Rolling Back the Myth of Good Government

Rolling Back the Myth of Good Government
by Laurence M. Vance, Posted November 14, 2011

Rollback: Repealing Big Government before the Coming Financial Collapse by Thomas E. Woods Jr. (Washington D.C.: Regnery, 2011); 232 pages.

The government of the United States has secured the confidence and consent of the American people through myths of its benevolence, provision, innovation, achievements, scientific advances, educational system, and protection. It takes credit for everything good that happens in the economy and society, accepts no responsibility for its failures, and proposes more government as the cure for every bad thing that takes place.

Libertarians recognize that the federal government is the opposite of everything it claims to be. And even worse, it is a parasitic, wealth-destroying, wealth-redistributing monstrosity. Although many Americans see the federal government as corrupt, too many of them give the government the benefit of the doubt and have a naive confidence in government to at least keep them safe from polluted air and water, defective products, contaminated food, dangerous drugs, exploitation by their employers, discrimination in hiring and housing, and, of course, terrorism.

The myth of good government must be exposed for the dangerous myth that it is. And that is where Thomas E. Woods comes in. Woods is mythbuster. But unlike the entertaining television show Mythbusters, there is nothing humorous about the impending financial collapse of the U.S. government that Woods describes in his newest book.

In Rollback: Repealing Big Government before the Coming Financial Collapse, Woods demolishes the myths of the extent of the financial crisis we face, inflation and deflation, regulation and deregulation, prices and wages, money and banking, and bailouts and stimulus programs. He busts the myths that America has a genuine free market, that the Federal Reserve stabilizes the economy, and that large military budgets are necessary to keep Americans safe. But most of all, Woods destroys the myth of good government and its phony protection racket known as the OSHA, EPA, FDA, DEA, NHTSA, ADA, TSA, HUD, FHA, and SSA.

Woods is the New York Times bestselling author of The Politically Incorrect Guide to American History and Meltdown: A Free-Market Look at Why the Stock Market Collapsed, the Economy Tanked, and Government Bailouts Will Make Things Worse. He holds a Ph.D. in history from Columbia University and is a senior fellow at the Ludwig von Mises Institute.

Rollback packs a powerful punch in its 223 pages. The first chapter serves as an introduction to the looming financial collapse of the federal government. It is followed by five progressively more radical chapters on Barack Obama's stimulus and health-care plans, on how the government perpetrated the economic crisis, on how the Federal Reserve destroyed the value of the dollar, on defense spending and the warfare state, and on government as the enemy of the free market. The final chapter is prescriptive in nature. The book is heavily documented with end-notes from an eclectic mix of books, newspapers, magazines, journals, and websites, including U.S. government publications. There is also a helpful index.


The jumping-off point

Just how bad is the federal government's financial condition? It's worse than you've ever imagined. It's not enough just to look at the debt and the deficit, says Woods. "To get the full picture of the obligations the U.S. government is facing," you have to consider the government's unfunded liabilities of Social Security and Medicare ­ $111 trillion. So even if the economy fully recovers and the federal budget has no more deficits, the government would "still fall further into the hole by $2 trillion to $4 trillion a year." Woods emphasizes that that is a problem that existed well before Obama's administration. He rightly faults Bush's expansion of Medicare, the prescription-drug benefit (or Medicare Part D), as adding significantly to Medicare's unfunded liabilities. He also notes that the 2010 Republican "Pledge to America" kept the "major budget busters" off the table entirely.

The problem is simply that the aging of the population guarantees that those entitlement programs will go bust. Americans are in for severe entitlement cuts that will be painful and wrenching and that will cause suffering. Woods shows that even drastically raising taxes wouldn't solve the crisis.

He demolishes the myth of the Social Security "trust fund" and points out something that no politician pandering to seniors for their votes would dare to mention: "The elderly are in fact by far the wealthiest segment of the population."

And if the truth that the federal government is bankrupt wasn't bad enough, Woods points out that "many of the states are going bust as well."

This is not a book about cutting the budget or rolling back government spending to some previous level. The unsuspecting conservative (the picture of Obama on the dust jacket should entice conservatives and repel liberals) is in for a philosophical assault on how he views the federal government.

