Bailouts Destroy Prudence

Bailouts Destroy Prudence
by Tibor R. Machan

So you notice that your income has shrunk, you may even have lost your
job. So you decide to trade in your gas guzzler for a small vehicle and
even reduce your monthly car payments, if you have such. And in other
realms of your life, too, you may be making adjustments to cope with the
general economic downturn. You cook at home instead of eating at your
favorite restaurant; you do not purchase that pair of shoes you would have
otherwise, etc., etc.
In short, you are acting prudently, tightening your belt, as the saying
goes, in the face of the widespread economic contraction. Never even mind
why the contraction occurred--some of it could actually have come around
simply from people changing their preferences and behavior. (Instead, of
course, it happened because the government has been abandoning its proper
role as the protector of our rights and like a rouge referee, has been
inserting itself into the game for decades on end!)
But now that the results of such bad government have hit so many of us,
you are taking steps to deal with them. Ah, but no such luck. Instead of
making it possible for you to deal with your reduced resources, instead of
letting you make the budgetary adjustments you can make within the context
of your own life circumstances, the politicians are insisting that if you
refuse to spend the big bucks on those Detroit gas guzzlers, for example,
they will tax you and hand over what they have extorted from you to the
car makers, never mind your prudent choices. In time the savings you
thought you could garner from your good sense and discipline will have to
be shelled out in extra taxes so as to bail out those who aren’t getting
your business any more. Instead of insisting that those who make the big
cars and whatever else that’s no longer in demand in the market place make
their own adjustments, tighten their own belts, etc., the politicians
insist that they continue to be paid as if nothing had happened, no one
changed his or her purchasing behavior, as if the economy continued to be
in fine shape.
This is just one of thousands of results of the mixed economy, the
welfare state, in which your individuality is abolished and you are
treated as a member of some ant colony or bee hive. You will be
conscripted to be part of it all, never mind how sensibly you may figure
out to deal with the fiasco. No, you will not be allowed to use your good
sense, virtue, and occasional luck to address the economic mess the
politicians, bureaucrats and their rent-seeking clients produced. These
folks were the ones who prevented the realization of the free market and
instead created a top-down, planned or managed arena of wealth
redistribution.
In such an situation it is impossible to identify the good versus bad
players because the government lumps us all into the public for which it
presumes to make decisions. Individuals are seen as simple cells in this
public body, with governments and their cheerleaders in the academy and
think tanks as the head of the body.
All of this is not something that no one could foretell. Among those who
warned about where the planning done in a welfare state can take a society
was F. A. Hayek, whose The Road to Serfdom, published back in 1944, pretty
much foresaw it all. Members of the Austrian economic school, lead by
Hayek’s own teacher Ludwig von Mises, kept issuing warnings in all their
books and articles but, alas, they were ignored by the all mighty
politicians and bureaucrats. (Von Mises’ book, Socialism, published in the
early 1920s and translated into English in 1936, showed, among other
things, that central planning just cannot produce a productive economy.)
But socialist and near-socialist dreamers kept pressing their wish upon
politicians that a top-down system of economic organization be attempted,
in one or another form, and in America this came out to be a mixed
economy, one with capitalist as well as socialist elements. Such an
economy can muddle along for a while but, in time, it simply cannot do
what it is expected to, namely, produce wealth and forcibly distribute it
so everyone will be equally well off. (I produced an essay for the journal
The Personalist, back in 1969, "Justice and the Welfare State," now part
of my book The Right Road to Radical Freedom, in which this point was
driven home!)
So if you are appalled that your efforts at economic prudence get you
nowhere very fast, the culprit is our blessed mixed economy, the welfare
state.

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