Tuesday, 27 April 2021

The Great Reset, aka: Building up the State


Planners and self-appointed big-government experts are keen to follow the principle of "never allowing a good crisis to go to waste" -- leveraging the pandemic to carry out what they call The Great Reset: building what they call "a more sustainable, inclusive economy" by building up a Big State. And if you think government is “big” already, you’ve seen nothing yet!

But as Richard Ebeling explains in this guest post, building up the State means pulling people down.

The onrush to bigger and more intrusive government, he explains, seems to be happening and accelerating almost everywhere, particularly in the face of the Coronavirus and the massive and compulsory political paternalism that has accompanied it. For instance, U.K. economist and advisor to the World Health Organisation, Mariana Mazzucato, in a recent U.S. article, calls for the Biden Administration to basically impose comprehensive central regulation, direction and planning over virtually all aspects of social and economic life in the name of "fighting climate change," providing health care for all, and overcoming alleged unjust racial and economic inequalities in America and around the world.

It is a prescription from which governments around the world, like our one, will. be eagerly taking notes.

Warning! We are moving into the fast lane on the road to serfdom.

Building Up the State Means Pulling People Down

Guest post by Richard Ebeling

I can still vividly recall sitting with a high school friend and watching on television as astronaut Neil Armstrong stepped down onto the surface of the moon and saying his famous words, “One small step for a man, one giant leap for mankind.” My glance went back and forth from watching Armstrong make his first steps on the moon’s surface and looking out the window at what was a full moon in the clear night sky over Hollywood, California where I lived, and thinking how surrealistic it all seemed.

It wasn't just me who found it inspirational. In our new era of Covid-19 Big Government, there are those who want that famous event of a little over a half-century ago to serve as inspiration and a model for a post-coronavirus epoch of renewed and expanded political paternalism through government-business partnerships to solve the earth-bound problems of humanity. The questions I would ask are, was it really worth it? is this the appropriate role for government in a free society? and what happens to individual liberty and private property if they succeed?

Building Up the State for Expanded Political Paternalism

Mariana Mazzucato is a professor of economics at University College, London, and the chair of the World Health Organisation’s Council on the Economics of Health for All. She is one of the prominent advocates of government taking on “big missions” in society as the political “big brother” that organises and directs those in the private sector who are to follow and obey the lead of governmental paternalists like herself. All, of course, to make "a better world." (See my article, “The Downsides and Dangers of Mission-Making”.)

She featured in Time magazine as one of trio of writers making their case for The Great Reset: calling therein for something she calls "the entrepreneurial state" (one which shackles actual entrepreneurs to big government's mission.) And in another recent article for American readers, “Build Back the State”, she argues that the Apollo mission to the moon demonstrates how government should be doing things that can get big things done, such as combating climate change and reducing income inequality through political leadership. She tells us, “The task for the Biden administration is to provide leadership for the missions that will shape the decades ahead, starting with the fight against climate change.” Leadership (she hopes) that will go around the world.

She makes it very clear that, inn her view, it must be those in political power who should be in charge of the future economic direction of the United States: “We need top-down direction to catalyse innovation and investment across the economy [she says]. And the Apollo era’s example of government’s leadership, bold public interest contracts, and public sector dynamism offer a valuable template.”

Her mantra is that there is no alternative, and (once begun) no turning back. Going to the moon was a “choice,” Mazzucato says, but today in the 21st century, the “same type of visionary leadership is not a choice, but a necessity.” By implication, denying or opposing such a more dominant role for government is to be on the “wrong side of history.” In other words, it’s either political paternalism on steroids, or it's “curtains” for humankind. 

The Political Mission-Makers Dictate to the Private Sector

The Biden Government must seize the moment, she argues, setting the goals, determining the best ways to get there, and then enticing specially selected big-business partners to go along with it through the offering of hundreds of millions, indeed, billions, of tax or borrowed dollars to do the investment and innovative work that the political leaders want them to take on. The private sector, therefore, is the “junior partner” who follows the directives and commands of those shovelling out the government money to the corporate coffers. To see that private self-interest never gets in the way of what and how the government wants things done, however, she calls for “fixed-price” contracts to prevent cost overruns, and at the same time to have strict regulations that assure the profits to be earned are what the political authorities consider reasonable and “fair.”

The purpose of the price, cost and profit restraints, Professor Mazzucato tells us, is to ensure that what drives their private business partners is “scientific curiosity” and the public welfare rather than “greed or speculation.” To guarantee that those devious private enterprisers don’t pull a fast one on Uncle Sam, she calls for the government's bureaucracies to be filled with technical experts with the knowledge to keep the profit-seekers on the straight and narrow path of only doing what government knows to be best:
“By strengthening the public sector’s capabilities and outlining a clear purpose for public-private alliances, the Biden administration [she says] could both deliver growth and help tackle some of the greatest challenges of our age, from inequality and weak health systems to global warming. These problems are much more complex and multi-dimensional than sending a man to the moon. But the imperative is the same: effective strategic governance of the space where public funding meets private industry.”