Woods uses the government's imminent collapse as a jumping-off point. It is time for the American people to drastically change the way they view government. They must see that "the federal government has in fact been an enemy" of their welfare, and that "the progress in our living standards has occurred in spite of its efforts." Government is "a mere parasite on productive activity and a net minus in the story of human welfare." Woods aims to demonstrate that "we would not only survive but even flourish in the absence of countless institutions we are routinely told we could not live without."

Woods writes with passion and precision ­ passion, because many of the false views of government he critiques were once his own; and precision, because the myth of good government is so pervasive.


Obamanomics, the crisis, and the Fed

In his chapter on Obama's stimulus and health-care plans, Woods doesn't just tell the reader something he already knows about how bad they are. He explains the origin of the current state of medical care wherein most costs are covered by a third party. He shows that the American system of health care is not a free-market system at all, and criticizes government regulations, state and federal mandates, barriers to entry into the medical field, including medical licensure, and limits on the number of medical schools. Woods dismisses stimulus programs as based on "tooth-fairy" economic theory that "economic health is the product of government spending." He concludes that "the Obama economic program has perpetuated and intensified the problems that are sinking the U.S. economy."

Woods blames the economic crisis, not on any failings of the free market, but on the government. He explains the government's role in the housing crisis and indicts Fannie Mae, Freddie Mac, the Fed, and the Federal Housing Administration. He questions the very idea of the government's trying to make housing affordable, make home ownership universal, and keep the housing market strong. He writes in this chapter on the economic crisis one of the most thorough defenses of deregulation that I have ever read ­ especially in his discussion of the "repeal" of the 1933 Glass-Steagall Act that has had some conservatives up in arms. A hidden gem in this chapter is Woods's explanation of the Austrian theory of the business cycle and how it is the government itself that fosters the boom-and-bust cycle that is usually blamed on the failings of the free market.

The Federal Reserve System merits its own chapter. Although the Fed "has been given the task of manipulating the money supply in such a way as to maximize employment and output and minimize price inflation," it has failed miserably. American bank panics were "in large part the result of government intervention." Recessions have been longer and more frequent than in the pre-Fed period of American history. Market volatility is now "to a much greater extent the fault of the monetary system." The value of the dollar has fallen 95 percent since the Fed was instituted. The real problem with the Fed, and something that many "free marketers" fail to realize, is that it is "in fact a central-planning agency at odds with the basic principles of a free market." In this chapter Woods also debunks the myths of inflation, the money supply, deflation, and the gold standard.


Less bang for the buck

For Republicans, conservatives, and Tea Party members who are inclined to support the wars in Iraq and Afghanistan and regard military spending as "off the table," chapter 5 of Rollback, "Less Bang for the Buck: Pentagon Spending, the Military, and the U.S. Economy," will be the book's most important chapter. Here Woods doesn't just expose the folly of the U.S. government's spending more than $100 billion a year in Afghanistan to fight 100 members of al-Qaeda, but also what he describes as the parasitic, politically engineered, gravy train that is the bloated U.S. military budget.

Woods lays out the sobering facts as he destroys the myth that the military budget is too low: the ratio of military spending to GDP has no relevance; the United States already spends what the rest of the world spends combined; the Department of Defense is the only federal agency not subject to audit; real defense spending is about $1 trillion; the full cost of the wars in Iraq and Afghanistan may reach $5 trillion; expensive and complicated equipment and programs are of limited use in modern warfare; cost overruns in weapons systems are higher today than ever before; and military spending is spread around to as many subcontractors, to as many states, and to as many congressional districts as possible so members of Congress can cry about the bad economic consequences of terminating weapons programs in their districts.

Not to mention that military spending has damaging effects on the private sector, retards the growth of civilian R&D, has dubious civilian technological benefits, and distorts a firm's business sense the more it caters to the Pentagon. Woods concludes that "it is impossible to be concerned about budgets, deficits, and debt while refusing even to consider an overhaul in the way the country thinks about foreign affairs."

Another myth Woods busts in this chapter is the idea that Obama is out to gut the U.S. military. Nothing could be further from the truth. His basic views on foreign policy are no different from those of John McCain or Newt Gingrich. Not only has he escalated one war he inherited from his predecessor, he has increased military spending "to levels beyond those of Ronald Reagan" and has made no genuine attempt to bring home to American soil any U.S. soldiers stationed abroad.

