The Free Market 3, no. 9 (September 1986)
It is well-known that bureaucracies, especially governmental bureaucracies, have an unparalleled ability to suffocate innovation. Perhaps not as well known is the ability of those same institutions to ignore systematically well-documented, empirically supportable precepts about how the world really works.
Congress is the archetypical example of this black hole of historical precedent. It is an institution with an uncanny inability to distinguish between good and bad ideas, and almost invariably enact the bad. The bad ideas are defended with rhetorical barrages untainted by any understanding of the human action of free exchange based on free will.
Much to my chagrin—as a wayward economist who found his way to this body—no subject is so paved with good intentions ... and bad government policy. To most members of the House, “Austrian” means only a good place for summer ski vacations.
For example, here are five of the worst economic ideas currently being circulated, debated, and advocated with scrupulous disregard for fact on Capitol Hill.
Comparable Worth—This brainchild of social engineers inspired U.S. Civil Rights Commissioner Clarence Pendleton to label it “the looniest idea since Loony Tunes.” Basically it amounts to government-mandated wages. In the name of equality, this concept ignores the fact that women make less than men because on average they tend to have less experience, choose to work fewer hours, choose to leave jobs to raise families, and sometimes—for family reasons—choose lower skilled (and hence lower-paying) jobs. In disregard of all these choices and all market analysis and behavior, the government planners advocate establishing a wage and salary board with the authority to set “fair” wages based on arbitrary and discriminatory guidelines.
Level Playing Field—This used to be known as protectionism, but in the modern lexicon of Washington, it’s referred to as “fair trade.” Congress, of course, rushes to the aid of firms; consumers are rejecting with bail-outs, tariffs, quotas, and various trade barriers to protect us from those traded “cheap imports.” A few jobs and firms in the protected industry are saved, while in the meantime prices rise, quality drops, other countries retaliate, and U.S. export firms that would otherwise prosper lose jobs or go out of business.
Civil Rights Restoration—A monumentally bad economic idea clothed in the hide of a legislative sheep, HR 700 was resurrected this year. This bill pretends to be a civil rights act, but in reality would extend federal control in virtually every area of business, education and religion in America. This amounts to no more than “buzz-word blackmail” coercing House Members to vote for more economic control.
Minimum Corporate Tax—This is the classic paradox of modern statism: high tax rates that limit growth and productivity, a plethora of deductions to correct for confiscatory rates, and the ultimate irony of a minimum tax for those who either by lack of profits or use of legal deductions, reduce their tax burden to below an “acceptable level.” This represents my favorite example of a corrupt government practice. In fact, only people pay taxes and corporate taxation is “government by disguise,” hiding the cost of government from the buyer as a subtle way to convince us to take more government than we need or want.
Farmers and Ethiopians—The Congress has been very busy this session appropriating hundreds of millions of dollars to American farmers to bail them out of an agriwelfare-induced recession. Meanwhile, millions more went to Ethiopia where the spectres of Marx and Lenin oversee yet another central-planning debacle. Some House Members have even held hands and sang songs with each other, but to no avail. Somehow, subsidies and socialism always have the same results as they have for centuries: distorted markets, decreased productivity, waste, and deprivation.
These are just a few waves in the veritable sea of bad ideas on which Congress is currently adrift. Help is on the way, however. A small band of counter-revolutionaries is speaking the name of Mises and espousing the miracle of the market. Perhaps Armey’s Axiom 1 (the market’s rational; the government’s dumb) will never be codified into law, but the American people understand, and with their prodding—and the educational help of the Mises Institute—Congress may get the message.
