in the 1950s, America, by every moral and social indicator, was a better country"; and (p. 47), today "young people are not concerned about their souls; they're worried about the Nasdaq."
Like the environmentalists, then, Buchanan has decided that poverty has a wonderful upside. That's one way to save bad economic ideas: claim they are supposed to depress the standard of living! But there are a few problems with Buchanan's theory that poverty makes people pious and pregnant. Poverty-stricken places like Bosnia-Herzegovina, among many other Hell holes, have lower birth rates than the US. And as even Buchanan has to admit, the first time US births fell below replacement level was during the Great Depression. Finally, for the record: I know many people who want to save their stock portfolios and their souls.
Anti-Corporate Mentality: Buchanan says (p. 229): "The transnational corporation is a natural antagonist of tradition. With its adaptability and amorality, it has no roots; it can operate in any system. With efficiency its ruling principle, it has no loyalty to workers and no allegiance to any nation. With share price and stock options its reasons for being, it will sacrifice everything and everyone on the altar of profit. The global capitalist and the true conservative are Cain and Abel."
Or one might point out that multinational corporations increase competition and quality, expand access to new technology, reduce the price of goods for consumers and producers, create hundreds of millions of new paying jobs, lift the developing world out of poverty, permit the developed world to specialize in what it does best, foster peace among nations, promote financial stability, undermine the power of dictators, break up entrenched producer cartels, expand economic opportunity, undermine the welfare state, crush the menace of union power, and spread prosperity and liberty to the entire human race.
Or is it better to sacrifice everything and everyone on the altar of losses?
Dogs Eating Dogs: Buchanan says (p. 33): "The Global Economy works hand in hand with the New Economy, transferring manufacturing jobs from high-wage Western nations to the low-wage, newly industrializing nations of Asia and Latin America."
Last check, the unemployment rate was 5.8 percent and falling, and this in a recession. This is below what the Keynesians used to call full employment. The number of people working in manufacturing has indeed fallen, which reflects a sectoral shift due to economic development: witness the steady rise in household income since the mid-1990s. Thus, the Latin American, Asia, and Westerns nations are growing wealthier together by cooperating through trade and exchange.
Surprise: trade works! Why must Buchanan see conflict where there is none? Is it really necessary to point out that getting rid of high tech and global trade at this point would reduce the standard of living rather dramatically? How the heck does Buchanan expect the massive population increases he hopes for to be sustained absent economic development?
Freedom Is Heresy: Buchanan says (p. 37): "Many conservatives have succumbed to the heresy of Economism, a mirror-Marxism that holds that man is an economic animal, that free trade and free markets are the path to peace, prosperity, and happiness…."
Sorry, but free trade and free markets are the path to peace and prosperity. There's a word for people who deny it: socialists. As for happiness, Thomas Jefferson was right that freedom allows only for its pursuit.
Disastrous Trends: Buchanan says (p. 127): "People identify less and less with the nation-state, more and more with kith and kin."
This is supposed to be bad news. To stop this horrible trend, Buchanan offers no proposals to curb big government and plenty to expand it (like instituting a National History Bee administered by Historian-in-Chief George W. Bush).
I know Buchanan's book is about more than economics. Buchanan is right (p. 55) that John Lennon shouldn't have said, 36 years ago, "We're more popular than Jesus." He's right that "American Beauty" was an awful movie (p. 84). He is right that Confederate symbols are not racist, that the left is engaged in cultural jihad, that high Third World immigration has been invasive.
But what he suggests as a replacement is another central plan, one that would promote impoverishment. But he has put zero thought in the core issue: if you want a huge population increase, you have to come up with some system of economics to sustain it. The capitalist process of economic progress is the only system that does so. As even Buchanan notes in passing (p. 13), the welfare state brings about depopulation.
Buchanan hasn't made his peace with the market economy, but his book is not highly unusual in this regard. Economic fallacy is everywhere. I shudder to think of the errors unleashed on the world simply because people haven't taken a weekend off to read a basic text like Murray N. Rothbard's Power and Market.