We, the people, should control commerce

The hearts of progressives everywhere are racing as they contemplate the delightful prospect of a federal replay of the New Deal and Great Society, those overrated nostrums intended to solve major economic problems which they only made worse. In less than two months the sainted Obama Administration will take power, already in transition promising to stimulate our commerce with massive public works projects (including unprofitable and inefficient "green" energy) and doubtless more bailouts of companies "too big to fail." Preference will be given, of course, to those saddled with huge costs imposed by federal mandates, with expensive union pensions, "job banks" (money for not working) and top wages.

Hint: The initials are GMC, FMC And CMC.

The late great economist Henry Hazlitt, author of the remarkable volume, "Economics in One Lesson," advised economic policy makers to look not just at the immediate consequences of a given policy but the long-term consequences as well. Actually, one does not have to have a very long attention span to notice that the first bailouts of the credit markets have begotten still more in any industry or business whose bottom line is in trouble. This took only days and weeks, not years, to become evident.

A still longer term consequence has to do with how Americans view their commerce. Is it a multitude of transactions between willing buyers and willing sellers? Or is it a single entity waiting for the expert guidance of politicians to maximize the payoff to those most deserving of consideration, which always means the influential and the powerful?

A thoughtful article in the Wall Street Journal earlier this year debunked the false notion that there is such a thing as "the economy." When one considers the billions (yes, billions) of people who are buying and selling every day, 365 days a year, in a multitude of different markets and a great variety of ways, it leads the prudent person to scale down massive expectations. Commerce cannot be saved by government policy that intervenes on behalf of those not benefitting enough–whoever they are, whatever their resources.

Many who take this sober view of the possibilities of controlling the marketplace by political action consider themselves exponents of what has been called "laissez-faire" economics. Far from seriously quarreling with this point of view, I only hasten to mention that the United States Constitution authorizes Congress to "regulate commerce with foreign nations and among the several states, and with the Indian tribes."

Government, with its power to tax and spend, will always be the greatest single influence on commerce, particularly in this era of Big Government. For decades federal spending has accounted for about a fifth to a fourth of the nation’s total, not to mention that of 50 state governments and thousands of local jurisdictions.

Prominent economists of the past such as John Maynard Keynes and John Kenneth Galbraith argued that, given the massive influence government had even before the New Deal dwarfed all previous federal spending, it should intervene on behalf of socially desirable objectives, such as reducing unemployment, raising wages and redistributing wealth.

But government by nature is not a commercial enterprise. It does not compete in a free marketplace. It depends upon forcible collection of taxes and other revenues in order to ensure the performance of its basic functions, viz., insuring our safety inside and outside our borders and administering justice, civil and criminal.

Republican government was designed to be impartial among the many (fortunately) competing interests of our people. To regulate is to "control or direct according to rule, principle, or law." Rules, principles and laws are no respecters of persons. The object is the common good, not the good of favored groups.

Of course, this republican restraint is more easily advocated than practiced. But we Americans have been governed by principle to an extraordinary degree, and for that reason the majority of us still believe that the purpose of government is not to reward indolence or failure but to promote enterprise and provide no more than a ground floor for victims of circumstances beyond their control.

But as we are tempted once again to consent to massive controls over our commerce, here and abroad, let us remember, as Ronald Reagan said, "Government is not the solution to our problems. Government is the problem."