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free trade & free markets general freedom too much government

Prophet of Loss

What if Karl Marx was …  half right?

Marx’s theory of history elaborated that, with each bust of the boom-​and-​bust cycle, the rich would nab ever more property — capital — until impoverished workers united to take all that capital for “themselves” (as a collective) and run it for the common good.

That’s dialectical materialism. It didn’t predict what happened even in Communist countries. But something vaguely Marxian is going on now.

Today, when there’s a bust, government bails out the failed rich guys — even buying companies.

Further, governments keep hiring more people to “stimulate” the economy. Government workers increase as a percentage of the workforce, with higher-​than-​average wages and benefits.

This used to be called “creeping socialism.” Politicians move us closer to total government — measure by measure, tax by tax, law by law. No revolution necessary.

Except … well, as politicians put more of our eggs into the collectivist basket, each down-​swoop of the business cycle makes the whole system less stable — and (with increasing taxes and debt) more burdensome to sustain.

It could all lead to revolt — a taxpayer revolt.

Taxpayers, who’ve had to put up with a lot of nonsense over the years, aren’t even a tad bit interested in the foolishness of communism — or a corporate, fascist super-state.

That’s where Marx and his followers had it all wrong. Only the build-​up of instability seems Marxian. Americans’ response is to seek limits on government.

This is Common Sense. I’m Paul Jacob.

Categories
free trade & free markets

Fear of Falling

The fear of falling is innate. Newborns have it.

The fear of falling prices is different.

What? Who fears falling prices?

Politicians and investors and the big boys in big business, that’s who. When all sorts of prices fall, it means that their plans for ever-​upward growth hit the hard rocks of economic reality. And these downturns sure can hurt. A lot.

Yet there’s an awful lot of evidence that you just have to weather these periods. You shouldn’t panic. And you definitely should not try to “prop things up.”

But that is exactly what politicians generally try to do in an economic downturn — they try to prevent some set of prices from falling.

Post-​Great War depression in Britain, and America’s own beginning of the Great Depression … in both downturns there were huge political forces at work, trying to prevent a sector of prices from hitting their natural floors. In those cases, it was mainly wages that got propped up.

The effect? Massive unemployment.

I’m no economic historian, so I hate to tread these waters. But I’m not going to play Santayana’s fool, forgetting history and then forced to repeat it like Sisyphus’s rock-​and-​roll classic on permanent skip-​repeat/​skip-​repeat.

So remember: Propping up prices in the past didn’t work. They won’t work now with housing.

This is Common Sense. I’m Paul Jacob.