"As the world recovers, we will face a temptation to replace the risk-and-reward model of the private sector with the blunt instruments of government spending and control. History shows that the greater threat to prosperity is not too little government involvement, but too much."
- George W. Bush, November 2009
At a fundraising event for his presidential library last week, former President George W. Bush warned that too much government intervention in the economy could hinder a recovery. He also expressed concern over what he sees as the Obama administration’s drift toward protectionism.
It’s nice to know that the former President is out there on the chicken dinner circuit defending limited government and free-market economics. It would have been nicer if he had done that from the Oval Office for those eight long years. Instead, while in office President Bush presided over record federal spending, massively increased the regulatory state, bailed out failing companies, levied protectionist tariffs on imported steel, helped fuel the real estate bubble, and signed into law a government prescription drug plan that represented the largest entitlement expansion since the creation of Medicare itself.
Now that former President Bush is safely out of power, however, he’s rediscovered the value of free market principles – the same free market principles he abandoned in order to "save the free market". Nice. Mr. Bush’s speech offers a shining example of a long-standing libertarian criticism of Republicans. Whenever they’re out of power, they talk like libertarians (on economic issues, anyway). But as soon as they’re back in power, they govern like Democrats.
This is not to say that Bush’s comments at the fundraiser were wrong. He’s quite correct that President Obama’s massive government intervention in the economy will have detrimental effects over the long run. But it takes an extraordinary degree of chutzpah for George W. Bush to level those criticisms at Obama given the fact that it was Bush who initiated many of the destructive policies he suddenly finds so troubling. One might argue that the current administration’s policies outstrip those of the Bush administration in their scope and degree, but it’s hard to identify any serious substantive differences between the two when it comes to the economy.
Indeed, it’s hard to find substantive policy differences between the Bush and Obama administrations on any of the major issues of the day. War? Although candidate Obama delivered talking points designed to curry favor with the anti-war left, as President (and Nobel Peace Prize winner) he’s extended the war in Iraq and is in the process of escalating the war in Afghanistan. Executive power? Again, candidate Obama criticized the Bush administration’s view of limitless executive power and privilege, but President Obama has discovered that he rather enjoys the power his predecessor worked so hard to expand.
There are quibbles between the two parties, to be sure. When Democrats want to spend a trillion dollars on this program or that, Republicans draw a line in the sand and steadfastly refuse to spend a penny over $700 billion. But both agree that “something” has to be done by government to address the alleged problem. When Republicans want to add 40,000 troops to the Afghan theater, Democrats may draw the line at only 30,000. But both agree that national security is enhanced by having troops stationed in more than 100 countries throughout the world and by involving the US government in the domestic affairs of other nations. A public option may be absolutely essential for Democrats, but it will be passed only over Republicans’ dead bodies. But both parties agree that the government should “fix” health care by controlling it further.
The differences that separate Republicans and Democrats are so insignificant that they might require an electron microscope to be noticed at all. I suppose that’s where the media comes in. The story is the same whether it comes from NPR or Fox News. We are all supposed to believe that the “soul of the nation” will be won or lost on the basis of these relatively minor policy spats. Perhaps this is to be expected now that the debate over the proper role of government is over. Both parties accept the idea that the government should be involved in every nook and cranny of human existence. The only argument that remains is which group can more effectively manage the machinery of intervention and control.
Former President Bush’s comments at Southern Methodist University last week illustrate just how ridiculous these petty squabbles between Republicans and Democrats really are, and they provide additional evidence (as if any were needed) that in the political sphere, one need not have the slightest degree of consistency when attacking the opposition. One may easily hurl stones from the safety of one’s own glass house because Americans have become so inured to the false dichotomies of left/right, Republican/Democrat, liberal/conservative that they believe these hairsplitting differences are all that is left to debate.
There is another approach, however. Instead of arguing over numbers (one trillion or two?), we could debate fundamental principles of just law and proper governance. But that would require the key players to have identifiable principles in the first place, which is obviously too much to ask from the likes of Bush or Obama. From what I can tell, only the libertarians are ready for that kind of discussion.
