Today’s NRO-column from John Tamny is probably the most error-filled since at least Paul Krugman’s Toyota column. First he claims that somehow the west have become dramatically less socialist than it was in the 1940s. Somehow he seems to have missed the fact that in every western country since then the welfare state have been greatly expanded.
In Sweden for example government spending have increased from 20% of GDP to 55%, with other Western European countries increasing almost as much. In the United States, the increase have been less drastic, but it have nevertheless been very large, with programs like Medicare and Medicaid being introduced, with the former being recently been expanded by Tamny’s man, Bush. And unlike in the 1960s when Barry Goldwater and many other Republicans challenged the welfare state, today’s Republicans are all to eager to expand the welfare state.
While Tamny does concede that “both parties regularly pass bills that are anti-market” he goes on to assert that “neither would embrace the socialist ideology.” But for that to be true he would have to define “socialism” as communism or at least Scandinavian levels of welfare spending, but then it would certainly not be accurate to describe the 1940s as socialist as the welfare state were smaller then than now.
He also says that the current top 35% federal income tax is only 10% points above the 20th century low of 25% under Calvin Coolidge. Actually the 20th century low was the 0% that America had before the 1913 passage of the 16th amendment. His assertion that “In Germany, both candidates for chancellor decry the welfare and wage systems that keep the German economy stagnant” is simply not true. Both have pledged to defend Germany’s “social model” and will only implement modest market reforms at best. His description of British Finance Minister and likely succesor to Tony Blair, Gordon Brown, as “a proponent of Adam Smith” is just ludicrous. The Labour government have greatly expanded the welfare state and introduced a minimum wage and similar labor legislations and Gordon Brown have been leading in pushing these changes. Brown is in fact generally considered to be more left-wing than Blair.
What was then the point that Tamny tried to make with his false assertion that the west pursues free market policies? It was to point out the true observation that in the monetary area , central planning is being pursued. But even here he goes wrong. Because what Tamny advocates is not the Misesian view that central banking should be abolished. He wants the supply-side “price rule” to guide the Fed. But trying to implement such a “price rule” would be no less central planning than the current system. Any central banking is central planning.
He also decries Greenspan’s recent concerns about the housing bubble by saying “Leaving aside the Fed chairman’s major role in a housing boom that he apparently now laments, not to mention whether or not a a public employee should comment at all about private investments.” While the first part about Greenspan’s role in the housing bubble is correct, he apparently does not realize that this refutes his second point, that he shouldn’t do anything about “private investments”. The problem is that these “private investments” have been financed by money created in the centrally planned monetary system, so being negative about these are certainly not a case of interfering with market forces.
