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Interventionist Blind Spots

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Washington Post columnist David Ignatius is saying that interventionism just isn’t getting the credit that it’s due. He’s pointing to the “successful” government bailouts of the automobile and banking industries. Thanks to the bailouts, he says, the banks and the auto companies are getting back on their feet and might even repay most of the taxpayer money that was provided them. He’s also saying that the bailouts saved America from being plunged into another gigantic Great Depression.

I wish people like Ignatius would read Economics in One Lesson by Henry Hazlitt and The Law by Frederic Bastiat. Then, perhaps the poor readers of theWashington Post would be spared such ridiculous statist nonsense.

No one argues that a government dole is incapable of helping out someone, whether it’s a person who needs an operation, a business that is going under, or a local politician that needs a community center.

What people like Ignatius fail to understand are the moral implications of a government dole along with what Henry Hazlitt described as the unseen consequences of interventionism.

Take, for instance, a thief. Let’s say he breaks into someone’s home and steals $50,000. He takes the money and gives it to a buddy whose business is about to fail. The cash enables his buddy to pay off the money he owes the bank and to expand his business. The business survives and prospers.

Now, undoubtedly, the advocates of thievery will say the same thing that Ignatius says about interventionism: “See, thievery really does work! It’s time for the anti-thievery crowd to silence their criticisms of thievery. Thievery has not only saved that man’s business, it also produced jobs for the community. Hail thievery!”

But you see the problem? There are at least two major ones.

One, the money didn’t belong to the recipient of the loot. It belonged to the person from whom it was stolen. From a moral standpoint, any good that was done with the money — whether it’s to help the poor, provide retirement for seniors, enable someone to have a needed operation, or to save a business — is irrelevant. The fact is: It’s morally wrong to take what doesn’t belong to you in order to give it to someone else, even if you do good with it.

My hunch is that Ignatius might recognize the moral wrongfulness of stealing even when the thief is able to document with 100 percent certainty that he put the loot to a beneficial use.

The problem arises when government enters the picture. Here is the moral blind spot that afflicts people like Ignatius. Interventionists somehow conclude that when government agents forcibly take money from Peter through taxation in order to give it to Paul, somehow the entire process has been converted into a moral deed in which all the actors — bureaucrats, politicians, taxpayers, voters, and citizens — are converted into good, caring, compassionate individuals.

The other blind spot that people like Ignatius have is respect to the unseen consequences of interventionism — that is, all the things that did not happen because the owner of the money wasn’t permitted to use the money himself.

In other words, whenever a government grant is doled out, interventionists will proudly proclaim, “Look, look — a new center for your community.” Or, “Look, look — the banks and auto companies have been saved! See how much good we have done!”

But what about all the businesses that failed or never came into existence because the owner of the money wasn’t free to spend, donate, or invest it the way he wanted. Suppose, for example, he intended to invest the money in a friend’s struggling business. Or suppose he planned to donate it to a person who needed a medical operation. Or suppose he intended to use it to remodel his house.

What about all the people in those sectors? We don’t see them, and certainly people like Ignatius aren’t going to point to them. Yet, all of them have been harmed by not having received the money that was taken from the owner and instead given to the banks and the auto companies.

The principle is no different if the government borrows the money rather than tax people for it. By sucking money out of the private credit markets, it is unavailable for people in the private sector to use, thereby harming all the sectors on which those people would have invested or spent the money.

That’s why interventionists needs to read Bastiat and Hazlitt — first, in order to comprehend that it’s immoral to take what belongs to one person in order to give it to another person, whether the dirty deed is done by private thief or by government officials, and second, to comprehend the concept of unseen economic consequences of government interventionism.

This post was written by:

Jacob G. Hornberger is founder and president of The Future of Freedom Foundation. He was born and raised in Laredo, Texas, and received his B.A. in economics from Virginia Military Institute and his law degree from the University of Texas. He was a trial attorney for twelve years in Texas. He also was an adjunct professor at the University of Dallas, where he taught law and economics. In 1987, Mr. Hornberger left the practice of law to become director of programs at the Foundation for Economic Education. He has advanced freedom and free markets on talk-radio stations all across the country as well as on Fox News’ Neil Cavuto and Greta van Susteren shows and he appeared as a regular commentator on Judge Andrew Napolitano’s show Freedom Watch. View these interviews at LewRockwell.com and from Full Context. Send him email.