BOOK REVIEW: Fixing tooth-fairy economics
ROLLBACK: REPEALING BIG GOVERNMENT BEFORE THE COMING FISCAL COLLAPSE
By Thomas E. Woods Jr.
Regnery, $27.95, 232 pages
Americans want to believe we finally are emerging from an extended period of economic malaise, that we can see the light of the end of the tunnel. But, writes Thomas Woods, holder of a doctorate from Columbia University and senior fellow at the Ludwig von Mises Institute, that’s the light from an oncoming train.
“A systemic crisis is poised to strike an unprepared America, as the federal government is forced to renege on its impossible promises. It will no longer be the godlike dispenser of bounties. … Most of the people reading this book will live through one of the most significant periods of change in American history. The scale of the coming, inevitable spending cuts will be unlike anything Americans have ever experienced.
“Between now and the entitlement collapse,” Mr. Woods continues, “our representatives in government will keep trying to kick the can down the road,” as they do today with marginal reforms.
However, he points out, soon-to-be Chicago Mayor Rahm Emanuel was onto something when he observed that a crisis should never be allowed to go to waste. Although Mr. Woods disapproves of the intent behind Mr. Emanuel’s remark - seize the moment to extend government’s reach - he points out, “The coming fiscal crisis is an opportunity to take a careful second look at government, its claims, its promises, and to see how much of it holds up to the harsh light of reason.”
It’s in this “harsh light of reason” that Mr. Woods examines the politics, policies, entitlement programs and economic theories that he thinks will bring on “a depression worse than anything America has seen.”
Mr. Woods is bipartisan in his analyses. Among the initiatives he dissects are George W. Bush’s addition to Medicare of a prescription drug benefit, thereby adding “$20 trillion to Medicare’s unfunded liabilities,” as well as the Bush administration’s promulgation of thousands of pages of new regulatory requirements. The Obama “stimulus package” gets special scrutiny. “The problem with fiscal stimulus is the tooth-fairy economics on which it is based, the very idea that economic health is the product of government spending. After all, such spending must be financed either by borrowing … printing money out of thin air, or direct seizure from the population.”
Stimulus spending, he continues, “exhausts the remaining pockets of profitability in the economy, squeezing them and depriving them of profits in order to fund arbitrary government projects. … Government lacks the measuring stick of profit-and-loss that keeps the private sector from squandering resources and creating things consumers don’t want.
” ‘Stimulus’ packages, in other words, drain the productive economy of resources in order to subsidize money-losing ventures.”
In 11 books, among them the best-selling “Meltdown” and “The Politically Incorrect Guide to American History,” and in numerous journals, Mr. Woods has made the point that the federal government has to be kept under control. In “Rollback,” there may be a heightened sense of urgency.
“Americans in their twenties and thirties,” he writes, including himself in the latter group, “confront an especially grim future unless a radical change in direction occurs very soon. … Taxes are certain to be increased - especially if we include inflation as a tax - throughout our lives.” With the steadily increasing share of earnings appropriated by government, “the amount of money this age group will have left to save for the future will be pitifully small … we can safely say that most of us will never be able to retire. A world in which people’s productive lives ended around 60 or even earlier will seem like something out of science fiction.
“The price for the political decisions of previous generations who enjoyed rather a nice ride while it lasted, had to be paid by someone. It will be paid by us.”
Unless the rising generation chooses not to pay it.
“The sooner the younger generation liberates itself from the philosophy of plunder and intervention that has led us to this point,” he concludes, the sooner the rollback begins, “the better its prospects will be.”
John R. Coyne Jr., a former White House speechwriter, is co-author of “Strictly Right: William F. Buckley Jr. and the American Conservative Movement” (Wiley, 2007).
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