Government and economics are two entirely different subjects, aren't they?
No, they're not, at least not in America. Let's talk about NORMATIVE ECONOMICS, public policy and what kind of country we'll choose to be in the future.
The kind of government we choose will determine our economic system and vice versa. And that choice will determine our general well-being and prosperity, too. Free market capitalism requires limited government, and free consumer choice is predicated on free market capitalism. On the other hand, expansive command and control governments limit what the consumer can buy as well as what price he must pay.
PRICE DISCOVERY is a market based term which means that individual prices are determined through the interaction of buyers and sellers in the marketplace. Buyers and sellers align to establish the price of a product or service. Pricing is market based.
Government run economies don't have price discovery. Government sets the price, what's produced, how much is produced and so forth. No market and no customer choice.
Limited government, capitalism and personal freedoms served as the foundation for our free and free market American society. This alignment of limited government, capitalism and personal freedom was then and generally still is unlike prevailing conditions in most of the world.
In other words, the more government entitlements we choose, the less free we will be. The less free we are, the less free market prosperity we'll experience. And the less general prosperity we have, the less economic growth we'll experience. So more government requires more taxes, which results in less growth, which generates less prosperity and so forth.
The Debt Ceiling and the Pursuit of Happiness argues that our unique brand of American Exceptionalism rests on a moral foundation as well as an economic one. Accordingly, the argument today about the proper size of government and entitlement programs is really a fight over the decades long trend toward statism. The article makes the moral case for the personal benefits of self-reliance, hard work, earned success and limited government. It therefore concludes that the current national financial debate about the debt ceiling is inextricably linked to the right to life, liberty and the pursuit of happiness. In other words, it's about what the Founding Fathers had to say about what kind of country we would be.
Simply stated, the debate over the debt ceiling is really an argument about NORMATIVE ECONOMICS and public policy.
The case for less government is moral and based on the belief that our "unalienable" rights contained in the Declaration of Independence will encourage us individually to pursue our chosen dreams through things such as self-reliance, sacrifice, earned success and hard work. These are essential to a free society.
Unlike other countries, the Founding Fathers chose to put all this down in a written constitution. In our Constitution, "We the People" are the explicit source of all governmental powers and government is our servant. What the people say the government must do. A simple and straightforward statement.
Thus, today we the people aren't merely faced with an economic problem in need of solution but, even more importantly, a moral issue which must be addressed. Will our country continue to honor as ideals self-realization, individual opportunity and earned success? Or will we choose to go farther down the path of income redistribution, guarantees and leveling?
The choice is ours to make. The Founders saw to that.
The "progressives" of today talk about fairness and what "ought to be". Bigger government is the result, if not the stated goal. Things like the new health care legislation are presented as "should be" basic American rights. Similarly, preserving the social security system "as is" is sold as what "should be". And so on.
Do we want our kids to be self-reliant or government dependent? Do we choose to embrace equal opportunity or move away from merit and toward equal results?
The editorial puts it this way, "Consider a few facts. The Bureau of Economic analysis tells us that total government spending at all levels has risen to 37% of gross domestic product today from 27% in 1960--and is set to reach 50% by 2038. The Tax Foundation reports that between 1986 and 2008, the share of federal income taxes paid by the top 5% of earners has risen to 59% from 43%. Between 1986 and 2009, the percentage of Americans who pay zero or negative federal income taxes has increased to 51% from 18.5%. And all this is accompanied by an increase in our national debt to 100% of GDP today from 42% in 1980."
What used to be the American way needs to be argued for loudly in moral and not just economic terms in in the months and years ahead. Otherwise our personal freedoms will dwindle and our general well-being, security and world leadership will continue to wane.