America's biggest problem is big government
By: Dr. Gary Wolfram
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February 26, 2009
It is clear that members of the Democratically-controlled Congress and President Barack Obama have either not read or have choosen to ignore the 10th amendment to the United State constitution.
That’s the amendment that reads: “The powers not delegated to the United States by the Constitution, nor prohibited by it to the States, are reserved to the States respectively, or to the people.”
In his recent address to the joint session of Congress, Obama, cheered on enthusiastically by Speaker of the House Nancy Pelosi, D-CA, declared how the federal government will become more fully involved in the financial industry, the auto industry, the health care industry, the energy industry, higher education, and K-12 education among other things.
This speech reflects an attitude of a federal government that is unbounded in its powers and responsibilities. It is consistent with the so-called stimulus package that contains a vast array of federal government intrusions into the private sector and what are properly the responsibilities of state government .
It is telling that the president quoted a letter from a student in South Carolina who asked him and Congress to fix her school. This letter reflects on an educational system that has taught our children that the federal government is the place to seek solutions to the problems of local K-12 education.
That the President would offer up this letter as something which we should all agree with shows us that we have moved far from the Founders and their insight that a federal system is the best way to protect individual liberty.
Aside from the constitutional issue, the speech ignored what Friedrich Hayek and Ludwig von Mises pointed out decades ago--that centrally planned states cannot overcome the problem that information is decentralized.
A central planner cannot possibly know the relative value to 300 million consumers of resources used in the production of windmills versus airplane parts, or gasoline versus diesel fuel. This is a primary reason why socialist economies are beset by poverty. Markets, on the other hand, through their reliance on the price system, are enormously efficient at producing wealth for the masses.
My seventh-grade son, while listening to the President’s speech blurted out: “This is central planning.” His reaction was entirely accurate. The administration has plans for nearly every aspect of our life: What kinds of cars we drive, how much tuition will be at our colleges and universities, what kind of health care we will get, how we will produce and consume energy.
Nothing seems to be beyond the reach of the planners. The result of this planning will be a society that is poorer economically, but perhaps more importantly, less free. The result of Individuals acting according to their own plans will not result in the societal outcome that the planners desire.
If we are free to choose, we will not drive the type of cars Pelosi would like us to drive, or choose the type of health care that the Secretary of Health and Human Services would have us choose, or choose the type of education that Sen. Ted Kennedy, D-MA, would like us to choose.
Ludwig von Mises in 1927 warned about the coming Depression and Second World War. He did not warn that it was poor monetary policy, or high taxes, or too much government spending that would lead us into what he called “an approaching catastrophe in the world economy.”
Rather it was the adoption in the West of a philosophy skeptical of market capitalism and enamored with government planning. The greatest threat to our society is not credit default swaps or mortgage-backed securities. It is the loss of our understanding of limited government, individual liberty, and the economic system which creates a prosperous and free society.
Dr. Gary Wolfram is the William Simon Professor of Economics and Public Policy at Hillsdale College.