The Apollo Project was not “the People’s” Preference

President Kennedy once told the head of NASA at that time, “I’m not that interested in space.”Going to the moon  not the real goal; the real goal was beating the Soviet Union: a political decision to get there before the Soviet Union did. In fact, Kennedy was more concerned that the cost of going to the moon might “wreck our budget.”

Nor were the American people all that excited and interested in the U.S. getting to the moon first. According to Gallup opinion surveys, in 1965, four years before Armstrong’s walk on the moon, only 39 percent of the respondents supported the moon project to get there before the Soviets, “whatever it costs.” In fact, throughout the 1960s, opinion polls said that near the top of the list of those government programmes respondents thought not to be worth funding was the space programme. Even after the successful landing on the moon in 1969, public opinion surveys reported that only 53 percent thought it had been worth the cost. And in the 1970s, those in favour of the space programme decreased well into the 40s percentage range. 

Americans Are Even Less Excited about Paying to Stop Climate Change

While Professor Mazzucato understands that going to the moon was a “choice,” she insists that government-directed and leadership on climate change, inequality, and health care is now a “necessity.” But in whose eyes? An Associated Press poll in 2019 found that 57 percent of Americans were willing to pay just $1 a month more in taxes to “fight” global warming. But when they were asked whether they would be willing to pay an extra $10 a month to stop the climate from changing, only 28 percent said “yes,” while 68 percent said they were opposed.

Clearly, once told that a cost comes attached to the politically hailed benefit of an “unchanged” climate (whatever that would mean!), the public’s enthusiasm falls precipitously. And once confronted with the actual price tags of higher petrol prices at the pump, increased bills for heating and air conditioning, the inconveniences of mandated restrictions on air flights with increased ticket prices (along with possible mileage limits on driving your car to “save the planet”) the numbers of voters supporting a drastic reduction in the standard and quality of life to combat the climate change bogeyman will most likely become far less than what it may be today.

And her programmes have an enormous cost! The entire Apollo programme in the 1960s and 1970s had a estimated cost at the time of $25 billion, or about $157 billion in today’s dollars. That paid for all the equipment and material, and around 400,000 people working to help put a total of 12 astronauts on the moon. But that's pocket change compared to the projected bill for the Biden administration infrastructure and anti-climate change programmes, which carry a combined price tag over the next eight to ten years of upwards of $4 trillion. That's around twenty-five times the cost of the moonshot, not to mention the deadweight cost of all the economic destruction it will cause. The programme will require higher taxes, increased prices, and reduced living standards that represent far more than that $1 a month that 57 percent of the public said they were willing to pay to “save” the planet. But by the time it's implemented, it will be too late to say anything.

Exciting Missions for Those Planning to Be the Planners

When Professor Mazzucato says that what the White House is taking on is more complex and intricate than just getting men to the moon, she is telling the truth. The federal government would be basically taking over more direct decision-making for various forms of manufacturing methods, residential and business construction standards, and huge additions to expenditures on health-care and welfare redistribution. There would be funding to support increased unionisation of more of the work force, and (of course) subsidies and grants to those in the private sector willing to do the government’s bidding. Not to mention the funding for electric cars and accompanying recharging facilities, along with more funding for public transport boondoggles and broadband internet. Indeed, a number of analysts have made it fairly clear that only a fraction of these trillions would be allocated for what has traditionally been considered the infrastructural tasks of road and bridge repair and rebuilding. These jobs will be wiped from the menu almost completely.

The grand national “mission-making” that Professor Mazzucato happily and insistently endorses and demands from the Biden administration reeks with the pungent odour of political power-lusting, special-interest corruption, and dictatorial direction of virtually every person’s life. It also carries with it the end to all reasonable and rational economic decision-making throughout the American economy.

One can only read the words of someone like Mariana Mazzucato and sense the euphoric excitement of those who dream dreams of planning the future of the world. Clearly, she views herself among those qualified and destined to tell everyone else how they should and will live. Place her in charge, she all but demands, or at the very least among the special ones whispering into the ears of those in power who give the “expert” advice without which the world is doomed to live in misery and injustice. Her current roles as adviser to the UK Government and WHO for her and people like her are merely springboards. (See my article, “If I Ruled the World: A Dangerous Dream”.)

