Burning The Furniture and Eating The Seed Corn To Survive
By
Monty Pelerin, posted December 8th, 2009 http://www.economicnoise.com/2009/12/08/burning-the-furniture-and-eating-the-seed-corn-to-survive/
The
public has not yet reached the point indicated in the title. The
government reached it years ago and is impoverishing the nation.
Neither President Bush’s nor President Obama’s economic policies
brought this recession. The event was preordained from years of
governmental economic mismanagement and intervention. The crisis could
have come sooner, or later. It happened on Bush’s watch. Now Obama must
deal with it.
The insanity of current economic policy
has been dealt with here before. Keynesian economics, as practiced by
politicians, was not what Keynes advocated. He envisioned the role of
government as a controller/moderator of the economy, stepping to help
in down times. Keynes never proposed a government consistently spending
beyond its revenues. The government was expected to run surpluses in
good economic times. To understand how badly the Keynesian system was
bastardized, one only need know that the last true surplus in this
country was 50 years ago! Have we been in a depression for 50 years?
Why has this happened? Politicians are not economists, and they
don’t think like economists. Rational politicians live for the moment.
Like renters of a home, they do not care about wear and tear or
residual value. Politicians “enjoy the home to the fullest.” The
residual value of their home (country) is not their concern; staying in
the home (retaining office) is. This point was made by Hans-Herman
Hoppe in his book Democracy The God That Failed and in this article:
Both kings and presidents will produce bads, yet a king,
because he “owns” the monopoly and may sell or bequeath it, will care
about the repercussions of his actions on capital values. As the owner
of the capital stock on “his” territory, the king will be comparatively
future-oriented. In order to preserve or enhance the value of his
property, he will exploit only moderately and calculatingly. In
contrast, a temporary and interchangeable democratic caretaker does not
own the country, but as long as he is in office he is permitted to use
it to his advantage. He owns its current use but not its capital stock.
This does not eliminate exploitation. Instead, it makes exploitation
shortsighted (present-oriented) and uncalculated, i.e., carried out
without regard for the value of the capital stock.
Carrying
the home analogy a bit further, the last several decades of
governmental economic policy has seen wealth destruction. Such policies
are analogous to the government heating its home by burning the
furniture. Burning furniture might get you through a few winters, but
unless it is replaced eventually there is nowhere to sit and no fuel
for next winter. Fortunately our ancestors were industrious and frugal,
creating a lot of furniture. We stayed warm for a long time as a
result, but the furniture is disappearing. I believe the
furniture-burning analogy first came from Ludwig von Mises. His “eating
the seed corn,” leaving nothing to plant next year, would have been
just as applicable.
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