Proponents of markets often note that there is no such thing as a free lunch. The logic of this argument is simple, yet profound. Resources are scarce and all have alternative uses. Any time we consume any good, it comes as an expense to someone. Government does not create, it redistributes. The true costs of the things that government supplies to people may be dispersed or unseen, but they exist as surely as we do.
Late last year, in a move that gives even politics a bad name, the Federal Reserve announced yet another cut in its key interest rates. Around the same time, Fed Governor Ben Bernanke gave a speech praising the power of alchemy to lower the price of gold, and, similarly, the power of the Fed to print as many dollars as it wants. Hence, the Federal Funds Rate is down to 1.25 percent, while the discount rate stands at 0.75 percent.
The once unsoiled House of Greenspan, feted as it was by the yeomen of the New Economy with its attendant mythology, now finds itself smeared by criticism that it created the stock market boom and is therefore responsible for the bust that has naturally followed.
In Austrian circles, such criticism has long been a staple of economic and political commentary. Only in the aftermath of the boom has the mainstream press second-guessed their beloved maestro.
When some left-wing activists recently began their What Would Jesus Drive? campaign against sport utility vehicles, the first reaction of most folks—and especially libertarians—was a simple, “Are these people really serious?”
Consider what the business press doesn’t tell you. Just looking at the conventional data, we are still in the thick of the longest period of economic doldrums in the postwar period. I use the word doldrums because somehow the word recession is out of favor. Instead, in Alan Greenspan’s notorious phrase we are in a “soft patch” of the recovery.
When I heard of the explosion of the space shuttle Columbia, one of the first things that came to my mind was how little effect it had upon the lives of ordinary people—as compared to the Challenger disaster of 1986. I was sitting in the stands at a YMCA youth basketball game, and from what I could tell, the accident was hardly on the lips of anyone.
The New York Times recently ran a three-part series on a string of tragic industrial accidents at facilities owned by McWane Inc., a large producer of sewer and water pipe based in Alabama. The series describes nine apparently needless and sometimes especially gruesome deaths, as well as several horrendous injuries suffered by workmen. All of them are presented as taking place in an environment of such reckless irresponsibility and callous disregard for the value of human life as to strain credulity.
Economies tank for big reasons and small, but usually both. The current stagnation was prompted by investment imbalances created in the late 1990s that needed to be liquidated. But it is being made worse by a thousand bad policies, some of which are being aided by those seeking to “stimulate the economy,” but not knowing how; others have long been on the books.