God save us from the compassion of politicians. Last year Nancy Pelosi gave the keynote address at the Families USA conference where she was quoted as saying, "I want to start by talking about something that we all agree on: that everybody in America has a right to quality health care. But what is it that this health care should look like? What are the principles that this approach should have?"
Following up on her flawed premise, last Saturday Speaker Pelosi said, "It is appropriate that the promise we made...will be manifested today. We will pass health care reform." Later that same evening, she followed through on her threat as the House passed H.R. 3962, the ‘‘Affordable Health Care for America Act.”
After looking through the bill, my first question is, “Affordable for whom?” This thing is just a 2,000-page tax hike.
Individuals who, for whatever reason, decide that they’d be better off not buying health insurance will be fined an additional 2.5% of their income. Small companies that, for whatever reason, decide that they either cannot or will not offer health insurance to their employees will be fined 8% over the amount of wages paid. Larger businesses are simply compelled to offer health insurance to their employees (in lieu of higher salaries), and will be denied the ability to “opt out.” And woe be to high-income Americans making $1,000,000 or more per year. They get fined an additional 5.4% just for being successful. Sort of makes you think twice about heading into the office those last few days of the year, doesn’t it?
But wait, there’s more. This bill even punishes inanimate objects. A 2.5% sales tax will be levied on medical devices. I find this clause particularly bizarre, even by Washington standards. If, as Ms. Pelosi has claimed, the goal of health care “reform” is to increase access for all Americans, then why would she want to make the products that are used to deliver health care more expensive?
Evidently Ms. Pelosi believes that price is no object – especially when we’re the ones paying it. At a time when the Federal debt is $12 trillion, the deficit is $1.42 trillion, and unfunded liabilities in Medicare and Social Security hover somewhere around the $100 trillion mark, our “leaders” in Washington think this would be the perfect time to launch the mother of all entitlement programs. But then again, President Obama has claimed that this will all be deficit-neutral. Yeah, right. Pull the other leg and it plays “Jingle Bells.”
Putting aside the outlandish spending for a moment, let’s tease out some of the allegedly unintended consequences that would result if the Senate were crazy enough to go along with this plan. One of the major complaints about the American health insurance system is that if you lose your job, you lose your health insurance as well. This is due to the fact that most of us purchase our health insurance through our employers. In a normal free-market environment, we would simply buy health insurance directly from an insurance company in the same way we purchase car, life, or homeowner’s insurance. Health care is not a normal free-market environment, however, and years ago government policy encouraged employers to offer health insurance as a fringe benefit. The government then reinforced this trend by offering tax deductions to employers who provide health insurance to their employees. This disparity in tax treatment makes an employer-sponsored plan much less expensive than a plan purchased by an individual, who does not receive such favorable tax treatment for health insurance plans paid for out of pocket. From what I can see in the bill, the Pelosi plan does nothing to remedy this disparity, which means that the “lose your job, lose your insurance” problem will continue.
So at a time when the official unemployment rate is 10.2% and effective un- and under-employment is around 17%, Nancy Pelosi wants to increase the operating costs for businesses, thus ensuring that they will be able to hire fewer people. Those who lose their jobs will have a much harder time finding another one. Depending on the circumstances, someone in this unhappy situation might want to economize by not purchasing health insurance, particularly once private health insurance premiums skyrocket even further because people have begun to flock to the “public option.” The public option will reduce the number of people in the risk pool for private insurers, which will drive their operating costs ever higher. But if someone does try to forego health insurance against Nancy Pelosi’s explicit demands, he’ll be fined an additional 2.5% on his now-greatly-reduced income. And if he refuses to pay the fee for this protection racket, he’ll be thrown in the slammer.
Here’s a little taste of what life in the land of the (formerly) free will be like under the tender mercies of the federal government: “Hon, I’ve got some good news and I’ve got some bad news. The bad news is the company is going out of business because they can’t afford the additional 8% tax the Feds have imposed, so I’ve been laid off. That means we’ve lost our health insurance, and as you know, that’s now a federal offense. Since we don’t have a paycheck anymore, we can’t afford to pay the 2.5% fine, so we’ll be spending the next few years in prison. The good news is that federal prisoners get free government health care.”
