The Foolishness Of The Wise

Mainstream economists notoriously cannot agree nor predict; their construct, 'the economy' remains terra incognita until after some economic event. That results from the nature of their construct: the economy is no gestalt; it is aggregated people. So too, is government.

Economists assume that their economy is assembled from 'economic men' who behave rationally, seeking economic gain and avoiding economic loss. Real human beings are as much emotion-driven as logic-driven and often, more so. Economic models remain unable to recognize that, let alone predict it. Austrian economists acknowledge it and often are better predictors, but nobody listens. Too many economists are therefore reduced to what amounts to building castles in the air or manufacturing excuses for politicians. It is worse with government.

The American Founders strongly distrusted government, writing a Constitution that was largely a government impediment in the hope of protecting the people and favoring economic progress. Today however, at least half the American voters appear to consider government the solution of their problems and the primary source for fulfillment of their needs; they are encouraged in that by social and political leaders who have come to the opposite of the Founders' convictions.

Let's aim at reality: the government is, like the economy, aggregated people. In an economy, you have entrepreneurs and workers; in government, politicians and bureaucrats. Economic producers must serve the needs and wants of consumers; politicians must serve the needs and wants of first, political contributors, then of influential interest groups and finally, those of voters. It is too often overlooked that entrepreneurs and politicians, before serving those needs, are driven by their own, very individual, personal needs; these inevitably are their highest priority. Men are made that way, in order to preserve the species.

It is the genius of the free market that, by aggregating masses of individual, i.e. selfish, needs it can produce wealth and spread it among many while satisfying the needs of most. The less the market is restricted, the more efficiently it performs and the more people it serves. The market has no leader, no manager, no policymaker. It arises out of human nature and naturally serves our species simply because that is what we are and therefore, what we do. Government is both the same, and very different.

The overwhelming difference is, government is always under human management while the free market is unmanaged. Government then, must first, in order to have them, serve the needs of its managers. Next, government is the opposite of a free market; it is heavily constrained in its actions. Government can perform only two basic actions: it can use force or threat to prevent or compel the actions of others and it can take the property of others via that same force or threat. It has no other competence. There is no government function that does not flow from one or both of those basics.

Voters are the same species as politicians; their own perceived needs and wants determine their choices. Politicians, knowing that, frame their appeals toward the perceived needs and wants of the voters. In simpler terms, they lie. Voters know that, but depend upon at least a minimal benefit from their chosen politician since there is always another election in the future. Government then, is the interplay of the same self-interests as drive the market, but under different circumstances and so, with necessarily different results.

Politicians are not famously saintly nor are bureaucrats devoid of human needs requiring satisfaction. Both then, depend upon the property taken from others to accomplish their needs and goals. Both are human beings like all others who necessarily put their personal interests before any other interests. That is why, for example, government workers are paid more than those in the private sector. Simply, government has the power and takes the money for them. That is the same process relied upon by the voters when choosing politicians. One may characterize it simply: "What's in it for me?" Or you can just call it: "Human nature."

It's true that not all people fall into the described behavior; given time, some will be worse, some better. But the long-run average has historically fallen into this pattern, so that's the way to bet.

These facts were well known to America's Founders as a perusal of their writings makes clear. These facts are the explanation of the American Constitution. The Founders were 18th Century Classical Liberals and that is what underlay Liberalism then. Liberalism has changed a bit since; human nature, hasn't.

Bureaucrats famously advance by expanding their responsibility, which depends upon expanding their budgets and numbers of subordinates. Politicians advance by increasing the level of their elected offices; that in turn depends upon their access to increasing amounts of money and influence. A static or shrinking government for either of these, resembles a game of musical chairs; someone loses every time the music stops. To avoid that and its related political throat-cutting, all work to expand government, "a rising tide lifts all boats." This has been captured both perfectly and amusingly by C. Northcote Parkinson in Parkinson's Law.

The obvious conclusion is that elected governments are subject to a finite lifetime, extending only up to the point that the resources available to the politicians are no longer adequate to fulfill their increasing promises to the voters. Those promises are necessarily bid up at each succeeding election, in order to prevail over the competition's promises and at some point, reality can no longer keep up. The present financial conditions of many of the world's governments resemble that condition, according to some, but many wise men tell us to believe our leaders and all will be well. We will see...

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