The great failing of the Obama administration is that it is packed with people who show no apparent knowledge of the essential truths of liberal theory. That theory, which is the core of the American political contribution and the driving force of modernity itself, is that freedom is the foundation of and the reason for social and economic flourishing. All evidence suggests they know nothing of this.
Obamites, in contrast, hold the opposite view, the one advanced by the Pharaohs and Emperors of old all the way through the Talibans and Hugo Chavezes of our own time. It is the view that nothing is beyond the competence of the state and its great leader. Particularly in economic affairs, these people have a wildly inflated view of what the nation’s chief executive can accomplish through sheer will.
Liberal theory teaches that one truism of government is that whatever it does, the results end up making the problem not better but worse. I’m thinking of the war on drugs, the war on poverty, the war on illiteracy, and the war on terror. So it is with the war on recession. Already it has given us a record of failure, for going on a year most recently but really dating back to the 1930s.
A hundred years ago, liberal theory warned against the central bank on grounds that it would create inflation and generate instability and political corruption. All that happened. Liberals warned against the attack on the gold standard in the 1930s, and were proven right again. So it was for Bretton Woods and also for Nixon’s final creation of unbacked currency. They were right again.
But do Obamites learn from history? On the contrary, they are completely blind to it.
Intellectual failure is at the root of the problem. Note how the administration invokes economic theory in its defense of its policy of wholesale national looting. In this case, bad economic theory works as a cover for acts of despotism. In the end, this is how the theoretical errors of J.M. Keynes end up having utility for governments. Continue reading . . .
