Bad omens for economic policy

Not for nothing has economics long been known as the “dismal science”. Not only is it inherently boring, but hardly anyone truly understands it. Even among the few with some understanding, rarely are they able to communicate it to others. Harry Truman famously demanded a “one-armed economist” because he was so frustrated with economic advisors who kept saying “on the one hand this could happen, but on the other that could happen”.

I once had the honor of serving on a board with Milton Friedman, a remarkable man who not only understood economics better than just about anyone, but who also could explain the dismal science with a clarity comprehensible even to dolts like myself. Through an amazingly popular television series in the 1970s - “Free to Choose”-and in hundreds of newspaper columns, Friedman gave to a wide audience some basic grasp of economic theory and reality. For this feat as well as being proven “right” on the Big Questions, Friedman can fairly be called the most influential economist of the 20th century.

Perhaps the greatest truth that Friedman articulated was that as a general rule government intervention is bad for national economies and free markets are good. If you ranked the success of national economies over the last century the best (e.g.- the United States) had relatively the least government intervention while the worst (e.g.- the Soviet Union) had the most. Similarly free markets did best and non-free worst.

Despite this pretty clear track record left-wing opinion has relentlessly preferred giving government the primary role in managing national economies.

We were painfully reminded of these truths during the recent economic meltdown. Anyone doubting the general economic ineptitude of government had only to watch the ludicrous and downright dangerous posturing of our Democratic Congress as the crisis unfolded.

Turning the wisdom of Friedman upside down, Democrats outdid each other in laying all possible blame on free markets. Chanting a mantra of “greed” and “corruption” (phenomena unknown in Congress, of course) they instantly fingered “Wall St. fat cats” as the villains of the piece.

Piling hypocrisy on top of absurdity, no one shouted these accusations louder than Barney Frank and Chris Dodd -who arguably had more responsibility for the genesis of this disaster than any other two people in the country. Once again was George Orwell’s famous dictum validated: The Big Lie repeated loud enough and often enough does work.

Complementing the demonization of free markets was the obscene notion that our country’s salvation was to be found in –you guessed it- massive government intervention.

Blending irony with hypocrisy and betting on public memory loss many of the very same people (e.g. Chris Dodd) who had whooped through the landmark deregulatory legislation signed by Bill Clinton repealing the Depression era Glass-Steagall Act now howled that the economy desperately needed wall-to-wall Congressional oversight and bureaucratic regulation of just about everything.

The Congress’ last great outburst of regulatory mayhem came in the wake of the Enron collapse. Demonstrating its usual genius for producing “cures” far worse than the “disease” Congress passed the Sarbanes-Oxley bill, a bureaucratic nightmare that delivered a body-blow to U.S. entrepreneurial activity, and drove much of it overseas.

What we are going to get starting in January by way of “fixing the economy” from the Democratic triumvirate of Obama, Reid, and Pelosi will make Sarbanes-Oxley look like a relatively minor and benign piece of progressive legislation.

Throughout our past American greatness has been driven by an engine of economic opportunity unparalleled in the history of the world. Its’ indispensable fuel was freedom- freedom to dare, to risk , to choose, to innovate, to adapt, and above all to work hard with a just expectation that one would be allowed to benefit from the fruits of one’s labor.

Today- confirmed by the late election -new doctrines are abroad in the land. They value the collective over the individual. Their hallmarks are not work, risk, reward but entitlement, grievance, and envy. The engine of opportunity is now to be lubricated with class warfare. Growth gives way to redistribution.

This scenario may seem gloomy, but that is needed to get people’s attention. America has often been likened to a sleeping giant, frequently slow in awakening to danger, but once aroused, it is capable of extraordinary feats in meeting the greatest challenges.

We must hope that that capacity is far from exhausted.

William Moloney’s columns have appeared in the Wall St. Journal, USA Today, Washington Post, Washington Times, Philadelphia Inquirer, Baltimore Sun, Denver Post, and the Rocky Mountain News.