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The Road to Productivity
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10506 |
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Section : |
CURRENT ISSUES
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| Issue
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1 / 1993 |
1,553 Words |
| Author
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Paul Craig Roberts
Paul Craig Roberts holds the William E. Simon Chair in
Political Economy at the Center for Strategic and
International Affairs and is chairman of the Institute for
Political Economy in Washington, D.C. He is also former
assistant secretary of the treasury. |
The United States has been set up for a fall by economic disinformation--what Alan Reynolds (in the Wall Street Journal on October 21, 1992) called "the worst lying about the economy in the past 50 years"--that portrays the 1980s as an unsuccessful decade. If policymakers become victims of this disinformation, they may return to the government-interventionist policies of the 1970s that mired the U.S. economy in stagflation.
In the 1980s the world began rescuing itself from the socialist ruins of the twentieth century. The United States got rid of confiscatory tax rates on personal income. Britain and France privatized nationalized industries, and Britain privatized welfare housing. Mexico and Argentina reversed entrenched socialist traditions and launched large privatization programs. Chile even privatized social security and is now privatizing its national health system. Socialism disappeared from Eastern Europe and Russia, and, judging from their economic policies and the latest Communist Party conference, the aging tyrants in China seem determined to leave a capitalist economy as their legacy.
Today no one but a few Clinton advisers believes that government intervention does anything but hurt the economy. Economists, who once thought that government spending stimulated the economy, now recognize that government budgets serve merely to redistribute economic resources to organized special interest groups from taxpayers in general. The large entitlement programs such as Social Security and Medicare, once regarded as moral achievements, are now seen for what they are--intergenerational transfers from people who are trying to establish households and pay off mortgages to the elderly, whose mortgages are paid up. Other entitlements, such as welfare and public housing, are viewed as soul-killing social policies that destroy families and entrap generations in poverty.
The idea that any of these social programs stimulate the economy or alleviate poverty disappeared from economic analysis more than a decade ago. Today they are regarded as political payoffs to well-organized lobbies. In many cases, these lobbies are providers of the service---such as public housing contractors--and not the intended beneficiaries. Indeed, public housing occupants seem to prefer HUD Secretary Jack Kemp's idea of privatization instead of more subsidies to the builders.
The collapse of socialism in Europe and Latin America and of communism and central planning in Russia and China has dealt a fatal blow to the belief that the governments know how to
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