To me, that just sounds like the worst day ever.
I’ll be the first to admit that I’m a glass-half-empty kind of guy, a fact that will come as no surprise to regular readers. As such, it is very easy for me to fixate on freedoms lost while overlooking the ways in which the world in general (if not the United States in particular) is actually freer now than in the past.
Today marks the twentieth anniversary of the fall of the Berlin Wall, which for decades stood as a concrete (and barbed wire) symbol of the crushing tyranny of communism. Evidently East Germany was such a shining example of what governments can do if just given enough power that they had to shoot people who didn’t fully appreciate the benefits of living in that workers’ paradise.
Fortunately, economic reality eventually reasserted itself in such a way that even the communists had to admit that Mises had been right all along. With the Soviet Union breaking down like a Yugo hatchback, they finally realized that the whole charade wasn’t worth killing anyone else over. The Iron Curtain was lifted and passage from east to west was permitted for the first time in over a generation. Taking full advantage of this new freedom, East Germans immediately put their hammers and sickles to good use, destroying the barrier that had separated them from the wider world for far too long. The Berlin Wall was unceremoniously and quite literally relegated to the dustbin of history. Perhaps more than any other, this event marked the beginning of a new chapter of freedom for millions of people throughout the world as the Cold War finally came to an end.
The importance of this amazing episode in history should not be overlooked or forgotten, least of all by those of us who still adhere to basic principles of individual liberty. Although it’s important to defend freedom from its enemies even today, it’s also important to recognize that, at certain times and in certain places, others have had far greater obstacles to overcome – and on November 9, 1989, they succeeded.
The third-quarter GDP results were just announced, and they showed a 3.5% growth rate. This has prompted Ben Bernanke to declare that, no matter what the uninformed masses standing in the ever-growing unemployment lines might think, the recession is probably over. As if on cue, the media have been quick to parrot the Federal government’s claim that its interventions in the economy have saved us once again from capitalism. Even I might be inclined to believe that their optimism was genuine if it weren’t for the unmistakable note of desperation in their voices, but somewhere in the background you can hear them clapping their hands and chanting, “I do believe in Obama! I do believe in Bernanke! I do, I do, I do!”
Despite the strained enthusiasm and suspended disbelief filling the news cycle these days, the White House is trying to manage expectations ahead of the upcoming jobs report. It’s almost as if they understand that the GDP number erroneously considers government spending to be every bit as productive as private economic activity. Maybe they also realize that GDP is artificially inflated because it doesn’t include the cost of borrowing all the money that was needed to finance the government’s make-work “stimulus” programs and to incentivize purchases of everything from houses to golf carts.
All of these factors and more suggest that the 3.5% increase in GDP will have absolutely no positive effects whatsoever on the lives of most Americans, and even Obama knows it. The official jobless rate will continue its relentless push into double-digit territory. Since the Feds are dead-set against allowing the economy to liquidate bad debts and realign itself with actual consumer preferences, the outlook for employment will continue to be bleak in this country for the foreseeable future. People who are out of work might hope for change, but they’re in for a long wait unless they can find an industry with serious long-term growth potential.
The employment problem will be particularly acute for recent college graduates with little or no work experience. When researching schools and planning one’s major, the question is always “Where will the jobs be when I graduate?” For the students graduating in the near future, the answer is probably China. But given the fact that relatively few Americans speak Mandarin, incoming college students will need to plan their education very carefully in order to maximize their chances of landing jobs in the few remaining fields that are still hiring. Fortunately, we here at A Beginner’s Guide to Freedom have identified one sure-fire career path that virtually guarantees full employment, offers unlimited earnings potential, and doesn’t require relocating to Beijing. The premier job of the future is…professional rent-seeking.
Unfortunately, there aren’t any college-level degree programs that specialize in Professional Rent-Seeking yet. For now, those who are interested in this growing field may find suitable coursework in most Sociology or Political Science degrees. George Washington University seems to be a good place to start. I don’t know if the George Washington University College Democrats were getting college credit, but from what I gathered during a recent visit to D.C. they seem to have a pretty good rent-seeking internship program going.
