How to rescue the economy

Conservative doctrine tells us that government involvement in the economy is “the road to serfdom” According to this theory any government involvement is bad and highly suspicious.  Social Security and Medicare are ticking time bombs, poised to transform themselves into the American Gulag, etc.

The argument is taken to such extremes that you get the impression that if the government would go away, life would consist of nothing but unconnected individuals.  No large business enterprises, no large nations–certainly none with nuclear weapons—the industrial revolution didn’t happen, not to mention the subsequent technological changes.  With government out of the way it would just be millions of individuals interacting with each other in a very simple way, a kind of agrarian dream-world.  Everyone solves their own problems, or in extreme situations, voluntary community organizations sprout up to give assistance.  It’s all very nineteenth century—even eighteenth century. And it’s not even real eighteenth century.  It’s a highly stylized drawing of the eighteenth century.

Even the most basic capitalist society requires government intervention to create and enforce private property laws and contracts.  So there is no “getting government out of the way”.  Government is going to be a key player in a modern economy; the goal is to put together a political system that can address that need.  Conservatives don’t seem to understand this.  They seem to think that if government is “drowned in a bathtub” all blessing will spontaneously arise and neighbors will just start working with neighbors to address all our needs.

As Wall Street has so dramatically demonstrated, this is bogus nonsense.  But what’s really strange is how intensely our current leaders believe this stuff.  Consider Hank Paulson’s original response to the financial system collapse.  It was a three page document.  He had, apparently, given no thought to Plan B if Plan A—getting government out of the way—didn’t work. His faith was complete.

Consider also, Jonah Goldberg over at the National Review Online. In a recent post he was warning as usual about the evils of government, but–given the current financial crisis–lamenting that sometimes it might be necessary.  But it’s clear that his heart isn’t in it.  Eventually he wanders off into this reverie…

For some reason I keep thinking of Little House on the Prairie. Remember the episode  when the little girl fell down the well? All of the townsfolk raced into Oleson’s General Store and took stuff, axes, shovels, lamps,  whatever they needed to rescue the girl. They didn’t pay for any of it and the Oleson’s didn’t ask for money. They helped hand out their own wares for free.

And so forth.

Now, let’s be clear.  I like Little House on the Prairie, too, but what is he thinking?  He expected all the investment banker CEOs to come together and rescue Lehman Brothers because it fell down a well?  Whew, I’ve heard of stretching an analogy before, but this is out there.

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