Who Created Prosperity? Bureaucrats Or Individuals?
I am not sure what is more puzzling: President Obama's speech in Osawatomie, Kan., on Dec. 6, or the enthusiastic reviews in the mainstream media, such as "Obama attacks Republican economic theory: 'It's never worked,'" by Ann Kornblut in the Washington Post.
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Talking about his grandparents and Americans of the past generations the president said:
"They believed in an America where hard work paid off, responsibility was rewarded and anyone could make it if they tried — no matter who you were, where you came from, or how you started out. ... These values gave rise to the largest middle class and the strongest economy the world has ever known."
Past generations were right. When I immigrated to the U.S. in 1980, my family personally experienced the real opportunities that the country provided us.
Obama continued:
"For most Americans, the basic bargain that made this country great has eroded. ... In 2008, the house of cards collapsed. We all know the story by now: Mortgages sold to people who couldn't afford them or sometimes even understand them.
"Banks and investors allowed to keep packaging the risk and selling it off. Huge bets — and huge bonuses — made with other people's money on the line. Regulators who were supposed to warn us about the dangers of all this, but looked the other way or didn't have the authority to look at all."
Why were mortgages sold to people who couldn't afford them? Why had regulators "looked the other way?"
The president explained:
"It combined the breathtaking greed of a few with irresponsibility across the system. ... Now, in the midst of this debate, there are some who seem to be suffering from a kind of collective amnesia."
Today, in the words of the president, "Children might not have a chance to climb out of that situation and back into the middle class, no matter how hard they work."
In her ravishing reaction to the president's speech, Kornblut writes, "Obama deployed the language of right and wrong, fairness and unfairness, in a lengthy address that aides said he largely wrote himself."
Who put obstacles in the way of American children? Who broke the process, which was instrumental in the creation of the most prosperous middle class "where hard work paid off, responsibility was rewarded, and anyone could make it if they tried"?
Maybe progressive elites are suffering from collective amnesia.
Government interference into bank mortgage practices was the primary cause of the sub-prime mortgage crisis. The Carter administration initiated the process, the Clinton administration amplified the practices and the "compassionate conservative" Bush administration further enabled and witnessed the practice to its crushing end.
More federal government interference into schools resulted in a worsening quality of education. Before the federal Department of Education was created by President Carter in 1980, American schools were ranked among the best in the world. Today U.S. scores are behind those of most other developed nations.
The government's War on Poverty did not eliminate poverty, but it did create more social issues. For many people, dependence on government handouts resulted in the loss of ability to search for the personal talents and aspirations.
Obama complains that "huge advances in technology have allowed businesses to do more with less," adding that "if you're someone whose job can be done cheaper by a computer or someone in another country, you don't have a lot of leverage with your employer when it comes to asking for better wages and benefits — especially since fewer Americans today are part of a union."
At the dawn of the Industrial Revolution at the end of 18th and the beginning of the 19th century, labor unions explicitly objected to and vandalized new technology for the fear of losing jobs. Unions, in order to protect their interests, consistently hinder progress and competition.
"Finally," the president said, "a strong middle class can only exist in an economy where everyone plays by the same rules, from Wall Street to Main Street."
Perhaps Obama forgot about the fact that members of the government are excluded from the Patient Protection and Affordable Care Act (ObamaCare)? Or that Congress is exempt from insider trading laws? Why did Obama revoke vouchers for disadvantaged children in Washington, D.C., so that they can't attend the same school his children attend?
In his speech Obama warned: "At stake is whether this will be a country where working people can earn enough to raise a family, build a modest savings, own a home and secure their retirement."
Kornblut writes:
"Although the unemployment rate has been a constant shadow hanging over Obama's presidency, the mechanics of job growth had only a small part in the speech, which dwelled as much on the need for infrastructure investments, better education and a tax code that Obama said 'must reflect our values.'"
This poses the question: Whose values? There is nothing new or innovative in rhetoric about investments into infrastructure and education, and "fair" taxation. In 1920 Vladimir Lenin, the first leader of the Socialist Society, declared: "Communism is Soviet power plus electrification of the whole country."
Of course, in America we are talking about different infrastructure projects, but the idea is the same. The slogan, "Study, Study, Study — as bestowed by the great Lenin!" was found hanging in each school in the USSR.
The question of a fair approach to taxation in totalitarian socialism can be simple. What is the minimal cost of living? The socialist answer can be found in the old Soviet joke: "The minimal cost of living is the minimum needed for people to live on, so that the government can be comfortable."
Whether talented or mediocre, proletariat or professionals, all were equally poor, while top government officials had special housing, stores and medical facilities allocated just for them. Education does not lead to a prosperous society if people are not free to pursue their interests.
The USSR lasted from 1917 to 1987. Despite the Russian population being very well-educated and everyone paying whatever government found to be "fair share" of their salaries, by 1987 the centrally managed economy was collapsing.
So what is it that drove American progress if, in the words of Obama, the free market "doesn't work. It's never worked"? Was America's standard of living achieved due to individuals using their own capacities, in their own pursuits for happiness or success, unhindered by government control? Or was it thanks to government bureaucrats drawing up plans and managing the economy?
American progressives remind me of the top echelon of Soviet Communists: so confident in their condescension to people outside their circle, so in love with their rhetoric about fairness and the welfare of the masses, and so indifferent to the real fate of individual human beings.
• Kunin lived in the Soviet Union until 1980, working as a civil engineer. She is now a retired software developer living in Connecticut. The other articles she has written for IBD can be found at IBDeditorials.com.