The wrong side of liberalism
A few weeks ago, I wrote an article explaining what was wrong with the fiscal conservatism of the Republican Party from a fiscally conservative perspective. This week it is time to think about what is wrong with the fiscal liberalism of the Democratic Party from a fiscally liberal perspective.
Imagine a giant sphere comprised of thousands of tiny dots. Each dot is a person with two numbers. The first number is the amount of money he possesses, and the second is the value of the resources he owns. These numbers are constantly changing as the individuals conduct transactions with each other. Sometimes the total value of an individual decreases, but most of the time it increases. In theory, each transaction increases the total value of both of the individuals involved: Otherwise, the individuals would not be interested in the transaction. Moreover, each individual is constantly developing new and greater resources, whether by attending school to accumulate human resources, by growing a garden or running a factory to produce goods or by searching for buried treasure, fishing or laying claim to unowned territory to privatize communal resources.
In the free market, money constantly multiplies spontaneously, making the average wealth grow steadily higher. This is the appeal of capitalism. But, in its pure form, capitalism presents several very serious problems. Running around in a capitalist system is like driving without car insurance or playing football without health insurance. The insurance is comparable to government regulation. The total price of insurance over a 10-year period is greater than the expected price of whatever injuries or damages the populace experiences. In terms of sheer dollar value, insurance is a bad deal. A large chunk of premiums disappears in the bureaucracy without ever making it back to the people paying in. So why do we want government regulation? Why do we want insurance?
An economist might answer we should minimize government. This is because the answer lies in an area never touched by economists. Big word alert: interpersonal comparisons of utility. Essentially, an interpersonal comparison of utility contrasts the value of a hundred dollars in the hands of a college student – which is great – to the value of a hundred dollars in the hands of Mitt Romney, which is negligible. A college student will benefit greatly from an extra hundred dollars, because it means fruits and vegetables instead of mac and cheese or parking on campus instead of hauling 50 pounds of textbooks up Old Main Hill, but a hundred dollar bill would barely be worth Mitt Romney’s time to pick up if it were lying on the ground in front of him.
In times of economic recession, former Mitt Romneys are college students. In times of economic boom, former college students are running Fortune 500 companies. It makes sense a CEO would pay a hundred dollars in a time of boom in order to have an extra 50 bucks in his pocket when the rain starts pouring. Yes, the dollar value is decreased. But the utility per dollar is increased, and the total benefit to society is actually increased. This is the basis of the liberal argument.
Let’s be clear here. The government is inefficient. The military is inefficient. The government should never be in the business of job creation. The point of the military is to prevent the economic travesty of war. The point of the government is to protect human and property rights, and regulate the economy just enough to prevent significant recessions, allowing the free market to operate as unencumbered as possible.
The recession is over. All the regulations being implemented will only encumber the economy and prevent it from recovering. We are doing now what we should have been doing during George Bush’s presidency. Instead, we are slowing the recovery now with new regulation, and we will deregulate it again in a few decades in time to speed ourselves into the next recession.
Today’s liberals want job creation. They want stimulus. They want social security. They want wealth redistribution. These ideas are not justified. The government should borrow during a recession, yes. The government should stave off the worst of poverty and ensure children receive adequate sustenance. But social security is a Ponzi scheme, and running an unbalanced budget in times of peace and economic prosperity is a recipe for disaster. In other articles, I have suggested the Republican Party is sharply moderating on social issues and clarifying its stance on fiscal issues. Much of the recent success of the Democratic Party has come from demographic shifts in the populace and a rapidly liberalizing population on social issues. They are doing well now, but whether they can maintain their power may depend on their ability to soundly elucidate their fiscal argument.
– Peter Daines is a senior in the political science department. He has been involved in the leadership of multicultural and diversity clubs such as the Latino Student Union and Love is for Everyone. Send comments and questions to pdaines33@gmail.com.