Friday, February 27, 2009

The budget is a lethal mixture of poisons.

In the next few months we will find out "what makes him tick" – President Obama that is.

In my past blogs on him (here and here) I tried to reserve judgment, while warning of the danger that he really believed his own rhetoric.

If the current budget is any indication, my worst fears may have been understated. 

Mr. Obama actually seems to have deep-seated, often well disguised, principles. And the only thing more dangerous than a politician without principles, is a politician with the wrong principles.

Mr. Obama is a believer in the power of big government to achieve miracles. In fact, judging by his use of the first person, he is under the impression that the government is his own personal tool. The miracles will be his achievements.

There should be no illusions on this. America, and by implication the world, stands at the crossroads of a radical change of course that will have dire consequences for generations to come. It could be the peaking of the American civilization.

History suggests that civilizations do not die precipitously. They commit slow suicide. Affluence and success brings power, and power both corrupts, and in our case, creates guilt and the illusory belief that all pain, suffering and sacrifice can be avoided, thus providing deliverance from the guilt. The State is seen as the golden key to the world of equality in all things and prosperity for all without interruption. But, in reality, the State is merely that rhetorical device whereby everyone tries to live at the expense of everyone else. The result is collapse and impoverishment. 

Witness Mr. Obama's budget. It is an horrific combination of economic blows.

First, there is fiscal madness. The sheer size of this budget, on top of the various bailout and sub-bailout expenditures, is literally unimaginable, in the sense that if you told me two years ago that the Congress, as corrupt and spineless as it is, would vote to more than triple the deficit in one year, I would have said, never! I could not have imagined it. This spending, whatever it goes for, will have to be paid for, one way or another. Most likely it will mean higher taxes, much higher than provided for in this budget, and high inflation (which means high interest rates, falling real wages, rising unemployment, … hitting the poor worst of all). 

Second, this budget contains huge amounts to sustain long-term failed endeavors. The most obvious is the nation's failed public school system. Bush the younger spoke of vouchers and competition, but, in the end, compromised with a teacher-union intimidated Congress to implement a wasteful and useless "no child left behind" program. No one has yet explained to me why it is necessary for government to produce education as well as subsidize it (the latter may at least  be  debatable). The government is not good at producing anything, why should education be different? The system is the problem, throwing money at it just exacerbates the problem, it is no solution. Might as well flush this money down the toilet while kids in the inner-city languish in institutions that cannot educate them and simply expose them to crime and drugs. 

We are also going to throw money at an increasingly expensive and challenged health-care system – one that faces long-term catastrophe as the baby-boomers enter the ages of infirmity. Like the abortive "Hillary-care" a generation ago, this initiative does nothing to increase the supply of heath-care, which is the only thing that will arrest the inexorable rise in costs. We need more doctors, more hospitals, more hands to do many routine, now protected, health-care activities, and more competition to provoke more efficient delivery. More government money will just make things worse.

The same is true of college-education subsidies. They will increase the demand for a limited number of spaces and prompt the colleges to raise their prices, as they always do.

Third, and perhaps even more harmful than the previous two, is the environmental package. This contains a double whammy. First, and obvious, is the overt taxation of businesses for the purpose of limiting CO2 emissions. It needs to be understood, and cannot be overemphasized, that businesses never pay taxes. The taxes levied on businesses are ultimately "paid" by those who buy its products (at higher prices), those who work in the industry (at lower wages), those who supply the industry (at lower prices); in short, the taxes are paid in a multitude of invisible, and insidious, ways by the distortions of the production process that they produce. But, second, and perhaps even worse, this budget contains provisions for the promotion of "renewable" energy alternatives. Economically unviable investments, that would never be voluntarily made, are going to be foisted upon the American public in the interests of "clean" energy. The American auto producers are going to be hijacked for the purpose of producing ridiculously expensive cars that very few have been willing to buy. And all this is justified on the basis of the patently non-existent benefits of reducing CO2 emissions – understand this clearly!, there is absolutely no proven benefit to the climate or anything else from these dramatic economic distortions (see here).

All of this implies the unprecedented extension of the naked power of government against which the only protection offered us are the good intentions of this new messiah president. 

I retain a faint hope that Congress will succeed in clipping his wings. But how much this will help in softening the blow of this huge catastrophe only time will tell.


Anonymous said...

Same ole out of touch rhetoric.
Sorry pal, polls show your the minority in your concensus.

Stick with Rush Limbaugh, he won't steer you wrong. :)

Peter Lewin said...

Never claimed a consensus. If there were a consensus the post would be unnecessary. The majority is often wrong - as in this case.