Government Insanity
A popular definition of insanity (usually attributed to Albert Einstein) is “doing the same thing over and over and expecting different results.” Another definition might be when a politician announces a grandiose program and then, in explaining how he’ll implement it, he outlines a series of actions that are actually hostile to the program goal and make it virtually impossible to attain. (This is why most politicians keep the public focused on their stated intentions and divert attention from their typically dismal results.)
For example, Joe Biden demonstrated both insanity definitions in 2021 with his announced (and fortunately defeated) “Build Back Better” (BBB) plan. Here was the main thrust of the Biden BBB plan in his own words (or words attributed to him): “This is the moment,” he said, “to imagine and build a new American economy for our families and the next generation… [The plan] is to build a strong industrial base and small-business-led supply chains to retain and create millions of good-paying union jobs in manufacturing and technology across the country.” As one pundit noted, Biden’s BBB plan overall was government central planning on steroids. In other words, it was socialism on steroids.
First let’s apply Einstein’s version of insanity as it relates to government planning of a nation’s economy. To do that, we need to consider whether it has worked to any significant extent in the past – because, if so, that would indicate that it could work again if the right people did the planning. Consider, for example, Soviet Russia’s five-year plans for communal agriculture in the 1920s and 30s, and Mao’s similar agricultural plans for China in the 50s. In both cases, millions starved to death, so zero points there.
Communist countries also had five-year plans for state-controlled industries – for example, the auto industry. In Soviet Russia, the result was the Moskvitch “people’s car.” Ever hear of it? Most likely not. Or consider the Yugo, a car made by a state-owned company in Yugoslavia in the 1980s. You probably have heard of it because it’s been dubbed “the worst car ever made.” For more recent examples of government planned economies, check out North Korea under the Kim’s, or Cuba and Venezuela.
In America, we can look back to the pilgrim colony of 1620, which started out with a centrally planned communal farm on which everyone was to share equally in both the work and the bounty. The result? Almost half the 120 or so pilgrims didn’t survive the first year – mainly because many didn’t share the work. According to Governor Bradford’s journal, the survivors immediately went to individual (i.e., private) family farm plots and thereafter flourished.
Centuries later, in the Great Depression of 1929-41, FDR’s heavy government hand on the economy actually prolonged the depression until World War II. At that point, although Washington did ask for quotas on tanks, planes, arms, supplies, etc., they finally got out of the way and let the private sector work without interference. The result was the US “arsenal of democracy.” Incidentally, you never heard of “the Great Depression of 1920-21,” because there wasn’t any. After a sudden and deep price deflation (crash) in 1920, the Harding administration simply let market forces cure it in less than a year and a half.
More recently, we experienced Barak Obama’s huge stimulus bill to “jump start the economy” and cure the Great Recession that began in 2008. Remember all those “shovel-ready jobs” it was supposed to create? The fact is, politicians can’t “create” sustainable jobs no matter what they claim. All they can do is provide an environment that’s welcoming to intelligent risk-taking, business investment, and consumer confidence – lower taxes, fewer regulations, etc. For example, In Trump’s first term, true to his personality, he claimed credit for 11.1 million private-sector jobs recovered between June 5th and October 2nd of 2020 – but he didn’t create them. It happened because an investment-friendly environment (which he did help create) had already been in place and he knew enough (then) to stay out of the way.
In general, there is no shortage of examples of failed government planning in this country alone. As noted by Randal O’Toole in his book The Best Laid Plans, government planning typically produces surpluses of things people don’t really want, and shortages of things people really do want, because the planners simply cannot understand the complexities of human behavior. In fact, the other side of the ledger, central planning successes, is virtually blank – so the conclusion that government planning doesn’t work is inescapable. Yet, there are always a great many people in government who want to keep trying it, and from that perspective, insanity is rampant.
Next, regarding the second definition of insanity, let’s look at some of the proposed BBB plan details to see how its implementation would have undermined Biden’s stated objective of a new and stronger economy. First of all, since he was proposing supply chains of small businesses for a strong industrial base that his people would “build,” the chances are they would have wanted to specify which industries and products were to be favored, as well as tight regulations that would govern the “small-business” participants in the proposed supply chains. Indeed, the only participants would likely have been “government-approved” businesses – and we know how good the bureaucrats are at picking winners. Still, since 98-99% of businesses in the US are small businesses, the vast majority would have continued to operate outside Biden’s proposed supply chains – so what about them?
One of BBB’s big priorities was to “meet the climate crisis, build a clean energy economy, address environmental injustice, and create millions of good paying union jobs.” In the process, Biden and his people would have put thousands of coal miners out of work, reduced or banned fracking to make the US an energy importer again, and strongly regulate the oil companies (possibly doubling fuel prices). These counter-productive measures (among others) would have raised operating costs for nearly all businesses but would especially have hurt small businesses. All of that was in addition to the unreliability of green power sources, the huge land use and wildlife disruption they entail, and the soaring costs of energy to consumers.
Also, the BBB plan called for free childcare, higher pay for (unionized) teachers, and subsidies for those who care for the elderly. In addition, it pushed for “a dedicated agenda to close the racial wealth gap,” including a higher federal minimum wage, more housing subsidies, investment in minority entrepreneurs and communities, police reform, and educational opportunities for minorities. Whew!
Considering the country’s huge debt, how would all these programs have been paid for? As usual, the political solution was to raise taxes. For example, Biden was outspoken about repealing the Trump tax cuts. However, as demonstrated in the past, high tax rates are hostile to a thriving economy. In fact, after a point, high tax rates would actually lower tax revenues – because private capital takes flight, growth ceases, and the wealthy seek tax shelters. Human nature again. Also, repealing the Trump tax cuts would have imposed a $2000-a-year tax hike on a median-income family of four, and hit a single parent with one child for an additional $1300 a year.
The lesson for this November 3rd is: be careful how you vote, because Democrats and Democratic Socialists will bring all or most of these BBB proposals back again – and this time, they could pass.
What does the Bible say about planned economies? Old Testament governments were mostly autocratic monarchies. And at the time of Jesus, Rome was a powerful empire, with an emperor at the top. While many of these governments, using military threats, exacted harsh taxes from those they ruled, often in the form of grain, olive oil, etc., there’s no clear evidence of government economic planning or meddling in the production process. Indeed, the Bible often refers to independent artisans, large landowners, rich merchants, etc.
But what about the government of Egypt (represented by Joseph) decreeing that for 7 years part of the crops produced were to be warehoused for future lean years? That sounds like some government planning, doesn’t it? In fact, it was based on Pharaoh’s dream sent by God, so it was really God’s plan. Only God perfectly understands the complexities of this world, and His “central plans” always work.
Norbert J. Kuk