Big Govt Exacerbates Income Inequality

Thursday, 12 Dec 2013 01:01 PM

By George Will

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The education of Barack Obama is a protracted process as he repeatedly alights upon the obvious with a sense of original discovery. In a recent MSNBC interview, he restocked his pantry of excuses for his disappointing results, announcing that "we have these big agencies, some of which are outdated, some of which are not designed properly."
 
"We've got, for example, 16 different agencies that have some responsibility to help businesses, large and small, in all kinds of ways, whether it's helping to finance them, helping them to export . . . So, we've proposed, let's consolidate a bunch of that stuff.

"The challenge we've got is that that requires a law to pass. And, frankly, there are a lot of members of Congress who are chairmen of a particular committee. And they don't want necessarily consolidations where they would lose jurisdiction over certain aspects of certain policies."
 
The dawn is coming up like thunder as Obama notices the sociology of government. He shows no sign, however, of drawing appropriate lessons from it.
 
Big government is indeed big, and like another big creature, the sauropod dinosaur, government has a primitive nervous system: Injured in the tail, that fact could take nearly a minute to be communicated to the sauropod brain.
 
Obama, of whose vast erudition we have been assured, seems unfamiliar with Mancur Olson's seminal "The Rise and Decline of Nations," which explains how free societies become sclerotic. Their governments become encrusted with interest groups that preserve, like a fly in amber, an increasingly stultifying status quo. This impedes dynamism by protecting arrangements that have worked well for those powerful enough to put the arrangements in place. This blocks upward mobility for those less wired to power.
 
Obama, startled that components of government behave as interest groups, seems utterly unfamiliar with public choice theory. It demystifies and de-romanticizes politics by applying economic analysis — how incentives influence behavior — to government. It shows how elected officials and bureaucrats pursue personal aggrandizement as much as people do in the private sector. In the public sector's profit motive, profit is measured by power rather than money.
 
Obama's tardy epiphanies do not temper his enthusiasm for giving sauropod government ever-deeper penetration into society. He thinks this serves equality. Actually, big government inevitably drives an upward distribution of wealth to those whose wealth, confidence, and sophistication enable them to manipulate government.
 
The day before Obama shared with MSNBC his conclusion that big government defends its irrationalities but is insufficiently big, his speech du jour deplored today's increasing inequality and distrust of government. He seems oblivious to the mutual causations at work.
 
Of course Americans distrust one another more as more and more factions fight one another for preferential treatment by government. Of course government becomes drained of dignity, and becomes corrosive of social cohesion, as it becomes a bigger dispenser of inequality through benefits to those sufficiently clever and connected to work its levers.
 
Obama correctly says that not only do we "tend to trust our institutions less," we also "tend to trust each other less." Of course there are parallel increases in distrust: Government's dignity diminishes as government grows to serve factions of those sophisticated at manipulating its allocation of preferences. Social solidarity is a casualty of government grown big because it recognizes no limits to its dispensing of favors.
 
Obama's speech denounced "trickle-down ideology" and deplored growth that "has flowed to a fortunate few." But the monetary policy he favors — very low interest rates, driving money into equities in search of higher yields — is a powerful engine of inequality. Since the Dow closed at 7,949 on Inauguration Day 2009, it has doubled, benefiting the 10 percent who hold 80 percent of directly owned stocks. The hope is that some of this wealth will trickle down.
 
Suppose there were not 16 government agencies "to help businesses, large and small, in all kinds of ways." Suppose there were none. Such barnacles on big government institutionalize the scramble for government favors; these agencies are a standing incitement to bend public power for private advantage. Hence they increase distrust of government, diminish social solidarity, and aggravate the most indefensible inequality — that driven by government dispensations.
 
Obama's solution to the problem of the 16 is to "consolidate" them, replacing 16 small subtractions from good governance with one big one. Progressives consider this progress.
 
George F. Will is one of today's most recognized writers, with more than 450 newspapers, a Newsweek column, and his appearances as a political commentator on ABC. Read more reports from George Will — Click Here Now.
 
 
 

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