Thursday, December 5, 2013

Instant Utopia

"In the last generation politicians and governments have been promising the voters that they could not only bring perpetual full employment, prosperity, and 'economic growth,' but solve the age-old problem of poverty overnight. And the end result is not merely that accomplishment has fallen far short of promises, but that the attempt to fulfill the promises has brought an enormous increase in government spending, an enormous increase in the burden of taxes, chronic deficits, chronic inflation, and a constant loss in the buying power of the people's earnings and savings. . . Another result of the promise of instant utopia has been a gigantic growth of governmental power—of interference in the details of everybody's business and everybody's life. As this power has increased, it has also become concentrated in fewer and fewer hands. . . One mark of the welfare state everywhere has been the gathering of power into the hands of one man. This is no mere unfortunate coincidence; it has been inevitable." - Henry Hazlitt, Man vs. The Welfare State, 1969, pp.1-2

Is there truth in the above quotation from Henry Hazlitt? Try to assess the governments of the world today on the basis of the idea in this quotation and then judge for yourself whether Hazlitt's analysis is accurate or not.

In the Philippines, if my memory still serves me right, I think all the presidents in my lifetime so far had given their promise to fight poverty. However, from Marcos, Cory, Ramos, Erap, Arroyo, and now Pnoy, none of them have succeeded in alleviating the condition of the poor, but instead, again, if my common sense is right, I think Filipinos now are poorer than ever. I accept that there are people who do not share this common sense, and could easily come up with the latest data to contradict this personal observation. But as far as myself is concerned, I think Hazlitt's analysis describes if not most, I think all of the governments today including our own.

So the government's fight against poverty is not bringing the results that we all desired. Instead, what we see are failed promises and greater poverty. One question that bothers me is about the sincerity of those in office. Are they really sincere in their goal or is it just a political slogan? Let us grant that they are sincere, and then another question must be asked: Why are they failing to produce the desired results despite their sincerity? Is it not because they are mistaken in their basic understanding of the nature and function of the government?

Instead of alleviating the condition of the poor, Hazlitt identifies seven inevitable outcomes of government's fight against poverty. And these outcomes are actually addictive for those in power and leading to economic trap and disaster. What are these outcomes? They are as follows:

  • Increase in government spending

  • Increase in taxes

  • Chronic deficits

  • Chronic inflation

  • Constant loss in the buying power of the people's earnings and savings

  • Gigantic growth of governmental power or interference in the details of everybody's business and everybody's life

  • Concentration of power in fewer hands that will finally end in dictatorship. 

All these outcomes or results are obvious now in the US. Here in the Philippines? I think it is still not so obvious, but our instincts feel it.