Contested Ground, Not Common Ground

Obama is wrong about the role of government.

Michael Tanner
Wednesday, January 26, 2011

President Obama spoke eloquently during his State of the Union address last night about civility and the search for common ground. And certainly a bit more civility would be a welcome change. Yet, at the same time, the president’s speech showed just how little common ground there is between two distinctly different views on the role of government.

The president clearly believes in using government broadly as a force for good in society. Despite the lip service paid to the need to put our fiscal house in order, the president’s answer to the problems facing this country is for government to do more and spend more. The president may call these new initiatives “targeted investments,” but what he means is “more expensive government programs.”

In calling for more government action, the president’s attitude reminds one of Samuel Johnson’s description of second marriages: the triumph of hope over experience.

For example, the president wants to spend more on education. That sounds good — who could be against education? But the federal government has increased education spending by 188 percent in real terms since 1970 without seeing any substantial improvement in test scores.

The president’s answer to unemployment is for the government to pick winners and losers in the marketplace, “investing” in infrastructure and “green technology.” The president sees government as the engine of economic growth, as a force that “creates jobs.” He says he wants that job growth to be in the private sector; it’s just that he doesn’t believe that the private sector can do much unless it acts in “partnership” with the government. Yet from Hoover and Roosevelt during the Great Depression to the anti-recession policies of Gerald Ford and George W. Bush, government efforts to fight unemployment by “creating jobs” have been unsuccessful. And we have the experience of hundreds of billions of dollars spent by President Obama in stimulus programs with little evidence of job creation.

Nor should we forget that the president’s “investment” must be financed through either taxes or debt (meaning future taxes). Thus the president is simply moving money around, taking it from those people and businesses he deems less worthy and giving it to those he believes will “win the future.” That’s a recipe for redistribution, not competitiveness.

As the economist F. A. Hayek noted, government’s ability to manage the economy is premised on a “fatal conceit” — politicians’ inability to recognize their own limitations. For example, studies show that not only do government “green jobs” policies create few jobs, but the ones they do create often come at the expense of existing jobs. To cite just one finding: A study by Gabriel Calzada of the Juan Carlos University of Madrid found that every green job created by the Spanish government destroyed an average of 2.2 other jobs, and that only one in ten of the “green jobs” created was permanent. The fact is, if these industries were viable and profitable, the private sector would be rushing to invest in them. The very fact that they require government subsidies demonstrates that they are not the road to future economic growth.

But the president continues to insist that the right mix of government spending will work better than the invisible hand of the market to restore a growing economy.

Naturally, the president defended his health-care bill despite all the evidence that it has failed to control medical costs and is actually driving up the price of insurance, limiting consumer choice, and making it more difficult for businesses to hire new workers. The government health plans we have now, Medicare and Medicaid, are spiraling into insolvency even as the quality of care they provide deteriorates. In fact, most of the problems facing our health-care system can be traced to government policies designed to fix it. But the president insists that more government mandates, subsidies, and regulations are the answer.

On the other side of this grand political divide are those who believe that government is already too big, too intrusive, and too costly. Rather than “invest” in new programs, they want to cut back the programs we already have. Rather than seeing Washington as the font of all wisdom, they see the 50 states as, in Louis Brandeis’s immortal phrase, “the laboratories of democracy,” and seek to devolve more authority and responsibility to state governments. Rather than federal money and regulation, they see increased competition and parental choice as the answer to failing schools. Rather than a government industrial policy, they see the free market as the route to economic growth, and call for lower taxes and less regulation to unleash that market. And rather than increased government control of our health-care system, they seek a consumer-centered health reform.

That is not a divide that can be bridged by civil rhetoric or rearranging congressional seating.