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Obama Blinks

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Tags The EnvironmentInterventionism

09/07/2011Llewellyn H. Rockwell Jr.

President Obama has pulled back on imposing new "air quality" regulations. The regulations would have hobbled many industries and created many spillover effects. The Republicans have estimated costs as high as $90 billion, but they are just saying that to provide a sound bite. They supported such things under Nixon and Bush.

There is no real way to know the costs of such egregious legislation, especially given that the highest costs of regulation are hidden. They consist of the jobs not created, the products that don't come to market, the production that does not take place, the efficiencies not realized, the standards of living not raised. Indeed, it is worse than that: the more the government hobbles the economy, the poorer we become — and there is no real way to document a future we are not permitted even to see.

Do you disagree? Well, fine, but apparently none other than Obama does agree. He said, "I have continued to underscore the importance of reducing regulatory burdens and regulatory uncertainty, particularly as our economy continues to recover."

This is a gigantic intellectual concession. If this is true of some regulations, what about the billion-plus other regulations? The results are the same any time you shackle free enterprise, in whatever way you do it. You cut off options for entrepreneurs. You reduce the value of capital by providing fewer outlets for its use. You divert productive energies from making things for society and force them into complying with regulatory bureaucracies. The costs are always enormous. In fact, we might look at socialism or fascism as nothing other than the extreme end of a highly regulated economy.

Maybe you say that sometimes regulations are worth it. That is your judgment. But let us at least acknowledge the existence of regulatory tradeoffs. When you regulate, you are giving up something, and that something consists of some level of prosperity that we will not see. That is the choice: regulation versus economic growth. You might say that society has had enough economic growth, and we don't really want a world in which the poor grow richer or more jobs are created or more businesses thrive. Again, that is your judgment. But let's acknowledge the tradeoff.

"It's almost like this combination of political and economic disaster has finally awakened the administration to reality."

This is precisely what Obama has done, and it represents a yielding to the reality that the Left always seeks to avoid. For more than 100 years, they have claimed otherwise. They say that their regulations will have the effect of increasing efficiency, saving money, creating jobs, and all the rest. In the case of clean air, the idea is that it creates "green jobs," better living spaces so that people can have happier lives, better use of resources, less exploitation of workers, and all the rest. This is why the New New Left has long called government spending "investment," regulations have been tagged "standards," and taxes rechristened as "contributions." The illusion these people have attempted to weave is the idea that government intervention in our economy will actually make us better off. (I might add that, despite its rhetoric, the Right is no better in practice.)

Now, these claims are self-evidently untrue for a variety of reasons: owners know better than bureaucrats, consumers can manage their own affairs, entrepreneurs need a terrain of liberty and opportunity to create, and the pricing system is the ultimate guarantor of efficiency. Government has no resources of its own; it plunders the rest of us to get what it has. Moreover, it has no knowledge of how to manage society that exceeds what the individuals in society themselves possess. Just the reverse. Government is an essentially stupid institution.

But now, with Obama's announcement, we see the proverbial turn on the dime. He and his administration are admitting that their program is a drain, a burden, an unwelcome presence, a hobbler of prosperity. That is the implication, and that is really the only conclusion that one can draw from this announcement. It pretty much upends a major claim of the interventionists.

And why is he doing this? Well, look at the polls. It's a disaster right now for Obama's presidency. And look at the economy. It is not growing; it's shrinking. It's almost like this combination of political and economic disaster has finally awakened the administration to reality.

This whole thing reminds me of an event in Austria following World War I. Otto Bauer was the most influential intellectual and adviser in the entire country, but he was a dedicated and hard-core Marxist. At a time when the direction of Austria was uncertain, and the Bolsheviks were on the rise, Ludwig von Mises met with Bauer and his Marxian wife over several evenings. Otto had been pushing for immediate socialism. Mises explained that such an experiment would collapse in a very short time. Vienna was dependent on imports. Without the means to calculate and pay, the rural food supply would cease, and everyone in Vienna would start starving in about one week. Mises pressed the point as only he could, and finally Bauer relented and admitted that Mises was right.

But here is the punch line. Bauer never forgave Mises for having convinced him to give up his convictions. He waged an all-out academic war on Mises, and never spoke to him again. He was instrumental in denying Mises a paid position at the university. Such is the fate of an economist who tells the truth to politicians who dream of using the state to elevate society. The economist essentially says, With all your power and all your theories, you still do not have the ability to do what you claim. The attempt will lead to disaster.

Someone in the Obama ranks apparently talked to the president in the same way about this potentially catastrophic regulation. Those same people should say the same about all the taxes, antitrust regulations, environmental regulations, wars, welfare, mandates, restrictions, and monetary manipulations. Someone needs to speak even more truth to power. Doing so always comes at a personal cost, as those who believe in government launch vengeful attacks. Still, it must be done.

May the sudden realization that regulations can kill build a consciousness that leads to an unraveling of the entire interventionist state, so that we can all be left alone to build our own prosperity.


Contact Llewellyn H. Rockwell Jr.

Llewellyn H. Rockwell, Jr., is founder and chairman of the Mises Institute in Auburn, Alabama, and editor of LewRockwell.com.

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