Monday, March 16, 2009

The Cause of Poverty

Jacob Hornberger has a short economics lesson for the new administration :


Liberals are saying that President Obama isn’t really a socialist because he doesn’t favor complete government ownership and control of everything, which is the strict definition of socialism. Since he “only” favors massive government involvement in some things, such as education, healthcare, mail delivery, transportation, retirement, employment, airports, money, bailouts, subsidies, grants, banks, insurance companies, the stock market, occupations, the drug war, and trade restrictions and immigration controls as well as progressive income taxation and equalization of income — well, according to liberals, all that makes Obama “free enterprise” instead of socialist.

I wonder what Fidel Castro, who also favors all those things, would say about that.

Lost in all this debate on whether Obama is a socialist or not is one simple but important point: It is the dead hand of government that is the cause of America’s economic woes. That means that the more that Obama does to restore wealth and prosperity to America with his increases in borrowing, spending, and printing money, the worst things are going to get.

The situation is akin to someone suffering from arsenic poisoning. He goes to the doctor and asks for an antidote. The doctor prescribes more arsenic.

What liberals, who purport to love the poor, needy, and disadvantaged, fail to recognize is another important point: It is the dead hand of the state that is the cause of poverty. Or to be more precise, it is massive government involvement in economic activity that prevents or inhibits a society from becoming wealthy. Call it socialism, fascism, welfare-statism, central planning, inflationism, wealth equalization, or just massive government involvement in the economy, the fact remains: the heavier the hand of government in people’s pocketbooks and business activity, the poorer people will be.

Consider my hometown of Laredo, Texas. It is located adjacent to the Rio Grande. On the other side of the river sits Nuevo Laredo, Mexico. It’s actually one great big metropolitan area, separated by a river.

Yet, the standard of living of people in Nuevo Laredo is markedly lower than that of those living in Laredo. It’s a phenomenon that one cannot help but notice the minute he crosses the border into Nuevo Laredo. People in Nuevo Laredo are a lot poorer than those in Laredo.

I’ll bet that most Americans would never ask themselves that simple one-word question that they used to constantly ask when they were children, before they had it drummed out of them in those government-run schools their parents were forced to send them to: “Why?” Why are people in Nuevo Laredo significantly poorer than those in Laredo?

After all, if one travels to the American city of St. Louis, he’ll find that the standard of living of people in East St. Louis, Illinois, is about the same as that in St. Louis, Missouri. That city is separated by the Mississippi River rather than the Rio Grande. Could that be the difference?

No. The reason that people in Nuevo Laredo are so much poorer than people in Laredo is this: The dead hand of the state is much more prevalent in Mexico than it is in the United States. As bad as things are in the U.S. with respect to taxes, welfare, regulation, inflation, and bureaucracy, they are 1,000 times worse in Mexico. While we have Big Government in the United States, Mexicans have Mega Government.

That’s the reason people are poorer in Mexico than they are in the United States. It’s also the reason that people in North Korea are poorer than those in Mexico. The dead hand of the state is more prevalent in North Korea than it is in Mexico.

All this should provide a clue for liberals, who are supposedly interested in helping the poor. If one wants to raise standards of living for people, the solution is not to increase taxes, spending, borrowing, and regulation but instead to slash them, such as by abolishing the income tax and the IRS and by completely separating the economy and the state. That’s the way to help the poor.

Alas, however, liberals move in precisely the opposite direction — higher taxes, borrowing, spending, welfare, regulation, bailouts, and stimulus plans. Even worse, they continue to force children into those government-run schools where they learn to memorize, regurgitate, and conform to this destructive nonsense rather than learn how to critically analyze and challenge it.


(h/t Dissecting Leftism)

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