Freeman

ARTICLE

Counting Our Blessings

The Sixty-Year-Old Death Grip of Government Is Loosening

NOVEMBER 01, 1995 by HANS SENNHOLZ

Criticism is said to be a basic amusement in which we like to indulge. We are quick to point out the faults of others, denounce their views, and decry their blunders. We enjoy lamenting the state of affairs, bewailing public policies, raising our voices against legislators and regulators, and deploring their motives and misunderstandings. We rarely are mindful that it is easier to destroy than to build up.

There is much to pull down when we view our society in the light of our ideals. We are guided by a set of ideals which are innate or acquired, and measure all things by them. We judge our society and its institutions by our ideal concepts of wisdom, righteousness, justice, and liberty. When seen in the bright light of the ideal, we are saddened by the wide gulf that separates the ideal from the real, particularly, by how the ways and injunctions of the Founding Fathers differ from the machinations of the Hoover and Roosevelt Deals and all others since. We lament the rise of the omnipresent, omnipotent polity and the politicization of many aspects of our lives. As political command and coercion encompass our lives, individual freedom is diminished.

If we compare our conditions with those of all other nations around the globe, we are tempted to sing about America, the beautiful. A brief look at our next-door neighbors and NAFTA partners as well as our trade partners in Europe and Asia makes us appreciate our lot.

In Canada, the Liberal Party of Jean Chrétien, with a comfortable majority in the House of Commons, is pursuing its stale tax-and-spend objectives. It is forging ahead with social assistance, unemployment insurance, and other transfer programs. As it labors under a heavy burden of federal, provincial, and local taxation and regulation, economic life stagnates and real wages fall. Unemployment is hovering about the 10 percent mark, federal deficits are running at 5.5 percent of GDP, and the Canadian dollar is changing hands at 74 U.S. cents. Nationalized healthcare is deteriorating, with thousands of doctors leaving for the U.S. Only two economic sectors continue to prosper: government and the underground economy. In Quebec, Ontario, and the three Maritime Provinces, merchandise worth many billions of dollars moves from the United States to Canada through the Akwesasne Indian reserve straddling the border. The smuggling is bringing new life to the St. Lawrence River valley. The migration of Canadian business to U.S. border states is bringing jobs and activity to the U.S.

In Mexico, the political difficulties usually permeate all aspects of life. Foreign observers raise concerns about Mexico’s one-party dominance, corruption, and human rights abuses. The vast majority of its population of 93 million make ends meet on labor income of less than one-fifth of U.S. incomes. The rate of inflation often exceeds 10 percent per year. In 1994 the peso fell by some 45 percent against the U.S. dollar, causing the financial markets to plunge precipitously, interest rates to soar, and economic activity to sink into deep depression. Millions of workers managed to escape their wretched conditions in Mexico by seeking survival as illegal aliens in the U.S.

If we compare our plight with that of our British friends, we cannot help counting our blessings. Although the U.K.’s economic statistics tell a story of some progress, they reveal an unemployment rate of 9 percent. The chronic economic problems that plague the country are recession, high inflation, a rising tax burden, and record levels of government borrowing, exceeding 5 percent of GDP. Wage rates are some 25 percent lower than in the United States, with interest rates generally higher by one or two percentage points. The pound sterling which used to be the world’s most trusted currency is one of the weakest now, losing exchange value even against the shrinking U.S. dollar.

Social and economic conditions in Germany are said to be among the best in Europe, even better than in the U.S. Productivity and income per capita are about the same. The crime rate is substantially lower, but the unemployment rate much higher since the reunification of East and West Germany in 1989. Yet, the ideo logical and political forces of socialism are very much alive, clouding the future of Germany.

The reunification created a double-bar-relled welfare state which is paving the way for a new command system. One barrel was crafted by the advocates of the “social market economy” or “middle of the road” after the pure market economy à la Erhard had transformed the country devastated by war into a wonderland of miraculous recovery. The other barrel was added after the reunification when the legislators and labor leaders turned East Germany into a huge social asylum. They decreed a currency union on an exchange rate of 1:1, which made prodigious gifts to all East Germans, and ordered a rapid wage parity in East and West, which condemned many Easterners to chronic unemployment. A massive transfer of West German wealth sustains the asylum but does not invigorate and elate its inhabitants. Many are yearning for an early return of the command system.

Japan reports a per capita production of $31,450, which compares with only $24,700 in the U.S.A. But if we bear in mind that these statistics are based on the yen/dollar exchange rate, which undervalues the dollar in Japan by more than one third in terms of purchasing power, we realize that Japanese real wages and standards of living are still lower than those in the U.S. Yet, Japanese society is one of the most harmonious and peaceful in the world. The crime rate per 100,000 population is a small fraction of the U.S. rate: homicide 1 rather than 9.3, rape 1.3 rather than 42.8, robbery 1.5 rather than 263.6. The Japanese are a naturally orderly people who obey the rules, which may contribute to the popularity of the Socialist Party, the second largest party in the House of Representatives. The Socialist Tomiichi Murayama is the prime minister who heads the government formed by three allied parties.

Looking abroad to the political, social, and economic conditions of neighbors and friends, Americans are counting their blessings. Away from home, there is no happiness for them. At home the warm winds of change are blowing. There are real indications that we are reversing the anti-business climate which has depressed economic life throughout the Democratic and Republican Deals. The sixty-year-old death grip of government is loosening. We are witnessing the reduction of government on all levels; even labor unions which build on the Marxian exploitation doctrine are in retreat. There is new hope that tomorrow will be better yet.

 

Hans F. Sennholz

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November 1995

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