Saturday, October 11, 2008

Politicians Can't Read (or: We Were Warned)

Check out this quote:

"Government-guaranteed home mortgages, especially when a negligible down payment or no down payment whatever is required, inevitably mean more bad loans than otherwise. They force the general taxpayer to subsidize the bad risks and to defray the losses. They encourage people to 'buy' houses that they cannot really afford. They tend eventually bring about an oversupply of houses as compared with other things. They temporarily overstimulate building, raise the cost of building for everybody (including the buyers of the homes with the guaranteed mortgages), and may mislead the building industry into an eventually costly overexpansion. In brief, in the long run they do not increase overall national production but encourage malinvestment."

So, who said this, and when? John McCain? Barack Obama? Ha! If only...

This was written in 1946 (!) by a conservative journalist and economist of the Austrian school, Henry Hazlitt in his seminal work Economics in One Lesson. Hazlitt is credited with bringing the free-market economic theory of Ludwig von Mises to the English speaking world.

We were warned more than sixty years before the current meltdown.

The book is a must-read for anyone who wants to understand the current worldwide economic meltdown, anyone who considers the vocation of citizen to be a God-given station in life, anyone who believes in the concept of being good stewards with the "talents" entrusted to us. It should be a "must read" for anyone serving in national politics.

But at this point, if we could get your average congressman, senator, Fed chairman, president, former president, or candidate for president or vice president up to the level of reading Green Eggs and Ham we would be moving in the right literary direction.

Normally, I would want to see people serving in government to be brighter than those of us who elect them. But given the hole the politicians have dug us into, the only way to even begin climbing our way out will require us to be smarter and better educated than the Washington ruling bureaucracy.

The good news is that's not much of a stretch right now.

If you haven't read Economics in One Lesson, you might want to do so. You can order the latest edition here.


Anastasia Theodoridis said...

When a person is corrupt, it means he doesn't do things the right way, because he has found it more profitable to do things the wrong way. Almost ANY way but the right way has its corrupt benefits.

That is why the politicians in Washington (and elsewhere) look stupid or under-educated, because they're always doing things the wrong way. But they're doing it on purpose. It isn't that they are stupid. It isn't that they cannot read. It's that they are corrupt.

Corruption always looks like stupidity or incompetence.

Father Hollywood said...

Dear Anastasia:

I agree about corruption. I think most of the smart ones are corrupt, but I also believe there is an army of "useful idiots" (an expression attributed to Lenin) who make the corruption possible.

I believe there are a lot of people who manage to get elected because they are popular or well-connected - not because they are well-read, understand history and economics, or particularly knowledgeable of the Constitution.

I think they get elected and then become part of the establishment in Washington, accepting all the "conventional wisdom" that is simply economic fallacy.

Of course, we also have stupid ones who are also corrupt - they tend to get caught.

One unelected Washington bureaucrat who truly "knows better" (who is known to advocate sound money in private while playing the debt game of Washington) is former Fed chairman Allen Greenspan.

He is truly an enigma. He isn't stupid. He might be corrupt, but more likely, he just accepted certain premises because that was the culture in Washington. Deep down, he knows this is nonsense, and some kind of horrific correction (likely hyperinflation) is coming.

It would be interesting to know where he and Bernanke are putting their retirement nest eggs.

Anonymous said...

I have been blessed with a co-worker who has become great friend (along with her husband, an economics major), who very recently came by my office with a gift: the book you mentioned in this blog posting.

This book reiterates the very simple truth that (at the very least, regarding economics) the best government is that which governs least.

Unfortunately, this election cycle, we have 2 candidates that support the very thing the free market fights against: excessive government intervention.

At least one of our 2 selections is pro-life: if he wasn't, I'd be sitting this one out.

Greg said...

Hey, I just posted the same text on my blog, and then found yours via sphere!

I note you are in Gretna. I grew up in Kenner, am now living in Congo as a missionary.

BTW - you are aware that Ron Paul is on the ballot in Louisiana, under the Taxpayers' Party? I voted absentee, and sure enough he is there!

Father Hollywood said...

Dear Greg:

I hope and pray you are safe from the violence in Congo. I lived in Kenner from 2004 until about a year and a half ago.

I could have voted early, but I'm just going to vote often instead. Just kidding (in Louisiana, I'm sure there will be some of those shenanigans for real!).

Blessings on your work, and may the Lord bless you and keep you!