I don’t want to exaggerate the significance of today’s Op-Ed piece by Paul Krugman. The title, “Too Little of a Good Thing,” says it all, namely that the TARP stimulus did its job of stopping the free-fall of the economy, but that unemployment will continue to plague us for years because it was too small to reverse it. These are familiar themes of Krugman’s, and he treads them again here.
Beneath the surface, however, beats the heart of his philosophy. For him, the economy will always suffer as long as we restrain government from managing it effectively. We do this, he believes, by overly relying on the free market, which will always serve the interests of the rich, and tamp any effort to re-direct the flow of wealth in a more equitable manner.
While I do not accept this goal as a primary function of government, I won’t take that further today. The more immediate problem is the underlying assumption behind it, namely that government regulation — I would call it “intrusion” — is always a positive, or at worst a neutral act, and that it should only be judged by how effectively it pushes the numbers in the right direction.
Although I am not alone in finding this assumption invalid, the reasons I cite today are purely personal, and depend upon a conception of the individual’s enjoyment of his or her freedom to negotiate one’s own fate in the marketplace. Government involvement in the economy always affects our ability to make personal choices, whether as a consumer, a worker or an employer. The economy is, at base, dependent upon people making these choices from what is available. As consumers, we choose what to buy, and from whom to buy it. As workers or employers, we enter into voluntary relationships “at arm’s length”.
The intrusion of governemnt — whether from stimulus money in a financial crisis, or any other regulatory scheme — always imposes a barrier, or filter, between us and our independent economic decisions. This is both the blessing and the curse of free enterprise.
I’m not saying that the paternalistic conception of government is of no benefit. Government can and should protect us from the dishonesty, fraud and damage caused by the private sector when it is motivated purely by profit. But an overreaching paternalism is always a loss of freedom, of the liberty to interact with the full community by relying on one’s judgment alone. But Krugman and his supporters see nothing of this. To them the “health” of the economy can be assessed solely by experts who will look only at numbers on charts.
Unfortunately, these government actions are often necessary to clean up the mess made by market forces run amok. We are still in the middle of that cleanup, and it’s not time to stop yet. The economy is nowhere near recovery. I’m only saying that the loss of liberty is real, not imagined, not just a morsel of conservative propaganda. Those who value liberty and independence will always chafe under government control, no matter how stabilizing the outcome. But the discomfort is not just a minor annoyance. It penetrates deeply, and I don’t need conservative zealots to tell me how it feels. It is not “neutral”.