Monday, August 17, 2009

Keep government out of the marketplace. by Judge Jim Gray

Ihave been pondering the answer to the following two questions for several years: First, what actually is the basic liberal philosophy? See if you agree with my answer. In general, the liberal philosophy is that “Government can best address — if not cure — the ills of the world by spending money.” (Of course, it is our money that the government is spending.)

And second, what is the basic conservative philosophy? See if you agree with my answer. In general, the conservative philosophy is that “We should have as small and non-intrusive a government as possible, which is basically one that will provide us with things like a military and police force, foreign policy, justice system, national monetary system, some oversight and regulating of the marketplace, and a few other nationally oriented things like that.” One of the rationales for that philosophy is that individual people are in a better position to make good decisions about how to spend their money than the government is.

Unfortunately, the recent administration of President George W. Bush abandoned that conservative philosophy when it failed to veto huge congressional spending, and even sponsored much of it. For as long as I can remember, conservatives have been chastising liberals as people who would “tax and spend.” But the Bush administration took that one big step further with policies that would “tax, borrow and spend.” And that is a big reason why our country is in such fiscal trouble today. Therefore, as a practical matter, the Libertarians are the only political group that has held true to the basic conservative economic philosophy.

So now one of the policies that the Obama administration and Congress are pursuing is the so-called “Cash for Clunkers” program. As you know, this program contributes $3,500 to $4,500 to people who trade in their old “clunker” automobile for the purchase of a new one. And the program has been so “successful” that it has gone through the first $1 billion of tax money, so Congress has now added another $2 billion to it.

Is this a good idea? If it is and it is actually working, maybe we should expand it to provide a subsidy for everything! (Hopefully, everyone will agree that this suggestion is preposterous.) I do agree that the program is taking older, more polluting and less fuel-efficient cars off the roads, and that, in a vacuum, is a positive development. But think of what this government interference in the marketplace is actually doing.

One thing is that it is taking people who are probably at the lower end of the economic ladder and putting them into more debt during these hard economic times. And the program is also encouraging (bribing?) people to purchase many new foreign cars, like Hondas, Toyotas, Hyundais and Kias. This results in our tax money being spent to help the economies of places like Japan and Korea. (Yes, I understand that some of the cars are assembled in the United States, but the underlying fact remains.) And even to the extent that they buy cars manufactured in our country, this comes on the heels of the government having paid billions of tax dollars in bailout money to General Motors and Chrysler Corporation.

As importantly, we must understand that everything is related, which is to say that things do not exist in a vacuum. So by encouraging people to purchase new cars, we are discouraging them from spending money on other things like movie tickets, haircuts and refrigerators. (Corporate welfare and other government subsidies bring on the same results.)

Indeed, from an environmental and economic perspective, wouldn’t society be benefited just as much or even more by encouraging people to purchase fuel-efficient refrigerators, air conditioners, dishwashers or toasters? Why just cars? And in many cases, wouldn’t it help people and the economy more by having the money spent on health insurance, trips to Yellowstone or a child’s education? Or why not encourage people to increase their savings, which could in turn be used as a basis for bank loans for capital improvements and business expansion?

Of course, the automobile industry lobbied strongly for the initiation and continuation of the clunkers program, but that just reinforces the old saying that if you are going to rob Peter to pay Paul, you can always count on the support of Paul.

So when it comes down to it, the conservative philosophy works more effectively for the benefit of the individual, as well as for society in general. That means that individuals really are in a much better position than government to decide how most effectively to use their money. And this in turn leads to the conclusion that government can best assist our people, as well as our economy, by getting out of the marketplace!

But there is something even more disturbing in what is happening today that must be faced and discussed. None of the major empires I can think of throughout history were conquered from without. Instead, they fell apart from within. Examples are the Roman, Ottoman and British empires. And all of this deterioration was facilitated by government overspending. Those governments extended their domestic and military spending beyond that which they could afford, and also increased taxes beyond the point that the taxpayers were willing or even able to pay. And it was their undoing.

Are we at that point yet? I do not have the answer to that question, but we should all be aware of the problem. Of course, even with all of this government borrowing of money, my generation will still be fine. But it will be our children and grandchildren’s generations that will be looked upon to pay for our fiscal irresponsibility. Shame on us all!

The fundamental truth is that when taxes get too high, people will move their resources somewhere else — out of the state or even out of the country. (Think of offshore banking in the Cayman Islands and elsewhere.) And when bureaucratic interference, costs and taxes pass a certain threshold, people will either move their businesses elsewhere, or simply be forced to close them down. Therefore, the “outsourcing” of jobs is only one of the logical or even economically mandated results of this situation.

So what can we do to keep from weakening our great country? As I have said numbers of times in this column, it is our government, and if government is not working, we have no one to blame but ourselves. That means that, if only for the sake of our children and grandchildren, we had better get more active and require our government to be more fiscally responsible. And the best place to start is to get it out of the marketplace.

JAMES P. GRAY is a retired judge of the Orange County Superior Court, the author of Wearing the Robe – the Art and Responsibilities of Judging in Today’s Courts (Square One Press, 2008), and can be contacted at or via his website at .


mj said...

Judge Gray, I typically agree with you but here you have just gone off the rails. the first moment i noticed it was when you said that citizens can better be expected to spend their money than government. that seems more disingenuous than naive to me. of course i want to spend much of the money i earn but saying the citizens will do a better job in spending their money is like suggesting the television will be filled primarily with educational programming.
likewise railing against cash for clunkers is a bit like complaining that the thieves left the door open when they departed. the stimulus packages were implemented without popular support and in spite of the fact they bailed out those who robbed the american public. once the money has been allocated it then became the responsibility of the administration to spend it wisely, to spend it and get real results in the form of loans being made and cash being infused at points in the economy. in that way cash for clunkers is the big success it is cracked up to be.
there were a few other fallacies and slippery slopes in this one judge, but you get a pass because of how right on you often are in your blog.

NewOldSalt said...

Having seen proof of how much pollution old cars produce vs. new cars—in a great show that also proved that idling measurements of pollution were not as good as another method—I was not necessarily against this plan.

But I am against those wishing to take advantage of the rest of us.

I lived 12-13 years in B'ham and often in the "run down" sections. I wonder how many of those people's cars were taken off the road? My guess is little-to-none. So this was probably yet again another idea gone bad.

In my opinion (the amorphous) they should have gone to places like B'ham and other very poor areas, and basically just approached the little old ladies, and other poor people driving Bonnevilles and other relics. Offer nicely and GIVEN them a new car. (While towing away their clunker.) This would have been a boon for the environment and reached out to many disaffected.

But instead this plan seemed to morph in to a temporary (drug) injection for our past-dead auto industry and those who could figure out how to game the system.