A Predictable Game

Every step toward socialism signifies a reduction in the overall economic means and the consumption of capital

BY JR NYQUIST

President Barack Obama says that Wall Street should be concerned by the government shutdown. But this shutdown is only partial, and the effects aren’t as dire or threatening as the president would like us to believe. The real threat to Wall Street is government deficit spending and our gradual drift toward socialism; that is to say, toward ever-increasing government intervention in the economy. A massive government intrusion into the healthcare industry via The Patient Protection and Affordable Care Act (of 2010) is the reason for the present government shutdown. Some members of Congress wish to delay the full effect of this legislation which may indeed place the entire system upon a slippery socialist slope.

“To the socialist, the coming of Socialism means a transition from an irrational economy [to a rational economy],” wrote Austrian economist Ludwig von Mises. “Under Socialism, planned management of economic life takes the place of anarchy in production….” Here the socialist does not know rational from irrational. In terms of healthcare, the government proposes that all Americans shall have health insurance regardless of the cost to the government or to individual payers. By such enactment the government is driving up the price of health care for everyone by forcing millions of previously uninsured persons into the market. It is, in fact, akin to what the government did to the business of buying and selling family homes during the previous decade (when the government encouraged a large number of loans to persons who would never otherwise qualify– producing a bubble in the housing market).

Government intervention in the economy is seldom helpful. More typically, it degrades and demoralizes. Such was the intervention that produced the housing bubble. Such was the “war against poverty.” Such shall be the result of offering everyone high-quality health care by means of legislation. To put it bluntly, the Affordable Care Act doesn’t guarantee a larger number of doctors for a larger number of insured persons. But if it did so, the increase of doctors would take place upon a false basis; for the economy cannot sustain what it cannot afford.

Does the impracticability of the Affordable Health Care Act signify its imminent defeat in Congress? In this regard we may predict with a high degree of certainty that the present attempt to stop ObamaCare will fail. As Mises noted several decades ago in his book on Socialism, the socialists believe in the excellence of government intervention and control. Furthermore, he added, “It is false to imagine that the socialist ideology dominates only those parties which call themselves socialist or … ‘social.’ All present-day political parties are saturated with the leading socialistic ideas.” Such is the situation of today.

Even the opponents of socialism believe that socialism is “more rational” and therefore “inevitable.” One might say that the egalitarian propaganda of modern times, the constant and ongoing flattery of the people, makes it so. If Mises were alive today he might well quote his own words in reference to the Republicans in Congress who are trying to stop Obamacare: “in their hearts they are convinced that their resistance is hopeless.” And this is despite the fact that socialism “is nothing but a grandiose rationalization of petty resentments,” according to Mises. “Not one of its theories can withstand scientific criticism and all its deductions are ill-founded. Its conception of the capitalist economy has long been seen to be false; its plan for the future social order proves to be inwardly contradictory, and therefore impracticable.”

Every step toward socialism signifies a reduction in the overall economic means and the consumption of capital. As Mises predicted, “To see the weakness of a policy which raises the consumption of the masses at the cost of existing capital wealth, and thus sacrifices the future to the present … requires deeper insight than that vouchsafed to statesmen and politicians or to the masses who have put them into power.” The destruction of wealth is not visible to the average person. This destruction is felt more gradually through a decrease in the overall standard of living. And the demagogue, as Mises points out, “would achieve success most easily by increasing consumption per head at the cost of the formation of additional capital and to the detriment of existing capital.”

This is, in fact, the economic significance of ObamaCare at the present time. The analysis of Mises therefore remains up-to-date, even as the American political scene has degenerated from earlier times. Our decline into socialism, however, is merely one aspect of a longstanding downward trend. There is an interesting passage in William Lecky’s Democracy and Liberty, written almost 120 years ago, in which the great sociologist casts doubt on the future of America in the following terms: “The decay, in some parts of America, of family life through the excessive facility of divorce; the alarming prevalence of financial dishonesty on a large scale; the strange and ominous increase of ordinary crime … the profligacy that still reigns in political and municipal life, and the indifference with which that profligacy is contemplated, afford much ground for melancholy thought.”

It would be almost laughable to compare the decay and profligacy of the 1890s with that of today. But every trend has its beginning, and America’s current course did not begin yesterday. We have been traveling this road for over a hundred years, and it is safe to say we will travel it down to the bitter end (which will certainly not take another hundred years). Those who think it was laughable that Lecky worried about “the profligacy that still reigns in political and municipal life” in the 1890s might well consider that the national debt is now approaching $17 trillion. It is easy to see how our indifference toward this profligacy has evolved into the present government shutdown charade, with all the attending rhetoric and posturing. Who seriously believes that government spending will be brought under control?

One might as well ask who believes in the Easter Bunny or the Tooth Fairy.