1984: Thread

[grarpamp]

https://mises.org/wire/12-myths-fueling-government-overreach-times-crisis

12 Myths Fueling Government Overreach In Times Of Crisis

Authored by Robert Higgs via The Mises Institute,

Congress and the president have adopted many critically important
policies in great haste during brief periods of perceived national
emergency. During the first “hundred days” of the Franklin D.
Roosevelt administration in the spring of 1933, for example, the
government abandoned the gold standard, enacted a system of
wide-ranging controls, taxes, and subsidies in agriculture, and set in
motion a plan to cartelize the nation’s manufacturing industries. In
2001, the USA PATRIOT Act was enacted in a rush even though no member
of Congress had read it in its entirety. Since September 2008, the
government and the Federal Reserve System have implemented a
rapid-fire series of bailouts, loans, “stimulus” spending programs and
partial or complete takeover of big banks and other large firms,
acting at each step in great haste.

Any government policymaking on an important matter entails serious
risks, but crisis policymaking stands apart from the more deliberate
process in which new legislation is usually enacted or new regulatory
measures are usually put into effect. Because formal institutional
changes—however hastily they might have been made—have a strong
tendency to become entrenched, remaining in effect for many years and
sometimes for many decades, crisis policymaking has played an
important part in generating long-term growth of government through a
ratchet effect in which “temporary” emergency measures have expanded
the government’s size, scope, or power.

It therefore behooves us to recognize the typical presumptions that
give crisis policymaking its potency.

The twelve propositions given here express some of the ideas that are
advanced or assumed again and again in connection with episodes of
quick, fear-driven policymaking—events whose long-term consequences
are often counterproductive.

1. Nothing like the present situation has ever happened before. If the
existing crisis were seen as simply the latest incident in a series of
similar crises, policy makers and the public would be more inclined to
relax, appreciating that such rough seas have been navigated
successfully in the past and will be navigated successfully on this
occasion, too. Fears would be relieved. Exaggerated doomsday scenarios
would be dismissed as overwrought and implausible. Such relaxation,
however, would ill serve the sponsors of extraordinary government
measures, regardless of their motives for seeking adoption of these
measures. Fear is a great motivator, so the proponents of expanded
government action have an incentive to represent the current situation
as unprecedented and therefore as uniquely menacing unless the
government intervenes forcefully to save the day.

2. Unless the government intervenes, the situation will get worse and
worse. Crisis always presents some sort of worsening of something: the
economy’s output has fallen; prices have risen greatly; the country
has been attacked by foreigners. If such untoward developments were
seen as having occurred in a one-off manner, then people might be
content to stick with the institutional status quo. If, however,
people project the recent changes forward, imagining that adverse
events will continue to occur and possibly to gather strength as they
continue, then they will object to a “do nothing” response, reasoning
that “something must be done” lest the course of events eventuate in
an utterly ruinous situation. To speed a huge, complex,
“anti-terrorism” bill through Congress in 2001, George W. Bush invoked
the specter of another terrorist attack. Barack Obama, Invoking the
specter of economic collapse, rushed through Congress early in 2009
the huge Economic Recovery and Reinvestment Act before any legislator
had digested it. In a February 5, 2009, op-ed in the Washington Post,
he wrote, “If nothing is done … our nation will sink deeper into a
crisis that, at some point, we may not be able to reverse.”1 At a
February 9 press conference, he said “[A] failure to act will only
deepen this crisis,” and “could turn a crisis into a catastrophe.”

3. Today is all-important; we must act immediately. In his first
inaugural address, Franklin D. Roosevelt declared, “This nation asks
for action, and action now.” He then proceeded directly to speak of
the most terrifying problem of the day, mass unemployment. "Our
greatest primary task is the put people to work … It can be
accomplished in part by direct recruiting by the Government itself,
treating the task as we would treat the emergency of a war, but at the
same time, through this employment, accomplishing greatly needed
projects to stimulate and reorganize the use of our national
resources." In any event, "The people want direct, vigorous action."

