Mises Daily Articles
Not All News Is Bad
The headlines say that a deal to bail out automakers stands little chance of success. One might hope that common sense alone would have killed it (it's never a good idea to throw good money at failing enterprises), but the Democrats are citing intense Republican opposition.
So too for the "stimulus package" that contains a long list of bad ideas, almost like a recipe for prolonging the downturn: bailouts, welfare, unemployment subsidies, union privileges, and other devastating devices. Now the package is being considered largely dead.
Already the Republicans are toughening up, seeing the light of day. After nearly a decade of signing off on horrible legislation and looking the other way as a Republican president chewed through our liberties, they are new converts to the cause of limiting the government because a Democrat will be president.
At the same time, we are witnessing the disgusting spectacle of Bush lecturing us on the merits of the free market. After eight years of wars, the police state, bailouts, and regulations, he is newly concerned about his legacy, and so he is following the path of Hoover, who was horrible in office and better out of office. Thus is Bush, of all people, sounding like a champion of the free society.
Already, you can see that the political constellation is lining up in a way that is more friendly to the cause of liberty. The Democrats are up to their old tricks, which are transparently dumb and dated. The Republicans are responding with smart and sound criticisms. The government looks poised for a fantastic gridlock that will let the liquidation take place so that we can move toward a good recovery.
There is plenty to regret about Obama's victory, but the first impressions of the political dynamic that is playing out looks like it could mean good things for the future.
I don't know if it is inspiring or just disgusting or what, but Bush's speech on Wall Street is worth quoting in full:
Government intervention is not a cure-all … History has shown that the greater threat to economic prosperity is not too little government involvement in the market, it is too much government involvement in the market…. Our aim should not be more government…the surest path to that growth is free markets and free people…. move forward with the free market principles that have delivered prosperity and hope to people all across the globe.…
Capitalism offers people the freedom to choose where they work and what they do, the opportunity to buy or sell products they want, and the dignity that comes with profiting from their talent and hard work. The free market system provides the incentives that lead to prosperity — the incentive to work, to innovate, to save, to invest wisely, and to create jobs for others. And as millions of people pursue these incentives together, whole societies benefit. Free market capitalism is far more than economic theory. It is the engine of social mobility — the highway to the American Dream. It's what makes it possible for a husband and wife to start their own business, or a new immigrant to open a restaurant, or a single mom to go back to college and to build a better career. It is what allowed entrepreneurs in Silicon Valley to change the way the world sells products and searches for information. It's what transformed America from a rugged frontier to the greatest economic power in history — a nation that gave the world the steamboat and the airplane, the computer and the CAT scan, the Internet and the iPod.
Ultimately, the best evidence for free market capitalism is its performance compared to other economic systems. Free markets allowed Japan, an island with few natural resources, to recover from war and grow into the world's second-largest economy. Free markets allowed South Korea to make itself into one of the most technologically advanced societies in the world. Free markets turned small areas like Singapore and Hong Kong and Taiwan into global economic players. Today, the success of the world's largest economies comes from their embrace of free markets.
Meanwhile, nations that have pursued other models have experienced devastating results. Soviet communism starved millions, bankrupted an empire, and collapsed as decisively as the Berlin Wall. Cuba, once known for its vast fields of cane, is now forced to ration sugar. And while Iran sits atop giant oil reserves, its people cannot put enough gasoline — in their cars.
The record is unmistakable: If you seek economic growth, if you seek opportunity, if you seek social justice and human dignity, the free market system is the way to go. And it would be a terrible mistake to allow a few months of crisis to undermine 60 years of success.
Bush isn't alone here. All the Republican leadership is sounding human again, making sensible points about the idea of a bailout of GM, Ford, Chrysler, and the UAW, and other pressure will follow.
Back up a bit to try to understand why divided government, even when it is divided among evil people, is better than unified government. Ralph Raico makes the point at every opportunity that the reason that the medieval period gave rise to liberty is that there was no power center on earth. The state was in competition with the Church and a thousand tiny governments were in competition with each other. Power was diffuse, and though any center would have been glad to have it all, the diffusion of power created a kind of gridlock that permitted liberty to grow and thrive
So too with divided power in any government. They can and do logroll to each other's mutual benefit, but when that process breaks down, it is a glorious thing. Recent history suggests that the logrolling between power centers is least effective when the Republicans are in the minority and the Democrats hold the presidency. The Clinton years are a case in point. Spending rose very little. Warfare was curbed relative to the past and present. Deficits fell. The public sector shrank.
This is the great hope of the next four years. The transition period seems to be signaling some very good changes, provided panic can be kept at bay, and the Republicans keep making sense.