FREE ENTERPRISE VS. THE WELFARE STATE 34

Can anyone imagine what would happen to any politician who even vaguely intimated that the victims of Hurricane Katrina themselves bear some responsible for their plight? After the mainstream media and the left-wing Democrats were through with him/her for even daring to suggest that the people of New Orleans were partly to blame for not reacting collectively with responsibility and unselfishness he/she could forget about ever running for elective office again. There are some differences between what happened to the people in New Orleans and the ones in Australia, yet there are also important similarities. Would you ever expect the left in this country to admit fallibility of their overweening assumption that only government can help people despite all the evidence extant that private enterprise and self-reliance will always be more efficient and effective? The welfare state has hurt the very people it was suppose to help, yet there is not the proverbial chance of a snowball in hell of getting any meaningful change in that flawed philosophy.

There are too many assumptions which are never challenged, especially by the left. This is one example which is that in an emergency ordinary people are helpless and must depend 100% upon government for their salvation. In the constant drumbeat of the affluent Western democracies having a moral responsible to share their wealth with the poorer countries of the world when have you heard the question asked about what is wrong with these countries anyway? Just why do so many people from Mexico and Central America feel compelled to illegally enter the USA in order to have an economically decent income. The same question should be asked about the people from Northern and Eastern Africa, as well as Eastern Europe illegally entering Western Europe. A more permanent, equitable, and stable solution to this problem might eventuate if the UN would seriously address and act upon it in conjunction with the countries themselves – assuming a majority of the people in those countries want change and after the UN is reformed because as currently constituted and working the UN is so bureaucratic, inefficient, and corrupt as to make it useless.

Speaking of false assumptions, there is a great 2004 book titled How Capitalism Saved America by Thomas J. DiLorenzo which challenges some of those assumptions. Among the issues and historical examples he dissects are these:

1.) The common belief is that the British settlers at the Jamestown (Virginia) colony in 1609 (the second group to go there) and the Plymouth (Massachusetts) colony in 1620 were kept from complete starvation by the largesse of the Indians. That is not what happened. Of the original 104 Jamestown settlers in 1607 all but 38 died - most by starvation. A second group of 500 came in 1609 and 440 of those died of starvation and disease. The problem was the lack of private property. Everything that was produced went into a common pool for the community and to repay the investment and generate profits of the Virginia Company back in England. In 1611 a “high Marshall”, Sir Thomas Dale, went to the colony and quickly diagnosed and corrected the problem. He gave each man three acres and required only that each would have to work for one month a year to repay the Virginia Company. The colony soon began to prosper since each was benefiting from his own labor and there was no more free riding. Whereas the Indians were originally implored to sell the colonists corn, after the transformation of the colony into an individual enterprise system the Indians bought corn from the colonists in exchange for furs and other items. Thus mutually beneficial trading and bartering between the colonists and Indians occurred. Similar conditions existed with the Plymouth colony. Originally there was collective land ownership and pooled output for the entire colony. Approximately half of the 101 Pilgrims who arrived in 1620 were dead within a few months. Another 100 arrived in the next three years and were barely able to survive. The governor of the Plymouth Colony, William Bradford, solved the problem of low productivity by introducing individuality owned land, the same policy as was pursued in the Jamestown Colony and the result was the same. The Plymouth colonists prospered. It is clear that collectivization fails every time it is tried and free enterprise succeeds. Why is it that each generation has to learn this lesson anew? It would seem that as Henry Ford said, “History is bunk.”

2.) The so called “robber barons” in the late 19th and early 20th centuries, John D. Rockefeller, Cornelius Vanderbilt, Grenville Dodge, Henry Villard, James J. Hill and others are generally considered to be no more than greedy, exploitative capitalists. In truth they supplied goods and services through a competitive economical system, created many jobs, and increased the economic prosperity of the country.

3.) Herbert Hoover is forever remembered as a “do nothing” president who allowed the country to go into and remain in a protracted economic depression. The facts are different. Hoover was a hyper-interventionist who instituted many federal government programs which made the economic depression worse. The Smoot-Hawley Tariff Act greatly restricted imports to America and predictably also greatly restricted American exports after other nations retaliated against us and further hurt our and other countries' economies. This act should more accurately be called the Smoot-Hawley-Hoover Act as Hoover strongly supported it.

4.) Franklin Delano Roosevelt is celebrated as the champion of the people who brought the country out of the worst economic depression in history through the creation of myriad federal bureaucracies and work programs. In fact although WWII brought on nearly full employment through production of war materials and millions of people being employed in the military, the depression ended only after the end of the war. There was a shortage of consumer goods during the war years (most production was directed towards materials of war) with inflation held in check by wage and price controls and rationing. During the depression years of the 1930’s the unemployment rate did not decline despite the federal spending of the Roosevelt administration. The USA unemployment rate was 16% in 1931 and 19% in 1938 after nine years of the New Deal – three under Hoover and six under Roosevelt. The unemployment rate in 1929 just prior to the depression was 3.2%. It is true, for instance, that the TVA (Tennessee Valley Authority) program brought electrification to many rural American homes and small business and employment to thousands of others, yet it was at the expense of other Americans. It is always the problem that the spending on government programs robs the private sector of funds and opportunity. Who is more efficient in spending – government or private enterprise? There is seldom proper accounting for waste and inefficiency in government spending while the viability factor and profit incentive of business keeps down waste and inefficiency. Pay attention to the upcoming expenditures in the rebuilding of the Gulf Coast and especially New Orleans for a further lesson in government waste, corruption, and ineptitude.

5.) Despite claims to the contrary by agitprop liberals the energy crisis of the 1970’s was corrected by deregulation formulated by the Reagan administration in the 1980’s. The recent blackouts in California and the Northeast were not caused by deregulation, but by restrictive federal and state government policies which curtailed exploration, production, refining, and transmission of multifold forms of energy. Artificially restrict supply and shortages ensue – wow, what a novel concept.

That above mentioned book is excellent I highly recommend it. I did not discuss all of the issues such as the differences of mercantilism vs. true free market capitalism, but it is in the book.