For those readers who are unfamiliar with the term “rent-seeking,” don’t worry. It won’t last. Rent-seeking is all the rage these days, and may soon surpass baseball and monster truck rallies as the quintessential American pastime. Rent-seeking is an economics term that refers to the use of the political process to obtain certain financial advantages that can’t be achieved through voluntary free-market transactions. Other related terms include mercantilism, corporatism, and participatory fascism, but the important thing to remember here is that rent-seeking is a way for certain politically favored groups to get what they want without having to go through all the trouble of earning it honestly in the free market. Nevertheless, most rent-seekers will still use free-market terminology as cover - further distorting the true meaning of capitalism in most people’s minds.
Perhaps an example will help illustrate how rent-seeking works in practice. Let’s say I own a corner store. I could eke out a living selling the various and sundry products that are desired by my customers. In order to succeed, I will have to make sure that I carry the items they want, when they want them, and at the price they want to pay, while at the same time covering all of my operating costs. That’s the free market in action. Sure, it’s voluntary. And sure, it’s precisely that kind of activity that has increased the standard of living for mankind steadily over the years. But it’s really hard work. A much easier way for me to make money would be to find a politician who (for a price) will pass laws that protect my corner store from competition. That way I can safely raise my prices beyond what my customers would otherwise pay, thus increasing my earnings at their expense. An even better option (for me, anyway) would be some sort of law that would forcibly extract money from the community at large and funnel it to me whether they shop at my store or not. Maybe some sort of tariff imposed against any stores not located on my block. There are infinite variations, of course, but they’re all just forms of rent-seeking. And brother, I’m here to tell you that it’s the wave of the future!
The beauty of professional rent-seeking is that it’s both booming and bipartisan. Whether you’re a Republican or Democrat, you will easily be able to find a business in the formerly capitalist US economy that is looking for someone with your skills to help them navigate the ever-changing Washington landscape. For years and years companies operated under the rule that the customer was king, but those days are long gone. From now on the government bureaucrat is king, and companies will need some help adjusting to this new reality.
That’s where you, the professional rent-seeker, come in. Not only will you find any number of lucrative employment opportunities in this fast-paced and exciting career, but you’ll also discover that the job itself is both easy and enjoyable. After all, bringing a product to market is hard, but taking a Congressman to the Bahamas is easy.
To be perfectly honest, though, I can’t say that professional rent-seeking is all fun and games. If it were, they wouldn’t call it work. There are a few unpleasant aspects of the job that you’ll just have to get used to. The biggest negative, of course, is that the whole operation is highly unethical. At first, many professional rent-seekers experience a few qualms about fleecing their neighbors in order to line their own pockets. After a while, though, most rent-seekers become quite comfortable with the idea. Within just a few short weeks, they manage to convince themselves and the elected representatives they work with that fleecing one’s neighbors is actually a good thing, because it funnels money and jobs to the politically connected constituency that wouldn’t otherwise have them.
Another potential negative that the professional rent-seeker has to deal with involves some uncomfortable questions that are occasionally raised by the economically literate. These people are the bane of the professional rent-seeker’s existence, but fortunately their numbers are dwindling so it’s becoming less of a problem (but you should probably avoid taking any calls from John Stossel, just in case). And if you do happen to run into one of these unmutual libertarian types at some point in your career, just be sure to focus the conversation on the people who benefit from your larceny, and avoid at all costs any mention of all the other people whose money is taken from them by force to support those industries that are either unwilling or unable to support themselves. Senator Chuck Schumer (D-New York) is a master of this technique.
And from time to time the professional rent-seeker will have to deal with the tedious Congressional ethics probe. But this shouldn’t dissuade anyone from pursuing a career in rent-seeking. The results of those probes always come back negative, because Congress is immune to ethics.
