The Fatal Conceit Always Fails

Just released, the 2004 Index of Economic Freedom, published by the Wall Street Journal and The Heritage Foundation, provides a country-by-country analysis of economic growth measured against ten categories of economic freedom, including tax rates, regulations, government intervention in the economy, private property rights, and the fiscal burden of government.

What the study shows is that the nations with the most economic freedom are also the most prosperous. "Economic freedom makes all the difference," writes Heritage President Ed Feulner. "When a government stops meddling with its people's money, cuts taxes, or sells state-owned assets to private industry, it encourages growth and investment. And the more a country expands economic freedom, the faster it will grow--and the longer that growth will last."

The Irish economy, for example, expanded at three times the European Union average for most of the 1990s, producing jobless rates well below the E.U. average. Pro-business, growth-oriented government policies were the key factor in this dramatic economic boom. Ireland's 12.5 percent corporate tax rate, for instance, is less than half the 30 percent average of E.U. nations.

Or consider North and South Korea. With its anti-capitalist ideology, overblown government, and centralized planning, North Korea ranks dead last in the Index of Economic Freedom. Begging for international food relief to feed its starving population, its per capita GDP is $3 per day.

South Korea, in contrast, ranks 46th out of the 155 countries graded on the Index, up six spots from last year. Sharing the same heritage and similar natural resources as North Korea, but with an economy that the Index ranks as "mostly free," South Korea enjoys a per capita GDP of $16,000 per year.

Closer to home, Lowman S. Henry, chairman of the Lincoln Institute for Public Opinion Research in Harrisburg, Pennsylvania, links that state's lack of growth and overall economic malaise directly to bloated government and the long-standing propensity of our politicians to grab larger and larger shares of our income. "After six months of fighting over the state's budget, the governor and legislative leaders arrived at a tried and true Harrisburg solution--tax everything in sight," writes Henry. "And so they did. From personal income taxes to cellular telephone taxes, 'revenue enhancements' as they are euphemistically known under the Capitol dome were raised on just about everything and everyone who hasn't left the state yet."

The 10 percent hike in personal income taxes, writes Henry, will adversely affect consumer spending, hurt businesses, and cut job creation. The Commonwealth Foundation projects that the tax increase will strip $1.4 billion in disposable income from the wallets of Pennsylvania's families and produce a loss of 33,000 jobs.

In short, in an overtaxed state with a sub-par economy, our politicians have voted to raise spending, hike taxes, and make Pennsylvania even less competitive with the rest of the nation.

In Pittsburgh, with tax-subsidized Lazarus-Macy's and Lord & Taylor raising the white flag and the second prospective Fifth Avenue-Forbes Avenue developer hightailing it out of town, the revitalization solution we're now getting from our local politicians is a 50 percent parking tax and a call for the city to buy even more properties.

What will work, of course, is the exact opposite. What generates economic growth, more business creation and more jobs are lower taxes, less central planning and less government, as unambiguously demonstrated by country-by-country analyses and by the widely divergent growth rates within the United States between the different states.

In The Fatal Conceit, the Nobel laureate economist F.A. Hayek writes of the key ideological conflict in economics. On the one hand are "the advocates of the spontaneous extended human order created by a competitive market," and on the other hand, "those who demand a deliberate arrangement of human interaction by central authority based on collective command over available resources."

What has failed is the latter, collectivism--the "fatal conceit" that says that a single mind, a single committee, can somehow do things better than the spontaneous, unstructured, complex, and creative forces of the market.

Ralph R. Reiland, a columnist for the Pittsburgh Tribune-Review, is the B. Kenneth Simon professor of free enterprise at Robert Morris University. E-mail:rrreiland@aol.com.

"What has failed is the latter, collectivism--the "fatal conceit" that says that a single mind, a single committee, can somehow do things better than the spontaneous, unstructured, complex, and creative forces of the market."

In a socialist country, apparently envisioned by the Democrats and Academia, citizens are obliged to follow the path set for them by central authority. Contrast this to a free country, with free enterprise, where the citizens pursue their own interests, their own dreams and desires. It makes all the difference.

Although it's not clear that much of anyone desires the latter. Which is why Hayek did not consider himself a "conservative."

The political spectrum, as depicted by a point moving from left (liberal) to right (conservative), is useful for whanging people or lusting after them based on what they think. If thought is always father to the deed, then pre-empting or pushing their way of thinking is rational in a rational world.

The current practitioners of national government show the hazard of electing based on thoughts. Who knew we'd get fiscal liberals? It's what they do, not what they say.

To get a handle on the desirability of politicians, the things they do, and the people who support them, we need a new Etch-a-Sketch to live by. Imagine a line that begins with liberty, and moves all the way over to authoritarianism, the 'fatal conceit' if you will.

Liberty and authoritarianism are on-the-ground results. They are not philosophies in their own right.

By placing the political parties on this line, we can see that the social conservative tendency towards behavioral control with lifestyle laws and victimless crimes drives Republicans to the 'fatal conceit' goalposts. The desire for income redistribution and hate crime laws show the need of Democrats to flatten out individual achievements while eliminating the stereotypes that point out differences in class behavior.

Simply put, a new political spectrum would show oppression for what it is, even when it comes from our own 'side.'

Freedom is the starting point. It does not come in reaction to something else. A life unencumbered by the state cannot be forced on someone. We are always free to suborn ourselves if we choose. To say liberals are forcing a lifestyle is not true. You don't have to have an abortion. You have the choice. Or rather, you should.

>>>...don't have to have an abortion. You have the choice.

The real problem is: They want me to pay for their abortion.

They want me to pay for their AIDS treatment.

In all cases it is not so much what they do, or want to do, It is that they want me to pay for any bad results.

They also want me to "accept" the screwy deeds as "normal" and that it is my fault that they are all serewed up.

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