A related myth that crumbles before Woods's pen is that opposition to war and the warfare state is "liberal." For this he appeals to conservative icons Russell Kirk, Richard Weaver, and Robert Nisbet. Real conservatives should recoil from global military intervention, a policy that is "at once utopian, destructive, impoverishing, counterproductive, propaganda-driven, contrary to republican values, and sure to increase the power of government."


The myth of "good government"

At 52 pages, "The Myth of 'Good Government'" is the longest and most important chapter in Rollback from a philosophical perspective. Contrary to the cartoonish, public-school version of history in which government is altruistic and benevolent, Woods's view is that "all government can do is impoverish and slow down or even reverse the free market's natural trend toward higher living standards for the population." And furthermore, government is "purely parasitic on the productive efforts of the people."

There is much good economic history here. The Industrial Revolution didn't impoverish workers, says Woods; it improved living standards, life expectancy, caloric intake, and living space. As the economy became more industrialized and less agricultural, living standards increased and the poverty rate decreased, and quite significantly. Factory work saved many children from starvation, poverty, forced early marriages, and prostitution. It is the increase in an economy's productive capacity that raises the standard of living and eliminates child labor. It is patently false that "improvements in workplace conditions can come about only through state edict." And rather than being monopolists who gouged the public through predatory pricing, the so-called robber barons were great benefactors to the public.

Woods argues that we don't need government wealth-redistribution programs such as Social Security, public-housing subsidies, rental vouchers, anti-poverty programs, and public education. Private charity, fraternal organizations, and the free market are more adequate, more moral, and more efficient than government welfare schemes. Woods concludes that government charity, anti-poverty, education, and housing programs prolong poverty, foster dependency, and make housing and education more expensive. He also has a good discussion of the folly and pitfalls of redistributing wealth to fund science.

Woods shows that the free market is preferable to government regulation ­ of anything. Whether it is regulations regarding energy, endangered species, the airlines, corporate accounting standards, hiring the disabled, or even the safety of food, drugs, automobiles, and the workplace, Woods explains how government regulations are often ineffective, redundant, counterproductive, and not worth their cost.

Since everyone knows it is bad to take drugs, the epitome of good government would have to be the war on drugs. This is a mission of the federal government that has wide bipartisan support. Yet Woods explains that it too is based on "the usual tissue of government falsehoods and propaganda." Not only does he show by facts and figures that the drug war is a failure, he also points out the myriad of negative effects that the drug war has on law enforcement, property crime, the court system, the prison system, civil liberties, and drug potency. He correctly maintains that the struggle against drug use is "a job for families and local institutions, not a paramilitary police state."

Government, concludes Woods, is not indispensable and does not have the people's interests at heart. Things would not be worse should government's impact on society be reduced. And no problem is so intractable that it requires government intervention to be remedied.


Conclusions and recommendations

At first glance, the concluding chapter of Rollback, which is titled simply "Rollback," seems disappointing. There are no grandiose plans for getting the country back on track. There is no longing for the Republicans to get back in power so they can "fix" things (and Woods reviews the awful Republican record lest the reader's thinking be so inclined). All Woods does is present some unconventional recommendations, including letting people reaching age 65 opt out of Social Security, cutting everything in the federal budget across the board by the highest percentage possible, allowing alternatives to the dollar, state nullification or repeal of unconstitutional federal laws, and jury nullification. What should be kept in mind, though, is that the author's conclusions about government and recommendations for reducing its power and eliminating its influence are abundantly clear from the six preceding chapters. Nevertheless, I think a few pages of recap would have enhanced the concluding chapter.

This is not a book just for conservatives who oppose Obamacare and the liberal Democratic agenda while accepting most elements of the welfare state themselves. Libertarians, and conservatives who diverge from the mainstream, need this book as well for the intellectual ammunition it provides. Don't let the publisher's title fool you. Tom Woods has not written a book just about cutting the budget, eliminating failed government programs, rolling back big government, and limiting federal power. Rollback is a serious, passionate, and reasoned manifesto on eliminating the role of the federal government not only from the economy and society, but from our minds as well.

http://www.fff.org/freedom/fd1108f.asp