Res ipsa loquitur (The Facts Speak for Themselves). In a recent article, the author asked if we needed a New Deal. He pointed out that the original New Deal has probably been the greatest political force in America during the last 100 years. The New Deal was created by the Franklin D. Roosevelt administration to combat what turned out to be the Great Depression. The fact that an economic malaise turned into a Great Depression was because of the New Deal; not despite it. In fact, the New Deal simply prolonged what might otherwise have simply been another recession. Why?
 
Here is a perfect example. At the time, Henry Morgenthau was Roosevelt’s most loyal Secretary of the Treasury. Morgenthau was completely frustrated by the persistence of double-digit unemployment throughout the 1930s. Finally in May of 1939 when unemployment was still at 20 percent (sound familiar?), Morgenthau exploded at the failed New Deal programs. “We have tried spending money,” Morgenthau noted. “We are spending more than we have ever spent before and it does not work. We have never made good on our promises. I say after eight years of this Administration, we have just as much unemployment as when we started – and an enormous debt to boot!” Again, sound familiar?
 
What is the hue and cry today? Government DO SOMETHING! And when the “something” that government did doesn’t work, then what? Well, we just didn’t spend enough money on “whatever” is the excuse. A definition of insanity is doing the same thing over and over again but expecting a different outcome. Will we never learn?
 
Seventy-one years ago in an administration that is still highly respected by many, a major player admitted that government intervention didn’t work. Why do we still insist (pretend) that it was simply because the government didn’t spend enough money on the problem? Why are we afraid to simply take responsibility for our own actions?
 
Free markets work. Capitalism works. They are the only things that do work. Yet we are constantly told (not in so-many words but by implication) that we are too stupid to make our own decisions. Government wisdom will protect us from ourselves. We couldn’t possible have enough intelligence to make appropriate health care decisions for ourselves; we need government to supervise and dictate our healthcare decisions. If government didn’t construct the highways of this country, how would they ever get built? How would the garbage get collected if not for government? Certainly we need government fire and police protection. If not for the government-controlled military, how would we ever defend ourselves? How would we ever have been able to get to the Moon if not for the government? The list is endless and very few folks even try to think outside that box. Yet the obvious solution to every question listed as well as an almost infinite number of additional “lifeboat” questions is Capitalism – in a free market environment.
 
This solution, of course, doesn’t sit well with the elite power brokers. Gee, if we, the people, realize that we can accomplish our objectives without government guidance and controls, the power brokers would be out-of-work. We can’t tolerate that sort of unemployment, can we? That might put another 535 folks out of work.
 
Here is a basic Fact-of-Life, like it or not. No one knows better how you should live your life than you do. No one knows better what you should be doing at any point in time than you do. No one knows better what you should spend your money for than you do. So if you’re not satisfied with your life, you can fix it. Not the government; you! Why are you afraid? Why are you reluctant to take charge?

Why are you afraid to be responsible?
 
I suggest the answer is the gradual brain-washing that has taken place over the decades that promotes government as being the know-all, be-all for society. Somehow if an individual gains enough support to get elected to an office, that person is instantly transformed into a superior being; a much more knowledgeable person than just prior to that election. Doesn’t make much sense, does it? Yet that is exactly the status we seem to confer on elected officials. Somehow they are no-longer fallible humans once elected. Nonsense. I could even make the argument that they have become less knowledgeable because of their stupidity to allow themselves to become an elected official in the first place. Have you noticed that the really intelligent people you personally know wouldn’t even consider running for an elective office? Why do you suppose that is? Do they know something you should?
 
I have long-argued that I could take the most honest, respectable person available; put that person into politics; help that person work his way up the political ladder to the top, and all I would have created is a totally corrupt politician. You don’t get to the top otherwise. Call me cynical but you know what I’ve said it true. Yet this is now the very individual that you accept as being better able to make decisions on your behalf than you could or would make for yourself. Why are you afraid to be responsible for your own actions; your own decisions?
 