And finally, you will be the subject of scorn by those who decry the influence of “lobbyists and special interests.” This can certainly be annoying, but this criticism completely misses the point. As long as those in government are able and willing to dictate winners and losers in the marketplace, market actors will always seek to influence those decisions. This is simply a matter of self-defense. And once those market actors have influenced the government to shield themselves from the worst effects of the regulatory state, it is simply a matter of time before they realize that the same regulatory structure can be molded into a competitive advantage at the expense of their competitors and everyone else. The only way to avoid this problem would be to limit the government’s power to dictate market outcomes, and no one (with the exception of a few reactionary elements who still cling to outdated notions of property rights and individual liberty) would ever seriously consider doing that.
So aside from these relatively minor drawbacks, most people find the world of rent-seeking to be quite rewarding and varied. Most major industries these days have a real need for people who can lobby politicians on their behalf to ensure that they get a bigger piece of everyone else’s pie. Let’s look at a few examples, industry by industry.
Healthcare
It goes without saying that healthcare represents the single largest opportunity for professional rent-seekers these days, and it will continue to offer lucrative employment for years to come. The Obama administration is determined to handcuff this industry with ever-increasing government regulations. This, of course, will simply exacerbate the problems that have been caused by all of the previous government interventions, thus ensuring that rent-seekers will always be in demand, no matter what part of the industry is involved. You can rent-seek for pharmaceutical companies, the American Medical Association, insurance companies, or for anyone else even remotely associated with socialized medicine. The sky’s the limit.
Environmentalism
After healthcare, environmentalism may represent the next-largest field for rent-seeking. Al Gore, the Bill Gates of rent-seeking, is a pioneer in this field, and it’s paid off for him in a big way. Al has convinced his buddies in Congress that they should funnel $560 million of your money to Mr. Gore’s company, whether you wanted whatever it is he’s selling or not. This, in part, allows Mr. Gore to live in a mansion that burns more fossil fuels in a month than you or I will burn in our lifetimes. The lesson here is clear – you can make a lot of green by forcing other people to go green.
Not everyone can be Al Gore, of course. Some professional rent-seekers may just have to settle for being the next T. Boone Pickens, who’s so convinced his windmills are the best thing since sliced bread and sunshine that he doesn’t want to risk the deal by trying to persuade others to invest voluntarily. He just wants government to take their land, thus forcing them to shoulder a considerable part of the cost of his project.
Financial Services
No shortage of opportunities here. In fact, the worse your financial services business is run the more money you can make through government bailouts. The only downside that I can see here is that your pay may be capped for PR purposes by some Washington czar, but on the whole it’s still a lot easier than working long hours trying to please your customers. The key for the professional rent-seeker in the financial sector is to convince some Senator that you’re too big to fail. Shouldn’t be too hard.
Manufacturing
Maybe you’re a steel-toed boots, lunch pail kind of guy. No problem. You, too, will find a wealth of opportunities for professional rent-seeking in the manufacturing sector. I’d suggest focusing on the UAW, Chrysler, or GM. And the steel industry’s rent-seeking roots stretch all the way back to the Lincoln administration.
Agriculture
Do you enjoy being outdoors, working with the land? No problem. The agricultural sector may be the longest-running rent-seeking game going. Farmers have been using Congress to reach into your pocket longer than anyone else, and as competitive pressure from foreign producers makes food more and more affordable, the professional rent-seeker’s services are needed now more than ever. If this is an area that interests you, you’ll find most of the opportunities around the offices of Congressmen from the Midwest, such as Charles Grassley (R-Iowa), who sees absolutely no downside to corn subsidies and ethanol mandates.
Sports
Are you a big sports fan? Then maybe you should consider a career in sports and entertainment rent-seeking. Here, you can hobnob with quarterbacks and major-league sluggers while you lobby local governments to steal other people’s land for your new multi-gazillion dollar stadium. Jerry Jones could be a useful mentor in this “arena.”
These days the government seems determined to choke the life right out of the private sector. This trend shows no sign of letting up, so it will become harder and harder to find honest work in the private sector. But professional rent-seekers will find their services are in ever-greater demand because, as P.J. O’Rourke once said, "When the legislature controls what is bought and sold the first thing that is bought and sold is legislators.”
"As the world recovers, we will face a temptation to replace the risk-and-reward model of the private sector with the blunt instruments of government spending and control. History shows that the greater threat to prosperity is not too little government involvement, but too much."
