Sunday, November 09, 2008

What Fundamental Change?

Tibor R. Machan

Senator Obama won over millions of voters by promising fundamental change in America under his leadership. He was not specific about what kind of change but there were hints here and there and by now a fairly clear picture of the proposed basic change has emerged.

In America the way people became better off economically is by working and earning a living from their work. A bit of luck never hurt and some also experienced setbacks. But in the main the American system did not involve fixed economic classes, huge groups of people whose level of prosperity is fixed and rarely if every changes for better or worse. Instead, the American system approximated an on-going, never ending marathon race, with people's positions changing for the better or worse, depending on their self-initiated effort and some luck. Over all, the economy was taken to be, mostly correctly, a win-win process. One person's gain didn't come at another's loss--in all the billions of deals that were struck, big ones or small, all the parties were taken to come out ahead, as judged by their own needs and objectives.

This, indeed, is one central reason so many people from across the globe wanted to be living in America. Elsewhere they were pretty much stuck, for a variety of reasons. They included their social situation from which it is difficult to escape without gaining political pull, favor with the government and members of the upper classes. In America the idea was that people could move without such favoritism, at least in the bulk of cases and government would stick to guarding the rules of the process, with no theft, no fraud, no deception tolerated.

But it looks like that this picture of the economy in America, admittedly never fully realized, will now be systematically altered. Instead of accepting that the citizenry is stretched out over a lengthy economic continuum, from poor to wealthy with all the steps in between and the positions they hold constantly changing, the dominant picture now looks like what it used to be in feudal times, with a small segment of very rich at one end and a huge number of poor or moderately well off at the other. And this is seen to be fixed unless someone like Barack Obama and his team of government managers interfere and forcibly spread the wealth around.

The way the Obama team sees the American economy is that it involves what is called a zero sum game--someone's gain must be another's loss. Wealth is static. For those who lack it they need to take it from those who have it. And since ordinarily that would be criminal, it needs to be accomplished politically, in which case it is deemed to be legitimate wealth redistribution, a matter of socio-economic justice!

This picture also assumes that wealth just happens, that it doesn't require that people create it. Thus no one earns the wealth he or she owns--it just happened to come his or her way. And when some have a good bit of wealth, it must mean they were overly lucky and that, of course, is quite unfair. Those who lack wealth or a good bit of it are, in turn, unlucky. There is nothing they could have done other than what ended them in their situation. And that's grossly unfair.

To remedy the unfairness of it all, the fundamental change that Barack Obama and Co., and their supporters imagine must be achieved in Washington, D. C., the center of the country's political power (certainly not its economic engine). It is not work, entrepreneurship, investment, and some luck that will bring about the prosperity of those who haven't enough of it. No, it is politicians and bureaucrats making policies that will redistribute the wealth of the country. They will tinker with the economy, regulate business, assign privileges and duties and that way they will bring about basic change. They will institute a planned economy, one that rejects the ideals of the free market, of what the Nobelist F. A. Hayek called the spontaneous order, in favor of a highly regimented system.

Of course, that fundamental change has been tried over and over again throughout history, recent and ancient. Earlier it was mercantilism that embodied the idea of a top down planned economic system. It is this system that was criticized by Adam Smith for failing to enable people to produce wealth. Later the top down idea was embodied in socialism and fascism. Both of these were in time total flops.

We will now probably see whether Barack Obama and his team can work miracles by doing the impossible, ordering people to make wealth and taking it from them and redistributing it according to their vision of fairness.

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