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Sunday, July 18, 2010

The ending of America

This American Spectator article has been going around and is well worth reading. I'm posting the economic section here, but the bit on the difference between the ruling class's interests and the rest of the country are arguably the most important part:
By taxing and parceling out more than a third of what Americans produce, through regulations that reach deep into American life, our ruling class is making itself the arbiter of wealth and poverty. While the economic value of anything depends on sellers and buyers agreeing on that value as civil equals in the absence of force, modern government is about nothing if not tampering with civil equality. By endowing some in society with power to force others to sell cheaper than they would, and forcing others yet to buy at higher prices -- even to buy in the first place -- modern government makes valuable some things that are not, and devalues others that are. Thus if you are not among the favored guests at the table where officials make detailed lists of who is to receive what at whose expense, you are on the menu. Eventually, pretending forcibly that valueless things have value dilutes the currency's value for all.

Laws and regulations nowadays are longer than ever because length is needed to specify how people will be treated unequally. For example, the health care bill of 2010 takes more than 2,700 pages to make sure not just that some states will be treated differently from others because their senators offered key political support, but more importantly to codify bargains between the government and various parts of the health care industry, state governments, and large employers about who would receive what benefits (e.g., public employee unions and auto workers) and who would pass what indirect taxes onto the general public. The financial regulation bill of 2010, far from setting univocal rules for the entire financial industry in few words, spends some 3,000 pages (at this writing) tilting the field exquisitely toward some and away from others. Even more significantly, these and other products of Democratic and Republican administrations and Congresses empower countless boards and commissions arbitrarily to protect some persons and companies, while ruining others. Thus in 2008 the Republican administration first bailed out Bear Stearns, then let Lehman Brothers sink in the ensuing panic, but then rescued Goldman Sachs by infusing cash into its principal debtor, AIG. Then, its Democratic successor used similarly naked discretionary power (and money appropriated for another purpose) to give major stakes in the auto industry to labor unions that support it. Nowadays, the members of our ruling class admit that they do not read the laws. They don't have to. Because modern laws are primarily grants of discretion, all anybody has to know about them is whom they empower.

By making economic rules dependent on discretion, our bipartisan ruling class teaches that prosperity is to be bought with the coin of political support. Thus in the 1990s and 2000s, as Democrats and Republicans forced banks to make loans for houses to people and at rates they would not otherwise have considered, builders and investors had every reason to make as much money as they could from the ensuing inflation of housing prices. When the bubble burst, only those connected with the ruling class at the bottom and at the top were bailed out. Similarly, by taxing the use of carbon fuels and subsidizing "alternative energy," our ruling class created arguably the world's biggest opportunity for making money out of things that few if any would buy absent its intervention. The ethanol industry and its ensuing diversions of wealth exist exclusively because of subsidies. The prospect of legislation that would put a price on carbon emissions and allot certain amounts to certain companies set off a feeding frenzy among large companies to show support for a "green agenda," because such allotments would be worth tens of billions of dollars. That is why companies hired some 2,500 lobbyists in 2009 to deepen their involvement in "climate change." At the very least, such involvement profits them by making them into privileged collectors of carbon taxes. Any "green jobs" thus created are by definition creatures of subsidies -- that is, of privilege. What effect creating such privileges may have on "global warming" is debatable. But it surely increases the number of people dependent on the ruling class, and teaches Americans that satisfying that class is a surer way of making a living than producing goods and services that people want to buy.

Beyond patronage, picking economic winners and losers redirects the American people's energies to tasks that the political class deems more worthy than what Americans choose for themselves. John Kenneth Galbraith's characterization of America as "private wealth amidst public squalor" (The Affluent Society, 1958) has ever encapsulated our best and brightest's complaint: left to themselves, Americans use land inefficiently in suburbs and exurbs, making it necessary to use energy to transport them to jobs and shopping. Americans drive big cars, eat lots of meat as well as other unhealthy things, and go to the doctor whenever they feel like it. Americans think it justice to spend the money they earn to satisfy their private desires even though the ruling class knows that justice lies in improving the community and the planet. The ruling class knows that Americans must learn to live more densely and close to work, that they must drive smaller cars and change their lives to use less energy, that their dietary habits must improve, that they must accept limits in how much medical care they get, that they must divert more of their money to support people, cultural enterprises, and plans for the planet that the ruling class deems worthier. So, ever-greater taxes and intrusive regulations are the main wrenches by which the American people can be improved (and, yes, by which the ruling class feeds and grows).
I've been saying for years that America as we knew it is over. The incipient battle between the rulers and the ruled will determine what its replacement will be. Fortunately for the ruled, the economic meltdown combined with the ruling class's dedication to macroeconomic guidance is adding a high degree of difficulty to their effort to finish reducing the citizenry to serfdom.

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