Similarly, not long after taking office, Barack Obama similarly
declared, not long after taking office, “The situation is getting
worse. We have to act and act now to break the momentum of this
recession.” “Doing nothing is not an option,” he said in Elkhart,
Indiana on February 9. “The situation we face could not be more
serious,” and “we can’t afford to wait.” In the February 5 op-ed,
listing a series of objectives he claimed the pending legislation
would achieve, he began four successive paragraphs with the words “now
is the time to…”6

4. Government officials know or can quickly discover how to remedy the
problem. All government policies adopted to meet a crisis presume that
the government knows how to effect the rescue it seeks. The government
officials may sometimes admit, as in the early new deal, that is does
not know exactly how to proceed, yet it maintains that “doing
something” is better than doing nothing. Roosevelt maintained that the
government ought to try something and, if that measure failed, then
try something else. Thus, ignorant flailing about— on the assumption
that “doing something” has no costs, adverse effects, or untoward
long-term consequences—has been touted as a virtue, and indeed many
members of the public, no more expert than the government itself have
agreed that the government must “try something.”

5. We may safely rely on the establishment and on its insiders for
expertise in this crisis. As a common first step in reacting to a
crisis, the government often assembles a council of experts or some
such group of wise men and women. These experts are invariable drawn
from the government itself and from groups with whom the government
maintains cozy relations. The experts frequently include those who had
responsibility for carrying out the government policies that
contributed to the occurrence of the crisis in the first place. Thus,
no matter how ill fated monetary policy may have been, the government
will call on the secretary of the Treasury and the head of the Federal
Reserve System to decide, perhaps along with others, what should be
done next. In this constructed circle, the range of possible future
actions the government might take is almost always no wider than the
range of actions taken in the past. Hence, the “experts” are subject
to repeating the same errors time and again.

6. We may trust the government to act responsibly and effectively on
the basis of the expertise they command. The public looks to
government officials and their assembled “wise men” to act in the
public interest and to organize their actions in an effective manner.
If the policy makers lack the requisite knowledge, then such trust is
bound to be misplaced, because no matter how responsibly the policy
makers may try to be, they simply don’t know what they are doing. If
they do have the requisite expertise, however, they may still fail to
act on it because of their political, ideological, or personal
interests and connections.

The public tends to think of crises as akin to mechanical problems—the
car’s engine is not running; policy makers need to give it a “jump
start.” Crises, however, are rarely so simple. More often, they
involve far-reaching relationships among many individuals, groups, and
nations, and the lack of productive coordination that the crisis
represents can seldom be restored by simple policy actions such as
“the government ought to double its spending and rely on borrowed
funds to cover its budget deficit. Complex political, social, and
economic breakdowns rarely take a form subject to easy treatment
activist policymakers (though many of them can take care of themselves
if only policymakers stand aside from them.)

7. The clear benefits of quick government action may be assumed to
outweigh its costs and its actual or potential negative consequences.
Crisis decision making is not characterized by careful attempts to
justify actions on a benefit-cost basis. If the situation is dire,
policy makers and many members of the public simply assume that a
policy with positive net benefits may be adopted. Little basis exists
for this assumption. Even in a crisis, the government may take many
actions whose costs and risks greatly outweigh any benefit they may
bring. The potential is great for focuses on benefits that are
immediate and visible while disregarding costs that are delayed and
less easily perceived. Thus, policymakers are likely to plunge almost
blindly ahead where more calculating angels fear to tread.

8. Fact finding, deliberation, study, and debate are too
time-consuming and must be forgone in favor of immediate action. In
April 1932, a year before the momentous explosion of New Deal measures
after Roosevelt took office, Felix Frankfurter complained in a letter
to Walter Lippmann that “one measure after another has been …
hurriedly concocted…. They have been denominated emergency efforts,
and any plea for deliberation, for detailed discussion, for
exploration of alternatives has been regarded as obstructive or
doctrinaire or both.”  The events of the spring 1933 congressional
session raised all of these attributes by an order of magnitude.

