Western Standard

The Shotgun Blog

« Steve Horwitz, member in good standing, Sound and Solid Thinkers Club | Main | Using free market language versus being a free marketeer »

Saturday, December 27, 2008

The problem with big government is Big Government

Speaking of Steve Horwitz and how much he gets it, here's yet another dead-on post by him in The Austrian Economists blog:

Bob [Higgs] points out that the real problem with big government is Big Government. What he means by that is that it's one thing for government to grow in scale, but when government grows in scope is when the real trouble starts. The key to Bob's ratchet effect argument is that crises lead not just to government "scaling up" but to it acquiring powers that it didn't have before, i.e., a change in the scope of its powers. The other part of the ratchet effect argument is that when the crisis passes, the government might reduce its exercise of these new powers, but not all the way back to the pre-crisis level. What people often miss is that this also means that those new powers lay dormant waiting for the next feasible situation in which they can quickly be activated. The long-run damage comes from the acquisition of those powers in the first place, not just their exercise in the specific crisis in which they are acquired.

And speaking of Robert Higgs, who is also, obviously, a member of the Sound and Solid Thinkers Club (we need a new moniker, that one is a bit clunky, don't you think?), here he is eviscerating some of the "fair weather" free market thinkers on the Liberty and Power group blog (via reason's Damon W. Root on Hit & Run):

It’s hardly a news flash that many people who are widely regarded as lions of the pro-market side have gone over to the dark side in recent months. I am not going to name any names; if you are one of the guilty parties, you know who you are; and the rest of us know, too, owing to your public expressions of anti-market sentiment in newspapers and on the World Wide Web. Why have so many notable economists and others jumped ship? [...]

It now appears, I am saddened to report, that these free-market experts were not so expert after all. Indeed, many of them seem to have failed to understand how markets work and how government actions can hobble or kill those workings. Many have talked as if they actually believe in vulgar Keynesianism or other crackpot ideas — about “systemic risk” where none exists or about “missing markets” for poor-quality assets that only a fool would try to sell privately when the alternative of a munificent government buyout shimmers on the horizon.

Despite the evidence of how counterproductive all of these frantic government actions have been, of how they have served above all to produce “regime uncertainty”about what the rules will be tomorrow or the next day, and thereby to paralyze private arrangements, the market’s fair weather friends are now clamoring for various species of government “stimulus” as soon as the Obama regime takes power. Of course, the Obamistas’ motives are purely political, as befits a pack of office holders and their lackeys, so it is pointless to indict them — a rattlesnake is not to be blamed if it strikes, because its nature impels it to do so. But why are well-known free-market economists going along with this nonsense?

Read the rest to get the message. And please notice the apt "rattlesnake" metaphor for politicians. Just notice it. Re-read it if you have to. And don't get confused about the meaning: It's not fundamentally about the pre-institutional character of people who pursue higher office, it's the built-in incentives and pressures of political office, and the recognition of what kind of character you have to have to get political office, that sharpen and bring out the worst in us. In short: It's the institutions, stupid!

Posted by P.M. Jaworski on December 27, 2008 in Libertarianism | Permalink


The institutions by design or by nature are completely out of control. Bureacracy was the foundation of Stalin's Russia and I'm sure he would be very much impressed with just how slick its now working in the so called "free west".
And amazingly, yes there are some so called free market advocates out there who are advocating bail outs. Free market - bail out....its an oxymoron. And its just a furtherance of state control of what should be private business.
Without a doubt we are being sleep walked into total state control.
On the up side, more and more people are seeing it for what it really is everyday, which might coincidentally explain the sharp rise in gun sales. People are scared, and fear leads to anger, and anger leads to....

Posted by: JC | 2008-12-29 7:52:54 AM

The comments to this entry are closed.