Special-Interest Politicking Grows with More and Bigger “Missions”

Implied by Professor Mazzucato’s vision is a spider’s web of government interventions, regulations and controls and commands of the type that must accompany any top-down system of government planning of economic and social life -- bringing with it inescapably an intensified institutional setting of special-interest favour-seeking and political profit-making. What Ayn Rand called creating "an aristocracy of pull."

To the extent to which private enterprises’ revenues and economic survivability is dependent on government spending and regulating and planning, every affected business will have an increased incentive to develop “relationships” with the agencies and its personnel – the overseeing “experts” in the bureaucracies – and with the politicians and their staffers whose decisions and permissions and contract privileges will determine a company’s success or failure. Political connections, and not market competitiveness, becomes increasingly central to every businessman’s attention and intention. (See my article, “Out-of-Control Government: How, Why, and What to Do”.)

More Political Planning Means Less Personal Choice and Freedom

How can the tentacles of government intervention and planning extend so far into the economic activities of every corner of society and not bring with it a decrease in the degree of liberty and freedom of choice of the citizenry in their roles as consumers and producers? As the “senior partner” in these government-business “mission” relationships, the autonomy of individuals on the producer side of the economy necessarily is confined within the targets and goals, the “carrots” and the “sticks” of what those in political authority demand and determine as the direction of economic activity.

Control and command over production by necessity narrows and dictates what is offered to the consuming public and on what terms. The loss of economic liberty carries with it a narrowing of personal choice and self-determination as to how we live and the options offered to us and at what expense; they are taken out of our own hands in the free associations of an open and competitive marketplace and shifted into the political hands of those imposing the top-down directives over all of our lives. In an earlier period of time not too long ago this would have been labelled tyranny and totalitarianism. (See my article, “‘Great National Purposes’ Mean Less Freedom”.)

The Mutual Benefits in Free-Market Exchange

Finally, Professor Mazzucato’s government “mission-making” weakens and finally destroys all economic rationality concerning what is to be produced in the society, as well as how and for whom. Since the time of Adam Smith, the virtue of the liberal free market economy has been understood as leaving each and every individual at liberty to make his own decisions as a consumer and producer. This is made possible due to the institutions of private property, freedom of association and exchange, and unrestricted peaceful and honest competition among all the participants in the social system of division of labor.

Self-interest is harnessed to the general well-being of all those in society by requiring everyone to creatively and effectively find niches for themselves in the arenas of production and trade by which they may acquire the things they want and desire by offering in exchange some good or service willingly taken by others in the agreed-upon buying and selling. 

Prices Inform and Coordinate All That People Do

On a free and uncoerced market, people express what they want and the values they place on the things they desire by the prices they are willing to pay for them. Sellers articulate what they may be willing to produce and sell through the prices at which they offer their goods and services to others in the market. At the same time, competing producers bid for the labour services and resources and capital equipment they may use in their respective lines of production, and those offering their means of production in the pursuit of employment evaluate the alternative prices and wages offered by the rival producers and decide which ones seem most attractive to negotiate over and accept.

The end result is that the prices for finished goods and the prices for the factors of production offer entrepreneurs, private enterprisers, and businessmen the means of determining what to produce and how to produce; that is, prices provide the tools for the “economic calculation” of deciding which lines of production and with what combination of inputs might bring a profit versus a loss, and if there exists potential for profitability; in what ways of producing the chosen good maximizes the net possible gain.

Production is guided into those directions reflecting the most highly valued wants of consumers, and supply-side competition sees to it that the scarce resources of society, including labour, are allocated and applied in ways that tend to utilise them in the most economically efficient and effective ways. Free markets supply what people, in their role as consumers, actually want and are willing to pay for, and each earns an income based on what the market says their services are considered to be worth in their respective roles as producers.

The entire competitive market process and price system sees to it that supplies and demands are tending to match, that information is provided to everyone about what, how and where to be doing things in ever-changing economic circumstances, and that each participant has a fairly wide latitude to make their own decisions in their joint roles as consumer and producer. 

Political Planning Making Decision-Making Irrational

But if Ms Mazzucato has her way, all that must change. Many, if not most or all of these free decisions are to be taken out of people’s hands and coercively transferred to the control of those in political power. The governmental “mission-makers” will now decide what shall be produced and in what ways and for which purposes. Goods produced and supplied will now reflect the ideas of how people like Mariana Mazzucato, in their roles as “expert advisers,” think these things should be done.

By manipulating prices, setting profit margins, dictating what goods should be produced in what technological ways to meet what they think is good and needed by “society” and “the planet,” the entire economic system loses all reasonable footing for rational decision-making.

