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IN WHOM SHOULD WE TRUST?
March 2, 2009 - Ray Hall (Archive)
"Government is guilty of being asleep on watch, of fiddling while our money burned, but there is yet to be found a single government employee that designed, engineered and implemented financial gimmickry."
Last week that sentence in this space prompted the following comment and query from reader and frequent responder “danyay:”
Why do you trust and love the government so much? All the trust you somehow have in these men whose power quest is never ending is scary.
Although the question might have been rhetorical, the content is valid and appropriate for serious examination. That and the fact that I’ve never been asked that before compelled me to give “danyay’s” question thoughtful reflection.
Throughout our history Americans have been motivated and energized by two powerful but symbiotic forces—government and the prevailing system of economics. Both forces effect individual behavior and determine the conduct of human activity, but the system I fear and the one I can least impact is our economic system.
One might suggest a third powerful force, religion. Until the mid-twentieth century religion exerted a powerful, but declining influence on human activity and behavior in our economic development. However, religion has lost a measure of economic influence as society strains to cope with complexities of life that clash with a code of authoritarian beliefs.
Our government, our Constitutional Republic, might have been won by revolution, but its creation resulted from our geography. This new land was too vast and too far removed from England, from Europe to be appropriated or governed, but it was chock full of natural resources.
English settlers in early 1600 quickly discovered that they were inadequate in numbers, knowledge and individual wealth to subdue the wilderness and subjugate an indigenous people that homesteaded no particular piece of land but roamed unmindful of defined boundaries. That particular characteristic might have prevented the native peoples from the savagery of slavery, but it foreshadowed an attempted genocide.
The settlers persevered but the need for labor remained critical and in 1619 a Dutch trader sold 20 black slaves to the settlers at Jamestown, Virginia. Although the settlers viewed the slaves as indentured servants, the slave trade flourished and an economic system with an abundance of natural resources and cheap labor was born on the backs of 20 slaves. This account demonstrates that economic systems do not appear naturally, economic systems are creations of man.
Before John Adams finished his term as our second President, our founders easily accepted that Adam Smith had written the final word on economics. Smith’s book, An Inquiry into the Nature and Causes of the Wealth of Nations was published in 1776 and was widely acclaimed. Even today Smith is heralded as the “father of modern economics”
The following passage from Smith’s book has been embraced as the bedrock for our free market economic system.
“It is not from the benevolence of the butcher, the brewer, or the baker that we expect our dinner, but from their regard to their own interest. We address ourselves, not to their humanity but to their self-love, and never talk to them of our own necessities but of their advantages.”
According to Smith if each of us acts in our own selfish, self interest we have acted properly and advanced economic wealth. With apologies to Mr. Smith, humanity, I believe, is essential in the marketplace. As usually the case with unrestrained enterprise, a butcher offers a piece of meat that he believes will fetch two dollars. Along comes a widow with fatherless children who desperately needs the meat and is willing and able to pay the $2 price.
However, standing in line behind the widow is a man of substantial reputation and means who at once offers the butcher $3 for the meat. According to free market advocates all is well; the butcher’s self interest was advanced, he became wealthier and the gentlemen had a fine dinner party and the widow was left to her own devices. In his work, Adam Smith advances that such irregularities in the market place are self-correcting by the “invisible hand” at work in free markets.
The invisible hand, I believe, can only be our government. Only government can establish standards for fair market practices or take twenty-five cents of the butchers unexpected gain and fifty cents from the man with means and give it to the widow whose family would have gone hungry.
This economic system, this urge to fulfill selfish needs, this need for the cheapest of labor, this need to gain an unfair advantage in the market held through the Continental Congress, through the Revolution and lasted until the government intervened in a massive movement-through our 16th President. The Civil War ended slavery, but it did not end the lust for cheap labor. Jim Crow kept blacks, and poor whites, locked in poverty and created a permanent underclass. Again, the government intervened—this time Lyndon Johnson signed civil rights legislation that would have a dramatic and lasting impact.
The insatiable desire for cheap labor, this lust for even cheaper wages, pushed market makers in this country to even greater heights to achieve an advantage in the markets. Child labor lasted well into the twentieth century in nearly every industry and as opposition grew in the northeast to children working long and miserable hours in factories, many of those factories moved south where opposition to child labor was not as prevalent.
That appetite for an edge, an economic advantage has resulted in more of our companies moving off shore for cheaper labor, even child labor—children as young as five working 14-16 hours a day and in intolerable conditions.
Our controlling economic system is unfair and undemocratic. We will always have those that live lavishly and excessively. We will always have the greedy and the selfish. We will always have those that exploit the masses. Citizens have nowhere to turn except to the government, not for equality, but for parity. We know the economic playing field is always going to be tilted away from the vast majority, and that’s okay. My vote has the possibility of changing the government, but I cannot change our economic system.
Our current condition resulted when our government failed to intervene—to regulate. Our condition has now engulfed the globe—governments—countries are scrambling to generate heretofore unheard of amounts of money to prop up their failing banks.All countries, that is except one—Canada. Canada has been wise. They regulated their banks and kept banks away from creating bundles of phony financial products. The real estate market is doing just fine in Canada.
In conclusion my attitude toward government is neither liking nor loving; rather it is one of necessity and acceptance. I also stipulate that wherever power is concentrated there is sufficient reason to fear regardless of how well intentioned.
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Young boys remove slate from coal in a Pennsylvania coal mine. Young boys sometimes worked 16 hours a day.