As I’ve noted many times in prior articles, I always seem to be defending Capitalism and free markets every time I publish. I’ve wondered why I feel the need to do that. While there is no single answer, the general answer is that so very few people understand Capitalism and free markets that it has become a full time job to acquaint people with their heritage. The very same politicians that would have you believe you need them to make your decisions are the very folks that don’t want you to know how Capitalism and free markets work. If the majority really understood, the politician would fall into “disuse.” Can’t let that happen.
 
Governments don’t create jobs. Governments don’t produce anything (except perhaps coercion). Governments don’t solve problems. Governments don’t make money. Governments don’t improve economies. Governments don’t eliminate poverty. Governments don’t improve health care. Governments don’t solve global warming (which is not even required). Governments don’t create productive jobs.  Lately, governments don’t even protect Contract Law (witness the complete loss suffered by bond holders in Chrysler and the other industries usurped by government). Governments don’t even seem to do what they were originally intended to do: protect their citizens and provide a stable currency. Feel safer thanks to airport security? Happy with the stable purchasing power of your dollar?
 
What governments do is create the problems and then offer themselves as the solution to the very problems they created. The New Deal we discussed above was offered as the “solution” to the government-created excesses of the 1920s, for example. After WWI, the government created the environment of easy-credit and artificially-low interest rates (sound familiar?). By 1929, this excess credit was sloshing around in a then-bubble called the stock market. It was easy to identify a bubble because the shoe-shine boy was touting stocks according to Bernard Baruch. In fact, all economic recessions can be traced to interference by governments. Then these same governments come-to-the-rescue to “solve” the very problems they created. And we permit this to occur over and over and over again.
 
When we then let government “solve” the problem(s) they created, their solutions only extend the recovery time that it would otherwise take if the government had simply gotten out of the way and let a free market solve the problem. That was true for the Great Depression and you will observe that it is now true today as government tries unsuccessful after unsuccessful stimulus and bailout fiascos. The latest fiasco about to be imposed on us is the new jobs bill. Please note no productive jobs will result because only Capitalism can create productive jobs. It is also safe to say that more bureaucratic jobs will result. Yet we continue to accept their premise that they can make better decisions for us than we can make for ourselves. Why are you afraid to be responsible?
 
If it were possible to distill the myriad of “reasons” used to justify government involvement into just one mythical statement, that statement would probably be: “If government doesn’t do it, how would it ever get done?” Again, this demonstrates the lack of understanding of Capitalism and how free markets work. If something is really worth doing, the public demand for that product or service will not go unnoticed by private industry. Trust that there will be a line of entrepreneurs willing to risk their money and talent to provide that good or service.
 
In a prior life, I designed, developed and manufactured nine (9) hardware items that went to the Moon and back. I worked in private industry but the overall funding came from the US Government. How could we have ever gone to the moon without government funding? My argument at the time and still is that we would have done it with private enterprise and made a profit in the process. Look at the private industry now developing in space travel. That is all privately funded. Government has absolutely no involvement. The companies expect to make a profit in the process. That’s because there is a public demand for the service. Even the original Moon Mission would not have been possible if it had been left up to NASA engineers to do all the work despite government funding. Only by utilizing private, for-profit companies such as the one for whom I worked was the original mission successful. We were not afraid to accept responsibility.
 
How about you? Are you competent in your work? Are you reliable? Do you feel you provide a talent or service that is desired by others? Are you a source of knowledge in your chosen field?
 
For the sake of brevity, you will have to accept that Capitalism is the answer to any problem you might choose to raise. In the same breath, government is not only not the solution, it is the problem. When you stop demanding that government DO SOMETHING and start relying on your own talent and initiative, you will be amazed at how quickly former problems simply disappear. You need not be afraid to accept responsibility.
 
Cheers,
Tex Norton 

February 10, 2010

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Tex Norton

Tex Norton is the nom de plume of an automotive engineer turned aerospace engineer turned financial planner turned curmudgeon.

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