CHAPTER V GOVERNMENT INTERVENTION SUBVERTS THE “X” FACTOR

That sharply analytical historian, Albert J. Nock, recently made an age-proved observation concerning intervention by government:

“It seems to be very imperfectly understood that the cost of State intervention must be paid out of production, this being the only source from which any payment for anything can be derived. Intervention retards production; then the resulting stringency and inconvenience enable further intervention, which in turn still further retards production; and this process goes on until, as in Rome in the third century, production ceases entirely, and the source of payment dries up.”[1]

Back in the five-cent days, the federal government confined itself to such strictly political matters as the common defense, post offices and post roads, foreign relations, the coining of money, the issuing of currency, the collecting of moderate indirect taxes, administering justice and to some reasonable regulations.

An estimate of the increased intervention that has taken place, gradual until recently, but lately at a revolutionarily accelerated pace, can be obtained by scanning the activities now constituting the main business of the federal government:

• The ethics and morals and practices of business.

• The wages of labor.

• The prices of goods.

• The planting and financing and marketing of crops.

• The relations between employers and employees.

• The care of the unemployed and the aged.

• The planning and financing of municipal improvements.

• The manipulation of monetary value to conform with political ideas.

• The use of the taxing power to attain social objectives.

• The education of youth.

• The planning and building and financing of homes.

• The minute regulation of hundreds of kinds and forms of industry and commerce and agriculture.

• The launching and conduct of hundreds of economic ventures directly competing with the activities of individual citizens.

• The general business of setting the moral standards and governing the human relationships of a nation of 130,000,000 persons.

A consequence equally as grave as the cost effect results from this intervention. The instruments of production and distribution change from control by business management to that by political management. Political management must lead to complete political control and then ownership and that is socialism. When control is transferred from private to political management, the managers no longer are chosen on the basis of business acumen but rather on the basis of political sagacity. The main requirements for successful private management are low cost production and distribution, getting more goods and services to more people. The main requirements for ascendancy among political managers, as distinguished from those of statesmen, are devising sneak-thief methods of taxation to balance political deficits and making subtle speeches to cover up political errors. Political management lacks the incentives of private management to produce goods and services, therefore less goods and services are produced. Witness the political, lazy-man theory of scarcity—destroying pigs, cotton, wheat, etc. To the extent that political management fails to produce and distribute goods and services as well as private management, to that extent does government intervention subvert the “X” factor.

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[1] “Our Enemy, The State”—William Morrow & Co., New York.