Tuesday, November 17, 2009

Government Can't Be Trusted

Here are two stories that illustrate perfectly the limits of government.

In the Washington Post the edit page is taking Congress to task for smoke and mirrors in its administration of Medicare. To make the budget figures look good, Congress has legislated a program to cut reimbursments to doctors. But every year, Congress rescinds the cuts.

This is the so-called doc fix, to prevent scheduled cuts in Medicare reimbursements to physicians from taking effect.

In other words, Congress is kidding itself that it actually intends to run a serious program for senior health care. It makes promises to seniors about glorious health care, then it tries to figure out how to prevent the program from eating the budget. But whenever it is time to take a scalpel to the program, Congress chickens out.

Then there is the reckless monetary policy of the Federal Reserve Board. According to the Wall Street Journal edit page President Obama on his Asian tour is getting an earful from Asian governments upset over the easy money sloshing into their economies from the US quantitative easing (i.e., money printing).

President Obama is getting an earful from leaders this week about what all those greenbacks are doing to their economies. Many of these nations peg their currencies, formally or informally, to the greenback. So they are getting a huge dollar liquidity kick from the carry trade, in which people borrow U.S. dollars at exceptionally low U.S. interest rates and invest them for higher returns elsewhere.

Now that the government has successfully rescued the banks it is time to tighten up the money supply and resume normal operations. But the Fed won't do this because politicians don't want to get blamed for high unemployment.

The simple fact is that government cannot be trusted to run a health program and it cannot be trusted to run economic policy. That's because the government is run by politicians. They are not interested in what is good for the nation's health care or the nation's economy. They are interested in buying support for reelection, and they are interested in papering over the previous disaster with no thought at all for what their actions are doing to set up the next one.

There's a simple moral to learn from all this. Government is force; politics is conflict. You cannot trust government for anything beyond wars and policing. In just about everything that government touches it substitutes for peaceful and voluntary cooperation the club of force. Politicians tax, they spend, they waste. They play favorites, they divide people. They do it because that is what politicians do.

If you don't like force, if you don't like privilege, if you don't like playing favorites then you won't vote for government programs.

Because government is waste. Government is force. Government divides.

Humans are social animals. We just want to get along, right? So we do, unless someone gives us a chance to lord it over our fellow humans and make them pay to support us in the way we deserve.

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