On Tuesday President George W. Bush made a remarkable admission. He told CNN television, “I’ve abandoned free market principles to save the free market system.” It is hard to believe, coming from a two-term Republican president. But there it is – proof positive that socialism is the wave of the future. President Bush does not believe in the free market. If he did, he would let the market function. He would have allowed the catastrophe to unfold according to market principles, trusting that the outcome would be better – in the long run – than the outcome of government intervention. For this is what market principles teach: that government planning cannot save an economy.
The president indirectly proposes that the government knows better than the market. He is saying that the government knows how to save the market, namely, by violating the market. By way of analogy, this amounts to advocating promiscuity as a means for preserving virginity. It would be laughable if it weren’t so serious. “We’re in a huge recession,” said Bush, “but I don’t want to make it even worse.”
But President Bush has made it worse by throwing good money after bad, by redistributing the market’s losses, pronouncing in favor of moral hazard, and by making massive decisions for the market. What comes next is hyperinflation. According to a senior economist at Decision Economics, quoted in an AFP news story titled “Fed cuts rate to virtually zero, will expand stimulus moves,” the government is “pulling every lever and pulling them hard. They are going to print money until they get a reaction from the economy.” Well, the reaction has begun. The good faith and credit of the United States is over. Who is going to loan money to a government determined to inflate?
Consider the parade of stupidities we’ve seen since the crisis began in September: the bailout of Wall Street, the bailout of the banking system, and now the bailout of Detroit. This is what the president means when he says, “I’ve abandoned free market principles to save the free market system.” So the solution is to spend trillions to save trillions. But nothing is saved!
The argument of the president is an argument from desperation. The economy is getting worse, we all can see. But nobody in government knows what to do. Only the market can generate the knowledge that provides a solution. If losses come out of this, they must be sustained. For the alternative is completely irrational, and leads to the government’s control of the economy and to socialism – that is to say, economic stultification.
I repeat: The government cannot save the economy. The government doesn’t know how. Taking over industries, or guiding the business community according to an overall “recovery” plan is nothing but socialism and socialism doesn’t work. “If the intellectual dominance of socialism remains unshaken,” wrote Ludwig von Mises during the Great Depression, “then in a short time the whole co-operative system of culture which Europe has built up during thousands of years will be shattered. For a socialist order of society is unrealizable. All efforts to realize Socialism lead only to the destruction of society.”
Washington’s solution to the economic crisis involves an infantile impulse to manage the economy. The poisonous idea of a government-planned recovery has already been accepted by the public. It is already politically accomplished. In the confusion of their egalitarian assumptions, they have embraced destruction. The more the economy contracts, the more control the government will take. The higher unemployment climbs, the greater the inflation – until all debts and all savings are wiped out. In this formulation, the pain will be monumental for the sake of avoiding pain. The economic collapse will be monumental for the sake of saving the economy.
It is important to understand that private property is fundamental to civilization. Without private property and the legal concept of ownership there cannot be a market, there cannot be material progress, and there cannot be civilization. At the same time, if the government intervenes with trillions of dollars in support of failed private businesses – with the money extorted from taxpayers and strings attached to the money – the result signifies a mighty negation of private property. In this situation the government assumes economic responsibility for every individual, even though such an assumption of responsibility is utterly absurd and unrealistic.
And yet, despite the absurdities on every side, President Bush excuses himself by saying, “I’ve abandoned free market principles to save the free market system.” Oh ye of little faith! The free market doesn’t need you to save it! Even if it happens to collapse, it will recover if you leave it alone. The habit of government expansion and intervention has now reached this final absurdity – that of being “saved” by those who are choking the life out of it.
