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President Obama has pulled back on
imposing new "air quality" regulations. The regulations would have
hobbled many industries and created many spillover effects. The Republicans
have estimated costs as high as $90 billion, but they are just saying that to
provide a sound bite. They supported such things under Nixon and Bush.
There is no real way to know the
costs of such egregious legislation, especially given that the highest costs
of regulation are hidden. They consist of the jobs not created, the products
that don't come to market, the production that does not take place, the
efficiencies not realized, the standards of living not raised. Indeed, it is
worse than that: the more the government hobbles the economy, the poorer we
become — and there is no real way to document a future we are not
permitted even to see.
Do you disagree? Well, fine, but
apparently none other than Obama does agree. He said, "I have
continued to underscore the importance of reducing regulatory burdens and
regulatory uncertainty, particularly as our economy continues to
recover."
This is a gigantic intellectual
concession. If this is true of some regulations, what about the billion-plus
other regulations? The results are the same any time you shackle free
enterprise, in whatever way you do it. You cut off options for entrepreneurs.
You reduce the value of capital by providing fewer outlets for its use. You
divert productive energies from making things for society and force them into
complying with regulatory bureaucracies. The costs are always enormous. In
fact, we might look at socialism or fascism as nothing other than the extreme
end of a highly regulated economy.
Maybe you say that sometimes
regulations are worth it. That is your judgment. But let us at least
acknowledge the existence of regulatory tradeoffs. When you regulate, you are
giving up something, and that something consists of some level of prosperity
that we will not see. That is the choice: regulation versus economic growth.
You might say that society has had enough economic growth, and we don't
really want a world in which the poor grow richer or more jobs are created or
more businesses thrive. Again, that is your judgment. But let's acknowledge
the tradeoff.
"It's almost like this combination
of political and economic disaster has finally awakened the administration to
reality."
This is precisely what Obama has
done, and it represents a yielding to the reality that the Left always seeks
to avoid. For more than 100 years, they have claimed otherwise. They say that
their regulations will have the effect of increasing efficiency, saving
money, creating jobs, and all the rest. In the case of clean air, the idea is
that it creates "green jobs," better living spaces so that people
can have happier lives, better use of resources, less exploitation of
workers, and all the rest. This is why the New New
Left has long called government spending "investment," regulations
have been tagged "standards," and taxes rechristened as
"contributions." The illusion these people have attempted to weave
is the idea that government intervention in our economy will actually make us
better off. (I might add that, despite its rhetoric, the Right is no better
in practice.)
Now, these claims are
self-evidently untrue for a variety of reasons: owners know better than
bureaucrats, consumers can manage their own affairs, entrepreneurs need a
terrain of liberty and opportunity to create, and the pricing system is the
ultimate guarantor of efficiency. Government has no resources of its own; it
plunders the rest of us to get what it has. Moreover, it has no knowledge of
how to manage society that exceeds what the individuals in society themselves
possess. Just the reverse. Government is an essentially stupid institution.
But now, with Obama's announcement,
we see the proverbial turn on the dime. He and his administration are
admitting that their program is a drain, a burden, an unwelcome presence, a
hobbler of prosperity. That is the implication, and that is really the only
conclusion that one can draw from this announcement. It pretty much upends a
major claim of the interventionists.
And why is he doing this? Well,
look at the polls. It's a disaster right now for Obama's presidency. And look
at the economy. It is not growing; it's shrinking. It's almost like this
combination of political and economic disaster has finally awakened the
administration to reality.
This whole thing reminds me of an
event in Austria following World War I. Otto Bauer was the most influential
intellectual and adviser in the entire country, but he was a dedicated and
hard-core Marxist. At a time when the direction of Austria was uncertain, and
the Bolsheviks were on the rise, Ludwig von Mises
met with Bauer and his Marxian wife over several evenings. Otto had been
pushing for immediate socialism. Mises explained
that such an experiment would collapse in a very short time. Vienna was
dependent on imports. Without the means to calculate and pay, the rural food
supply would cease, and everyone in Vienna would start starving in about one
week. Mises pressed the point as only he could, and
finally Bauer relented and admitted that Mises was
right.
But here is the punch line. Bauer
never forgave Mises for having convinced him to
give up his convictions. He waged an all-out academic war on Mises, and never spoke to him again. He was instrumental
in denying Mises a paid position at the university.
Such is the fate of an economist who tells the truth to politicians who dream
of using the state to elevate society. The economist essentially says, With
all your power and all your theories, you still do not have the ability to do
what you claim. The attempt will lead to disaster.
Someone in the Obama ranks
apparently talked to the president in the same way about this potentially
catastrophic regulation. Those same people should say the same about all the
taxes, antitrust regulations, environmental regulations, wars, welfare, mandates,
restrictions, and monetary manipulations. Someone needs to speak even more
truth to power. Doing so always comes at a personal cost, as those who
believe in government launch vengeful attacks. Still, it must be done.
May the sudden realization that regulations
can kill build a consciousness that leads to an unraveling of the entire
interventionist state, so that we can all be left alone to build our own
prosperity.
Llewellyn H. Rockwell, Jr
LewRockwell.com
Article originally published at Mises.org here
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