Politics & Policy

Ho Ho Hill

Santa politics.

Senator Hillary Clinton’s Christmas commercial, showing various government programs as presents under a Christmas tree, was a classic example of calculated confusion in politics.

Anyone who believes that the government can give the country presents has fallen for the oldest political illusion of all — the illusion of something for nothing.

#ad#Santa Claus may turn out to be the real front-runner in the primaries, judging by the way candidates are vying with one another to give away government goodies to the voters.

Santa Claus is bipartisan. The Bush administration is unveiling its plan to rescue people who gambled and lost in the housing markets when the bubble burst.

We now have a bipartisan tradition of the government stepping in to rescue people who engaged in risky behavior — whether by locating in the known paths of hurricanes in Florida or in areas repeatedly hit by wildfires over the years in California or by doing things that increase the probability of catching AIDS.

Why not also rescue people who gambled away their life’s savings in Las Vegas? That would at least be consistent.

Apparently the only people who are supposed to be responsible are the taxpayers — and they are increasingly made responsible for other people’s irresponsibility.

Military conscription is long gone. But taxpayers are still being conscripted to play Santa Claus.

If taking our money and wasting it — or, rather, using it to buy votes — was all the damage that politicians did to the economy, that would be Utopia compared to all the damage they actually do.

What’s more, politicians can picture themselves as the solutions to our economic problems, when in fact they are the biggest economic problem of all.

To this day, there are people who believe that the market economy failed when the stock market crashed in 1929 and that the Great Depression of the 1930s that followed required government intervention.

In reality, the stock market crashed by almost exactly the same amount on almost the same day in 1987 — and 20 years of prosperity, low inflation and low unemployment followed.

What was the difference?

Politicians — first President Hoover and then President Roosevelt — decided that they had to “do something” after the stock market crash of 1929.

In 1987, President Ronald Reagan decided to do nothing — despite bitter criticisms in the media — and the economy recovered on its own and kept on growing.

To people who think the government should “do something” — and this includes most of the media — it would never occur to them to compare the actual track record of what happens when the government does something and what happens when it lets the market adjust by itself.

Back in 1971, President Richard Nixon responded to widespread demands that he “do something” about rising prices by imposing wage and price controls that got him re-elected in a landslide. Moreover, the later damage to the economy was seldom blamed on those price controls.

Recently, Professor N. Gregory Mankiw of Harvard, a former chairman of the Council of Economic Advisers, noted that people in Congress and the White House were wondering what they should do about the current economic situation. His suggestion: “Absolutely nothing.”

It is not just free market economists who think the government can do more harm than good when they intervene in the economy. It was none other than Karl Marx who referred to “crackbrained meddling by the authorities” that can “aggravate an existing crisis.”

Ronald Reagan and Karl Marx did not have much in common, except that they had both studied economics.

After the departure of Senator Phil Gramm and House Majority Leader Dick Armey, Congress has been an economics-free zone. There is not one economist among the 535 members of Congress.

But, in an election year, that is not a political handicap. Santa Claus has won far more elections than any economist.


Thomas Sowell — Thomas Sowell is an American economist, social theorist, political philosopher, and author, whose books include Basic Economics. He is currently senior fellow at the Hoover Institution, Stanford University.

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