If your doctor gets the diagnosis wrong, it is almost certain that he’s going to get the prescription wrong. If he concludes, for example, that your stomach ache is nothing more than indigestion, when the problem actually is cancer, the medicine he prescribes is probably not going to do you much good.
The same holds true for diagnoses for ailments that afflict the body politic. The wrong diagnosis will almost certainly mean the wrong prescription.
A good example of this phenomenon is a recent article entitled “U.S. Poverty Is More Entrenched Than Ever” by a progressive named Eve Ottenberg, which appeared on the website Counterpunch.
Otteneberg laments the vast amount of poverty in the United States. Her introductory paragraph states:
Since last year the number of people living in poverty in the U.S. increased by 15.3 million, as pandemic aid ended, according to CBS September 12. The census and CBS differ over how many American households endure penury, with the latter claiming 12.4 percent and the former 11.5 percent. Either way it’s too much. Either way it means progress in recent decades combatting destitution has been pitiful. The poverty rate today is virtually unchanged from the turn of the century, according to Statista.
What is Ottenberg’s diagnosis for all this poverty? She says that the problem is that America doesn’t have enough welfare. Her prescription? More welfare.
But wait a minute! I thought that the abolition of poverty was the very reason for America’s conversion to a welfare state in the first place. Isn’t that why progressives enacted a federal income tax in 1913? Isn’t this why they enacted the Federal Reserve System in that same year? Isn’t that what Franklin Roosevelt’s New Deal program in the 1930s was all about? Isn’t that what Lyndon Johnson’s War on Poverty and Great Society programs were all about?
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It seems to me that what Ottenberg is failing to recognize is that the welfare state and the war on poverty obviously, by her own admission, failed to end poverty. So, what good where they? And if they failed to end poverty, why would we want to expand them in a further attempt to end poverty?
What progressives simply cannot see is that it is the welfare state (and the warfare state) that are the root cause of poverty. And since they cannot see that, they naturally assume that the prescription for poverty is more welfare. But when more welfare produces more poverty, they still can’t see it. They then call for more welfare. Thus, by steadfastly continuing to get the diagnosis wrong, they continue to get the prescription wrong. They make poverty worse with their prescription.
In her article, Ottenberg laments the high inflation rate that impoverishes the poor. But what she obviously doesn’t realize is it is the very welfare policies that she advocates that lead to a debasement of the currency, whose burden inevitably falls disproportionately on the poor.
Here is how that process works. Government officials tax people to fund their welfare programs. But they spend more on welfare than they they collect in taxes. Thus, they borrow the difference. The debt mounts year after year. Collecting the taxes to pay off the debt becomes politically unattractive because voters tend to get upset. That’s where the Federal Reserve comes into play. It prints the money to pay off the debt. Everyone’s money is now worth less. It’s just a different way of taxing people.
Thus, by failing to understand how this process works, leftists fail to realize that when they call for more welfare, they are also calling for more debt and more inflationary debasement of the currency. In other words, their prescription makes the patient worse off.
There are two major ways by which people’s standard of living rises. One way is through the rise of productive capital. Workers with better tools and equipment produce more. That increase in productivity leads to higher revenues and higher wage rates.
How does such productive capital come into existence? Through savings. People save part of their income and place it in banks to earn interest on it. The banks lend the money to employers, who use it to purchase better tools and equipment for their workers. Thus, savings leads to higher productivity and, thus, to higher standards of living,
But leftists adopt tax-and-spend policies that confiscate those savings, thus reducing people’s standard of living.
The other major way to increase standards of living is through trade. In every trade, people improve their standard of living. That’s because they are giving up something they value less for something they value more.
But leftists adopt trade restrictions, economic regulations, trade wars, tariffs, sanctions, and embargoes that interfere with this process. As such, they reduce people’s standard of living.
By 1890, Americans had discovered the solution to poverty. That solution was: Prohibit government from waging war on poverty. That was why Americans chose a system in which there was no income taxation, Federal Reserve, Social Security, Medicare, public (i.e., government) schooling, national-security state, drug war, a regulated or government-managed economy, and immigration controls.
The result of this unusual way of life was soaring standards of living, which was partly reflected by the millions of immigrants who were flooding into America to participate in this unusual and highly prosperous way of life.
Unfortunately, seeing poverty in the process of soaring standards of living, caused American leftists to get the diagnosis wrong. Rather than leave the process alone, which is what they should have done, they prescribed the welfare-state way of life, which has proved to be an absolute disaster for the poor.
Like I say, wrong diagnosis, wrong prescription. And the patient pays the price.