Let’s take Professor Mazzucato’s three stated areas of “mission” concern: the global environment, health care, and income inequality
  • How and by whom will it be decided that certain relative quantities of resources and labour will be devoted to infrastructure retrofitting versus wind-power turbine construction versus solar power manufacturing?
  • And how and by whom will it be decided what pieces of land will be dedicated to each of these two latter activities (versus the uses of that land for residential housing, farming, wildlife preserves, retail shopping needs, or manufacturing)? 
  • How will these be weighed and considered versus allocations and uses of the scarce resources of the society for health-care research, the servicing of patients, and the manufacturing of the medical devices and equipment and facilities connected with the provision of health care needs? 
  • How will all these decisions be made versus a reallocation of income and wealth through tax transfers and in-kind services to those deemed “marginalised” and “unprivileged” and “underrepresented” in society? 
  • How will it be decided that not enough disposable income has been redistributed to “people of colour” – and since “colours” come in a variety of shades, the determination of what and how much goes to each racial and ethnic “colour” group? 
  • The same applies to those declaring their chosen gender and sexual orientation. How and who decides the proper “marginal” distribution of employments and relative incomes between “straight” people of color versus white people who are gay or handicapped and who come from differing family income and educational backgrounds?
The problems of central planning are manifold. And they don't simply disappear just by throwing money, propaganda and political power at the problem -- as the Soviet Union so abjectly demonstrated.

Who Selects the “Experts” Like Mariana Mazzucato?

There is a related problem of central planning: Who exactly selects the “experts” like Professor Mazzucato, and on what bases and benchmarks, and how is it known that what they say are the necessary “mission priorities" to which all in society are to be made to conform?

No-one ever really knows, except that their real and most important skill will be that they are politically connected. And that real decision-making will be taken out of the hands of real people, i.e., those with a real stake in the success or otherwise of those decisions.

Because when politically-driven experts rule, all economic and social questions and problems are taken out of the peaceful, voluntary, and private arenas of market exchange and the nongovernmental institutions of civil society, and they are moved instead into the realm of government coercion. Under this mandate, prices can no longer tell people what their fellow human beings actually want and how much they value it. Individuals can no longer pursue ways of earning a living guided by what others might like to buy from them, no longer decide for themselves how best to do it based on agreed mutual terms of hiring and employing. “The people” are no longer allowed to freely speak to each other through prices, and associate with each other as they find best and most advantageous through the free bargaining and contracting that is otherwise central to an open and competitive free market. (See my article, “Price Controls Attack Freedom of Speech”.)

To the extent that climate changes may be occurring that have negative effects on people in different ways in different parts of the world, the advantage and benefit of the free-market system (over the chaos of big-government coercion) is in essence that ,when left unmeddled with, the price system will bring to every individual around the globe all the information about whatever changes are actually occurring. Whatever changing demands, shifting resource and supply possibilities, whatever changing terms-of-trade, are reflected in the relative price structures for inputs and outputs in which is incorporated all the relevant information of all the changing circumstances worldwide. With this information embedded in the price system, free individuals and private enterprises in each and every corner of the global division of labour then have profit-motivated incentives and the personal liberty to utilise their own unique and specialised types of knowledge to competitively discover and bring about the appropriate modifications in what people do, where and in what ways, and with the most cost-efficient uses of resources, capital investments and labour skills to do so. (See my article, “F. A. Hayek and Why Government Can’t Manage Society”.)

By constrast, under Professor Mazzucato’s scheme of things, we will all be reduced to those manipulated pawns on the great chessboard of society about which Adam Smith once spoke, with the social engineers and political paternalists like Ms Mazzucato moving us about and positioning each of us as they think we should be arranged and related to each other; instead of each of us deciding ourselves where we want to be and doing what, in collaborative associations with others, as we peacefully see fit, we will instead be pushed around and trodden upon by bureaucrats with political connections. (See my article, “Adam Smith on Moral Sentiments, Division of Labour, and the Invisible Hand”.)

Yes, Mariana Mazzucato and Joe Biden and all those on the Great Reset path are all on “missions” with “big plans.” But their political missions and their big economic central plans require all of us to give up our own individual and personal plans, and to be straightjacketed instead into their compulsory designs for us all. We need to remember Adam Smith’s words in The Wealth of Nations, that:
“The statesman, who should attempt to direct private people . . . would nowhere be so dangerous as in the hands of a man who had the folly and presumption enough to fancy himself fit to exercise it.”
* * * * * 
Richard M. Ebeling  Richard M. Ebeling is the BB&T Distinguished Professor of Ethics and Free Enterprise Leadership at The Citadel, in Charleston, South Carolina. He is the author of several books including Monetary Central Planning and the State, and For A New Liberalism.
This post first appeared at the AIER blog. It has been lightly edited. 

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