"You either write your own script, or you become an actor in somebody else's script." -- John Taylor Gatto

Sunday, December 20, 2009

All of the Cookies are not in the Jar

Adam Smith. Karl Marx. Frederic Bastiat. John Maynard Keynes. Milton Friedman. Murray Rothbard. Paul Samuelson. No, these are not name contenders for the new family pets. These are some of the economists who have become dinner table conversation at our house this year. We discuss which ideas we like and we smile and laugh. We discuss which ones we don’t like and we boo and hiss. We talk about which ideas got used and which ones didn’t. We dream about what it would be like if we actually tried some of the better ones. We discuss which ones we are living and really shouldn’t be. So, pull up a chair and join in.

The one concept of Keynesian economics, the theory introduced by John Maynard Keynes, that has not so silently become a prevailing thought in our country is that of Agenda. Keynes said that economic ‘experts’ should determine the Agenda and Non-Agenda of our nation and then politics should be the vehicle for creating new forms to achieve the Agenda. Now, in my house when someone has an agenda and sends someone else out to create a path to achieve it, somebody is going to end up in tears. Unfortunately, it isn’t all that different in politics – only the taxpayers generally end up crying. Economists are like the big sisters who send little brother to eagerly sell the idea of cookies before dinner to the parents. This is exactly what our government LOVES about Keynesian economics. They have someone else – an economic ‘expert’ – think up a new policy or program that appears to solve some of the current problems in our economy. Then the politicians can work to sell it, implement it and take credit for it. They definitely get their cookies too.

Prevailing Keynesian economic thought holds that the best way out of a pinch in the economy is to spend. Spending will make the economy grow, and a growing economy looks great on paper. That is what the stimulus package was all about. It’s called fiscal policy. We have been practicing this idea of spending our way out of trouble for quite a few years now and what it seems to do in actuality is increase our debt. “The burden of debt is as destructive to freedom as subjugation by conquest,” (Cleon Skousen, The Five Thousand Year Leap). Adam Smith, an economist who influenced our founding generation, was a proponent of laissez-faire or ‘let it alone’ economics. He taught a sound economic principle: The way to wealth for individuals is to save and invest wisely. The way to wealth for nations is for the individuals of that nation to save and invest wisely. A government is made up of people and for the economics of the nation to be sound, the economics of the people must be sound. It doesn’t work the other way around. In other words a country cannot be wealthy unless its people are wealthy. “The highest level of prosperity occurs when there is a free-market economy and a minimum of government regulations,” (Skousen, The Five Thousand Year Leap). How does that fit with what we are choosing today? See how too many cookies before dinner can ruin your appetite?

Another Keynesian concept is that the government should be making the decisions people are not making. I don’t know about you, but last I checked ‘government’ doesn’t have a brain with which to think. What it does have is a collection of people, hopefully some with brains, who make decisions on behalf of us all. Bastiat, a French economist who fought for a free market, said that collective rights should be an extension of individual rights. The government cannot enforce a right or extend a right that does not exist for the individual. The government has the right to protect, by force, personal property because individuals have the right to protect their own property by force. By the same logic the government does not have the right to equalize property (through taxes, etc.) because individuals do not have the right to take wealth from one citizen in order to equalize the wealth and give to another. Does your daughter have the right to take away her little brother’s cookie and give it to the neighbor girl? No, of course not. It isn’t just. She can give her own cookie away, but she can’t take one from someone else and give it to another. Funny, but kids get this. They know plunder is wrong. That’s why they sneak. We voters seem to forget that just because plunder is legal, it doesn’t mean it is right.

So, if you are getting ready to spend your next stimulus check, let me give you some sound advice. Save it. It will do more good than the spending. Government isn’t its own entity. It is a collection of people, of families. If we are not saving, if we are choosing to support the policies that are prevalent in government today, we are agreeing with them. If you don’t agree with the prevailing thought. If you don’t like the idea of government agenda, of increasing debt, of the state as an entity, what are you going to do about it? My suggestion…do a little reading. Discuss it with your family because, as Ronald Reagan said, “All great change in America begins at the dinner table.” Oh, and you should probably have some cookies ready.


Merty said...

what about a stimulation check? i got one of those, how do i spend that?

really though, it's a GREAT article, I really love it. Great job.

Merty said...

hey what's next?

the mama said...

i understand the 'save' part, but does it matter how we invest?

is buying a house that you think will appreciate in value an investment or is that just foolhardy at this point?

is buying stocks the kind of investment our economy needs or should we stick to keeping our money buried out back?

just hoping you can enlighten me further....

good article. it's a bit of a refresher course for me and i like that. what i don't like is that i want some cookies, and it isn't dinner time yet.

Merty said...

invest in a small business, a fixer-upper starter home (these are really cheap right now.)

these will stimulate the economy and provide you a return

Lindsey said...

I'm going to frame the Ronald Reagan quote for my kitchen. I need more Adam Smith type thinking around here and less cookies. Clever article.

M Diane said...

Really liked your article -- so very easy to understand. And the concepts are so logical. And who knows, perhaps you could have a fish for a pet sometime and name him Milton. :)

I want to share your basic thesis about Keynes with the president of our local University, who is an economist by education. Unforturnately, he is always looking for what the state is going to provide for higher education -- and with what you know, does it make sense that the state government should control how higher education spends their monies when the state provides only about 17% of higher ed's total budget and most of higher ed's income is from private donors and gifts?
M Diane