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Larry Beinhart's Body Politic

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Last Updated: 02/22/2019 2:55 pm
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The appeal of Republican economic policy rests on a set of myths that sound really good. They are completely false.

We must choose between capitalism and socialism!
Freedom or state control. Laissez-faire free markets vs. communism, fascism, Nazism, welfare-stateism. Well, gosh-a-roony, that’s like choosing between good and evil, happiness and misery, ice cream and boiled leeks.

But even in prisons, where the power of the state is at its maximum, people are producing and servicing, buying and selling, on a market basis. There’s no such thing as a pure free market. Or pure communism. Belief in either is theology.

All economies, in reality, are mixed economies.

Capitalist economies succeed, socialist economies fail!
It is true that in the great war between the Soviets and the West, the Eastern Bloc fell and the capitalists thrived. But the Weimar Republic, Czarist Russia, Nationalist China, Batista’s Cuba, and Vietnam were all capitalist countries. They all failed.

When the Right rails against socialism today, they rail against France, Germany, Sweden, and Finland. Which are doing very well, thank you very much. They’re mixed economies.

Government and business are in opposition.
Government is necessary to group existence.

If there no government, or not much government, or a weak government, whoever has money will act to create one. They’ll even build their own towns, with their own rules and their own police, as all sorts of companies did during the Industrial Revolution.

Or move to strengthen government.

By 1924 prominent [German] industrialists and financiers were secretly giving substantial sums to the Nazis. In 1931 members of the Coal Owners’ Association pledged themselves to pay 50 pfennigs for each ton of coal sold to go to the organization that Hitler was building.
—US Senate Committee Subcommittee on War Mobilization, 1945

Money will always attempt to influence and control government. From 1998 to 2010, the finance, insurance, and real estate sector in America spent $4.25 billion on official lobbying activities. That does not include campaign contributions.

Government jobs are not real jobs.
Michael Steele, chairman of the Republican National Committee until recently, said that. Next time you’re stopped by a state trooper, tell him so. If you run into a couple of Marines passing through the airport, let them know. When you go to your next parent-teacher meeting, make it clear.

Only the market makes good production choices.
“Real Jobs, Fake Jobs,” posted on the Ludwig Van Mises Institute website, includes a standard version of this argument. Mises is sort of Ayn Rand without the ripped bodices and swooning heiresses.

The point of jobs is for people to work toward providing goods and services that are valued by the marketplace. If there is no consumer-driven demand for the things people are doing, their jobs are nothing more than waste. It does nothing for society if everyone is employed building pyramids.
—Llewellyn H. Rockwell Jr., Mises Daily, July 19, 2010

Ahem. Llewellyn, is there any “business” enterprise in Egypt that has brought in as much money as pyramid tourism? It’s been bringing in traffic since 2,600 BCE.

Taxes take money out of the economy.

Governments don’t take money and just keep it. They spend it. In general, they spend it in ways that we all agree are useful and necessary but that businesses have not, or will not, or can’t. Roads and bridges, education, health, science, technology, regulations, safety, national security, education, clean water, clean air, waste disposal, criminal and civil justice systems.

Yes, some of that spending is no doubt wasteful. If rich people controlled it they might have invested with Bernie Madoff. Or given it to Lehman Brothers, which would have put it in credit default swaps, derivatives, and repackaged mortgages.

Which one takes money out of the economy?

Taxes are theft. They forcibly take money from those who have earned them.
It sure feels like it. However, as a writer, I need customers who have been taught to read, roads to deliver the books to stores, a legal system that protects copyrights and enforces contracts, and a great deal more.
All that great free enterprise stuff takes place in an environment that is expensive to maintain. Even money spent on welfare, Social Security, unemployment, and the like serves the purpose of keeping the rabble from riots and revolt.

Money is the only valid measure of value.
Over 14 years Lehman Brothers, the fourth-biggest financial services company in America, paid their CEO, Richard J. Fuld, almost half a billion dollars. Fuld made $22 million in 2007 alone. In 2008, under his leadership, Lehman Brothers went bankrupt.
The average teacher’s salary is around $42,000. Which do you value more? Your children’s teachers? Or Richard J. Fuld?

Markets will always find the best solution.
The market solution for Fuld’s befuddlement was to let Lehman make stupid decisions, then pay the penalty with corporate death.

Unfortunately, Lehman took the economy of the entire world down with them. People who had no control over what they did are the ones paying for it. Fuld is still rich.

But let’s say, for a moment, that free markets do make the best decisions. The question remains, for whom? The invisible hand of the market might be pushing Americans to mortgage all their property, transfer the money to Saudi Arabia and China, so that they will become the new world leaders. Markets have no patriotism.

Right now, the Democrats, the liberals, and the left are stuck talking about fairness. In the marketplace of ideas this is greeted as whiny, wimpy, and moralistic.

They need an economic message that talks about making money, for everybody. For America. It shouldn’t be hard.

Cutting taxes for the rich, deregulation, and waiting for the invisible hand to work its magic has, in reality, led to buying up companies just to gut them, shipping jobs overseas, throwing money into utterly unproductive things like real estate, speculative bubbles, and spectacular crashes. The further we go toward “free markets” the more that will happen.

Yet, it hasn’t happened. The left has not developed a fresh and vibrant vision for our economic future that can be expressed clearly and vigorously and that can be repeated over and over again as 'nuff-said catchphrases.

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