What Big Government Can Do


On Monday morning, President Obama dropped the bloated corpse of a bizarre, $3.73 trillion budget on the steps of Capitol Hill.  It is a remarkable document, in that it extends the wildly irresponsible spending and Big Government devotion of Obama’s first two years almost without hesitation, despite the historic pounding his party took in the 2010 midterm elections.  Described in these thousands of wasted pages is a death spiral, which Obama seems to believe there is no way for America to escape.  He even ignored the recommendations of his own blue-ribbon deficit reduction panel, convened with much fanfare last year as a sign of the President’s commitment to fiscal sanity.

This dead-on-arrival budget, in combination with the results of the Obama spending binge to date, has but one use: it shows us what Big Government can do.

Government, for example, is indispensable in the creation of high unemployment.  Left to their own devices, people will generally find uses for each other’s talents.  Every individual is both a producer and consumer, employee and customer.  The United States is rich in knowledge and natural resources.  Given stable currency, reliable access to credit, and basic consumer protections, business ventures will be created to fill the needs of any given population.  Large groups of people create opportunities merely by existing.

The heavy hand of Big Government creates massive distortions in this process.  It increases the cost of labor, through regulations and burdens like ObamaCare.  By increasing the cost of labor, it drives down demand.  It destroys industries through moratoriums, and chokes the life out of profitable ventures with heavy taxation and regulatory oversight.  Government can easily increase the cost of pursuing an opportunity so much that smart businessmen will simply ignore it. 

Not even massive natural disasters can destroy jobs as efficiently as government, because eventually even the worst earthquake or hurricane ends.  Government keeps unemployment high for years on end.  It even subsidizes joblessness, through lavish and prolonged unemployment benefits.

Big Government is also vital in the creation of shortages.  In a free society, entrepreneurs respond to demand by increasing supply.  This is one of the reasons competition drives down prices.  If Company A is not generating enough supply to meet the needs of consumers at reasonable prices, Company B will soon appear, and find a way to increase supply so it can satisfy those needs. 

Only the government can step in to shut down competition and deliver shortages, artificially increased prices, or both.  It blocks the exploration and development of natural resources, keeping American consumers at the mercy of foreign suppliers.  It can block entry to a market with taxes and licensing requirements.  It creates labor shortages by empowering labor unions, whose fabulously expensive workers would otherwise be undercut by non-union shops on almost every bid.  There is almost no way to create a monopoly, or manipulate supply to artificially drive up price in the long term, without the assistance of government.

Government is the mother of entitlement.  Only the State can make unsustainable promises to favored constituents, and leave future generations to cope with the crushing burden of fulfilling them.  A private entity which operated that way would go out of business, or end up in jail, like Bernie Madoff. 

A business entity that suckers people with ridiculous promises that can never be kept will be sued for fraud.  Government, on the other hand, does this all the time, with complete impunity.  Virtually every action Big Government takes produces an obligation against future generations.  For example, Obama’s budget continues his weird obsession with spending billions on “high-speed rail.”  Whatever other functions high-speed rail might serve, you must understand that it is also an obligation.  If we followed Obama’s plan of spending $53 billion to develop a massive high-speed rail network, future politicians would be obliged to keep spending on it forever, no matter how much money it might lose.  Abandoning it would be tantamount to wasting that $53 billion investment, to say nothing of “destroying” all the jobs connected with operating the trains, so the high-speed rail system would be subsidized for eternity.

Only Big Government could produce the public-sector union benefits that threaten to bankrupt several states.  Private management generally understands it has a vested interest in providing benefit packages that won’t bankrupt the company in the future.  Politicians, on the other hand, love nothing better than to promise big pensions and benefits to loyal union members, because it buys their support without costing the present-day politician a dime.  Only the government can build billion-dollar levels of corporate entitlement through massive bailouts.

And, of course, only government can produce crippling levels of debt.  A private corporation would see its credit rating ruined, and probably face legal charges, long before it reached the absurd situation Obama’s 2011 budget places us in.  No company could sell its stockholders on a business model where it spends 30% more than it takes in, for years on end.  No corporation can use force to arbitrarily extract more income from its customers, as Obama plans to do with the many tax increases built into his budget document.  No private concern can randomly charge one person for services rendered to another.  A private citizen will never awaken one morning to discover he is $30,000 in debt to a company he would prefer not to do business with.

An activist government produces unemployment, shortages, entitlement, and debt by using power to reverse the normal operation of market forces.  That is the strategy laid out in Obama’s gigantic budget.  The bigger government gets, the more it will do these terrible, but entirely predictable, things… and the more time it will spend telling the private sector it is somehow responsible for problems that simply could not exist unless the government created them.



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