In Government, First, Do No Harm!
The major difference between success in government and success in business is credit for intentions versus credit for results. Unlike the customer, the electorate is far too forgiving of bad results, so long as the politician or politicians concerned had good intentions. Perhaps, going forward, we should hold our politicians to a higher standard:
Nonmaleficence, which derives from the maxim, is one of the principal precepts of medical ethics that all medical students are taught in medical school and is a fundamental principle for emergency medical services around the world. Another way to state it is that "given an existing problem, it may be better not to do something, or even to do nothing, than to risk causing more harm than good." It reminds the physician and other health care providers that they must consider the possible harm that any intervention might do. It is invoked when debating the use of an intervention that carries an obvious risk of harm but a less certain chance of benefit. Since at least 1860, the phrase has been for physicians a hallowed expression of hope, intention, humility, and recognition that human acts with good intentions may have unwanted consequences. http://en.wikipedia.org/wiki/Primum_non_nocere)
A friend recently sent me a list of the "panics," "crises," "recessions," or "depressions" that have taken place in the United States and elsewhere since 1776.
There was something that struck me immediately upon looking at my friend's list. I went to the web for research and found the (probably not exhaustive) historical information on Wikipedia. Most of these economic "crises" were of short duration, and the government(s) at the time took no significant action. However, in the cases of the Great Depression (1929-1939) and the Financial Crisis of 2007 to 2010, the governments at the time took very significant actions, and the crises lasted longer than normal.
Let us ascribe the purest of motives to the actions taken. The fact remains that the governments in each case had no assurance that the policies pursued would have any curative effect and ignored the likelihood of unintended consequences both immediately and in the future. In each case, the actions of the government made recovery take longer -- though recovery did occur, all but in spite of said government action.
Moreover, we have seen a series of actions by government since 1929 seemingly taken without considering unintended consequences. Not that there were no similar actions prior to 1929, but it would appear that there have been many more and much more significant instances since then. Examples of this include most of the "New Deal" programs and Social Security (1935); the "great Society," including Medicare and Medicaid (1965); and the recent great stimuli of 2009 and 2010 coupled with the passage of Obamacare in 2010.
Since the intended beneficiaries of these actions often turned out to be the unintended victims, it may be important to recognize that in order to benefit the people, government should most often do nothing! We have arrived at a point where we cannot afford much more experimentation by government -- at least not at the national level. Since we cannot, with accuracy, analyze the unintended consequences of recent actions already taken, we should insist on a cessation of expensive experimentation and a return to those things tried and true that promote economic growth and therefore the general welfare.
The fact that mistakes have been made in administrations past does not lessen the mistakes made and being made by the current administration. One of the first things anyone can do to recover is stop doing those things that were dragging him down. The most pressing problems for government at the moment are the economy and the huge national debt. The Obama administration should be slashing spending and budgeting for a surplus in 2012 to help our own economy and to strengthen the dollar so as to bring down the dollar-price of oil and other commodities. Yet the Obama administration and Democrats in Congress keep pushing against all attempts to bring down spending by enough to accomplish this.
At this point, we should realize that historical information may help us to understand why we should or shouldn't do something in search of a certain result. However, when contemplating present difficulties and future opportunities, we should realize that what matters is not only how we got here, but also where we go from here. When you are in a hole, at least stop digging! Then you can think of ways to get out.
In order to start seeing clearly, you have to realize that every fiscal deficit total adds that much to the debt, and every fiscal surplus total subtracts that much from the debt. There has been no need to run deficits since the end of WWII. Yet what have you seen Congress and presidential administrations do? The answer is that they have run deficits in an effort to buy your vote with your money. They have borrowed what you or your children have to repay. And repay it you (or they) will in the form of monetary inflation, reduced opportunity, and lower standard of living.
There is no need to run a deficit this year, or next year, either. You can see this for yourself by just taking a completed budget and cutting it until it balances. Using FY 2010 numbers, I showed that we could run a balanced budget, pay interest on the debt, and pay Social Security right now. And using 2005 numbers, we could do it even more easily.
The only reason we don't have a balanced budget right now is politics. If Barack Obama had one statesman-like bone in his body, he could propose a balanced budget right now and make Congress pass it, because the Members of Congress couldn't politically oppose that path right now.
Our problem has been with us for a long time, but in a manageable magnitude. However, the steps taken by Obama and Congress since 2009 have exacerbated the problem beyond manageability. It will spiral out of control if action is not taken now.
The aim of government should always be promotion of an atmosphere that maximizes the possibility of economic growth. Growth is what makes everything else possible. It provides the wherewithal to have social programs and take care of the unfortunate, to provide defense, and to pursue our far-flung interests around the world. Without economic growth, we have nothing.
A pro-growth policy means no more debt, low taxes, and less regulation -- since it is debt, taxes, and regulation that provide the biggest drags on economic growth. People who want more of those three things want to kill the goose that laid the golden egg.
"We can't solve problems by using the same kind of thinking we used when we created them." - Albert Einstein
Jeff Scribner is president of ASI Enterprises, Inc., an investment bank serving small- and medium-sized businesses. He can be reached at firstname.lastname@example.org.