Wednesday, November 26, 2008

Government handouts cost more in long run

Published in The Tennessean, September 23, 2008

Government handouts cost more in long run

By RICHARD J. GRANT

In every country where government has tried to run the economy, the results have been poverty and oppression. Do our political leaders believe they can do better?

They have done many dumb things on our behalf and, as a result, we are poorer and less free than we could, and should, be. By world standards, we are still the biggest and most powerful. But that is to damn ourselves with faint praise.

The world can overtake us if we forget who we are. Many Americans have forgotten, or never learned, that U.S. prosperity grew in a historic oasis of economic freedom, constitutionally preserved by the Founding Fathers. And prosperity will fade away when our freedoms are taken away.

When politicians pander to the most gullible among us by offering "bailouts" and "stimulus" packages, we must know that the deal is rigged against us. In seeking something for nothing, we have mindlessly taxed ourselves and our descendants. We can still prosper, but will always bear the burden of past choices. We have made government bigger. We have traded away part of our future freedom and prosperity for present comfort; and in so doing, we have traded away some of the virtue that has made America unique.

Less intervention is best stimulus
The only stimulus that Americans have ever needed is freedom. Stimulus does not come from government programs. America's genius was to place limits on those who would use the powers of government for their own purposes. The Constitution was designed to keep the government small and focused on doing only those few things that it is capable of doing well.

The Constitution has protected us from aggression so that we could get on with our lives in a civil manner. But a constitution is only as good as those who interpret it. That is what Benjamin Franklin was warning of when he said, "a republic if you can keep it." A republic is sold off one vote at a time, one entitlement program at a time, one freedom at a time.

When we should have been saving capital, the government gave us the first "stimulus checks" and told us to go forth and spend. Spend on what? On anything: Just spend it, we were told. And from where did the government get the money? It borrowed the money and put it on our tab. We'll be paying the interest on that one forever.

When our government regulates, spends, borrows, taxes and inflates, it changes how we live and do business. Then, when things go wrong, the less observant among us blame "the market." They cry for more of what set up the problems in the first place: more government.
Now, the majority in the House of Representatives is angling to buy our votes with promises of a second "stimulus program." It will sound nice to voters in swing districts, but will consist of make-work projects and various subsidies.

It will also push the budget deficit up to record heights. But that's OK — we'll blame the president.

Richard J. Grant is professor of finance and economics at Lipscomb University.

Copyright © Richard J Grant 2008
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