President Obama likewise recently declared that enough debate had
occurred on the massive “stimulus” package even though it had been
rushed through both houses of Congress, neither of which had paused to
hold hearings on it. “We can’t posture and bicker. Endless delay and
paralysis in Washington in the face of this crisis will only bring
deepening disaster.”

9. Existing structures and incumbent firms must be preserved; new
structures and firms are unthinkable. Existing office holders,
bureaucrats, firm managers, and owners have a decisive political
advantage over possible alternative occupants of their positions (“new
entrants”). Hence, the overriding theme in any crisis is that current
politicians and capitalists must be preserved—propped up, bailed out,
subsidized, whatever it takes to save them and their present
organizations.

In truth, however, the best way to deal with some crises is by getting
rid of the persons and organizations that helped to bring them on.
Bankruptcy, for examples, is not the end of the world, but simply the
end of existing stockholders. If a company still possesses valuable
assets, they will be transferred to new and presumably more competent
managers.

10. If a policy is not getting the results its proponents promised,
more money should be poured into it until it finally “works.” This
presumption receives application to government policies in general,
not simply to crisis policies in particular, but it gains force during
a national emergency, when getting results as regarded as especially
imperative.

By the time Barack Obama became president, the U.S. Treasury and the
Fed had made commitments for trillions of dollars in loans, capital
infusions, loan guarantees, and other purposes. Yet, the economy
continued to sink. The president and his senior advisers did not
conclude that these measures had failed, but only that they had been
too timid. Thus, President Obama told reporters that after Japan’s
bust in the early 1990s, the Japanese government “did not act boldly
or swiftly enough,” even though it spent trillions of dollars on
construction projects. Likewise, Treasury Secretary Timothy Geithner
concluded from his study of the Japanese stagnations that “spending
must come in quick, massive doses, and be continued until recovery
takes firm root.”

11. We must not be deterred by the accumulation of public debt; there
is no practical limit to the amount the government may safely borrow.
Political office holders prefer to finance their spending by borrowing
rather than taxing, if possible. That way, the public does not feel so
dispossessed and therefore is less inclined to oppose the spending
programs. In a national emergency, the office holders’ preference for
deficit finance comes ever more boldly to the fore, and throughout
history governments have tended to borrow heavily to pay for major
wars. With the dawning of the Age of Keynes, deficit financing during
recessions acquired an ostensible intellectual rationale, magnifying
whatever inclinations the politicians already possessed. At present,
the public debt is rising at an unprecedented rate, yet few people
raise serious objections to the government’s spending program on this
ground. Virtually everyone who matters politically is content to rely
on what I call “vulgar Keynesianism”—or at least pretend to do so.

12. The occasion demands that policymakers put aside partisan or
strictly political maneuvering and act entirely in the general public
interest, and we can expect them to do act accordingly. After Woodrow
Wilson had sought and gained a congressional declaration of war in
1917, he declared that “politics is adjourned.” By this expression, he
sought to convey the idea that he would henceforth abstain from the
usual partisan maneuvering and devote himself to prosecution of the
war in the most effective way and that, he hoped, others would do the
same. Whether his announcement of the adjournment was sincere or
merely attempt to point those who disagreed with his war policies as
partisan obstructionists, we do not know. We do know, however, that
partisan political actions did not cease on either side.

In a similar way, President Obama recently declared, “We are in one of
those periods in American history where we don’t have Republicans or
Democratic problems, we have American problems. My commitment as the
incoming president is going to be to reach out across the aisle to
both chambers to listen and not just talk, to not just try to dictate
but try to create a partnership … [W]e’re … not going to get bogged
down by old-style politics on either side.” A month later he
reiterated this idea, denouncing “the same old partisan gridlock that
stands in the way of action while our economy continues to slide.” And
promising “We can place good ideas ahead of old ideological battles,
and a sense of purpose above the same narrow partisanship.” Even as he
made this declaration, however, partisan maneuvering continued as
usual on both sides in Congress.

Politics cannot be put aside. Politics is what politicians and
political interest groups do. Partisanship is inevitable as political
actors who seek conflicting ends struggle for maximum control of the
government.

End it.