"If the natural tendencies of mankind are so bad that it is not safe to permit people to be free, how is it that the tendencies of these organizers are always good? Do not the legislators and their appointed agents also belong to the human race? Or do they believe that they themselves are made of a finer clay than the rest of mankind?" — Frederic Bastiat (The Law)
We don't need to ask the wizards of the Ivy League why Obamanomics is not working. Everything we need to know can be explained with lemonade and cookies. Or more specifically, a couple of news items from the last few days involving lemonade and cookies pretty well demonstrates why the economy is doing well in a few select places while being in the tank overall. Two little anecdotes define conservative versus liberal economic thinking, not to mention the inevitable failure of the Obama regime.
First, in Bethesda, Maryland parents were fined 500 dollars when their kids had the temerity to run an "un-authorized" lemonade (and other cold drinks) stand. In fact, the venture was in part a fundraising effort to boot. Talk about making lemons out of lemonade. Now if you're scoring at home, this stunning tale makes it Bureaucrats 1 Entrepreneurs 0 in blue-state Maryland.
Meanwhile, in Texas, Governor Rick Perry signed into law SB 81, making it legal for kids and grandmas to bake cookies and cupcakes for sale at home. Before this law was signed, it was not technically against an ordinance. Now it's Entrepreneurs 1 Bureaucrats 0 in red-state Texas.
Gosh with these divergent thought processes, I wonder which state might have performed better over the past few years with respect to private sector job creation. The answer of course is Texas.
And it's not because of a couple of drink stand jobs here or home baking jobs there will result from the ordinances and laws. It's about the entire notion of the role of government intervention in our economy. In Texas, and all over red-state America, the idea is that government's role in the economy is merely to foster an environment where businesses can prosper. This is a good thing of course, allowing businesses to create jobs and economic opportunities for the owners and employees and investors through the production of attractive goods and services for consumers. This win-win-win equation explains the engine that has fueled the economy of our nation for decades. This is Milton Friedman's compassion theory in practice. He would no doubt like SB 81.
In blue-state America, the notion is that government must manage every aspect of business to make sure rules are followed and that no one is taken advantage of by anyone at any time. It's the idea that highly educated central planners can create a better economy by empowering armies of unelected and unaccountable bureaucrats who will interpret and enforce all of these wonderful ivory tower edicts from the smartest among us. As Friedman would ask sarcastically, just who "would be these angels" that could deem fairness from on high?
The answer of course would be those same some unnamed and unelected and unaccountable bureaucrats in faraway government buildings.
The bureaucratic mindset regarding lemonade in blue-state Maryland stands as a microcosm of the Obama administration. The Bethesda authorities' penalizing of the kids' drink stand is simply a micro-version of the National Labor Relations Board (NLRB)'s attempt to prevent Boeing from opening up their massive Dreamliner plant in North Charleston, SC. It's also much like the EPA running Shell Oil out of Alaskan waters after Shell had invested four billion dollars in exploration in those waters. These are the same battles as the Maryland lemonade stand, just on a scale of billions of dollars. It's the idea that central planners and government statists know what's best for our economy and our population. It's the thinking that the cumulative decisions made by free peoples and free enterprises acting in their own best interests cannot be trusted without bureaucratic supervision.
This is chilling the business climate everywhere. Entrepreneurs are on strike, à la Atlas Shrugged, and for the same reasons.
People in business are very sensitive to the government-knows-best mindset too. They can practically smell it. Many started their own businesses for the express purpose of being independent and having control of their own destinies. In short, liberty is often the entrepreneur's main motivation. Accumulating money is of course part of that, because property is a necessary ingredient in the liberty equation. People motivated by independence are obviously going to avoid situations that invite government interference. Under the Obama administration, running a business now invites just that.
Which is the whole issue with Boeing and the NLRB. Boeing has experienced difficult labor regulations in Washington State, costing it billions of dollars and no telling how much customer goodwill in past years. (One of the angriest customers ironically was ultra-lib Richard Branson of Virgin Air, ticked off that Boeing missed delivery deadlines due to union strikes.) Boeing was doing what any sensible business must do, which is to channel future investments into areas where those problems would not arise again. To do otherwise would be to commit economic suicide.
Not interested in suicide, Boeing went to Charleston. Keep in mind that this decision was made before Obama, Reid, and Pelosi came to power and was not only sensible but perfectly legal. There was no thought given to the idea that in America there would soon be the central planning mindset of the new regime. It was beyond thinking that this move would be challenged retroactively as illegal. Welcome to "hope and change."
Is it any wonder businesses have their money "on the sidelines" now? Of course not. To take a chance now would be business malpractice. You don't have to understand complex labor law in Washington or the science of environmental law in Alaska to get this. It's simple common sense. The best economic lessons always are, since economics is nothing more than human nature in action.
Part of Milton Friedman's fame comes from the famous "pencil" example, where he describes a five-cent pencil is literally the result of cooperation and products from multiple continents by people who can't stand each other — or understand each other. And yet, the marketplace weaves them together through a series of self-interested decisions to produce a pencil for a nickel. It demonstrates that this miracle could only happen in the marketplace. A government-mandated system requiring products from multiple continents would no doubt produce pencils costing thousands of dollars. The market thus not only forges products and prices that central planning cannot, but the collateral benefit is cooperation from people who otherwise would not cooperate.