04 June 2011

No, It isn't

I've noticed a little meme on the liberal/progressive/socialist end of the spectrum that is being used as a cudgel in the debate about the proper size and scope of government. I first noticed this with Professor Krugman (see here and here) and saw it somewhere along the line repeated by the captain of the JV squad, Ezra Klein. That the federal government "is an insurance company with an army."
No it isn't. At least the United States of America isn't. It is extremely important to remember that I am not a professional historian, political scientist, lawyer or genius polemicist writing for the New York Times. But I can read. And I have read this, the constitution of the United States. I've read a couple books about the constitution. I've even sloughed through a couple Supreme Court decisions. I've given more than a passing glance at Hobbes, Locke and even Rousseau, along with some other works on political science and political economy. I've read some of the Federalist Papers and even a few of the Anti-Federalist Papers. I even have a copy of Madison's notes on the Convention. I'm not listing this stuff to make it look like I'm smart. Because you don't have to be smart to have read these things (and truth be told, I've forgotten most of what I've read, but I think I still have the gist of most of it and I also still have most of the texts). Thanks to Google Books I can state categorically that the word "insurance" does not appear in The Social Contract, Leviathan or Two Treatises on Government. The word "insurance" does not appear in the constitution and the matter was not broached during the convention. It is not mentioned in any of the amendments passed since ratification.
The point being that the government is not an insurance company. It isn't supposed to be one, anyway. And if it were to try and be one, it would carry out that function rather poorly and it has). But none of that matters to the epic minds that embrace the notion of state control of just about everything. Not when the government can inflate the currency, increase taxes, bastardize the interest rates and deny that long-run expectations of catastrophic outcomes are not rational considerations in economic decisions today*.
But merely stating as if it is a given fact that the government is a huge insurance company with an army, then anyone who disagrees with the basic premise is immediately marginalized.
"What do you mean the government isn't an insurance company? What would you do with Medicare, Medicaid and Social Security? Who would provide health insurance for the indigent, infirm and elderly? Who would provide retirement funds for retirees?"
Are we that far gone as a society that we don't realize that a human being's first responsibility is to himself? That this isn't some Randian/Objectivist homage to selfishness but simple common sense? Is it that much of an anathema to speculate that people would be able to make arrangements on their own, voluntarily, to take care of themselves?
Because they can't afford it? Ummm, guess what? Neither can the government. Because when you give someone something for nothing, they tend to want more of it. That is not greed, that is normal. When people don't have to apply marginal utility preferences, when scarcity is removed from the equation by the deus ex machina of government, costs will explode.
Here's another meme that has the added benefit of being true: the government doesn't produce anything, it merely moves resources from one area of the market to another. Anything "given" to one must first be taken from another. When this is done under penalty of law, this is not compassion or charity, it is bullying and theft.
When legislators and bureaucrats (or New York Times columnists) presume to know how to direct resources to more efficient (or humanitarian) outcomes, it can be difficult to prove to them that they are wrong.
But they are wrong. And closing your eyes and repeating silly, and untrue, mantras over and over again won't change that.

*Banks, firms and individuals are not hoarding (i.e. "not not spending") money due to uncertainty and concerns over long-run considerations, both of which are usually (but not always) created by government interference in the market. It's a "liquidity trap" that can only be countered by, yep, more government spending. If this seems like an idiotic concept, then congratulations are in order. You fully understand Keynesian economics and why it doesn't work.

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