Does government always betray the future?
Government鈥檚 role in an economy has never been properly explained. We will have a go at it ourselves. In a word, government betrays the future.
Government is a profoundly reactionary institution. It always favors its current clients 鈥� the present generation of taxpayers 鈥� over its clients of the future (who don鈥檛 pay taxes and don鈥檛 lobby). It provides protection against foreign invaders and domestic troublemakers. It also attempts to give its clients protection against the future.
Taxpayers want government to protect their existing assets鈥heir businesses鈥heir claims鈥heir jobs鈥heir franchises against all threats. In the modern world, most of those threats come in the form of economic and technological change. That鈥檚 why taxpayers demand subsidies and bailouts. It鈥檚 also why they like regulation. Anything that will keep change from diminishing what they鈥檝e got.
A properly-functioning economy, as Schumpeter described it, is a process of incremental growth and also of creative destruction鈥n which old industries, old technologies and old institutions are blown up by change. This is what people pay their taxes to avoid. The present generation wants the government to 鈥渄o something鈥� to protect them from this process. It鈥檚 why they are perfectly happy to see the government take over the whole economy, if necessary, in order to prevent capitalism from happening.
What鈥檚 more, the current generation of retiring taxpayers in all the welfare states hopes to get something it cannot afford 鈥� pension and health care benefits above and beyond what it has saved for. How can it do so? Only by borrowing from future revenues 鈥� that is to say, by putting a claim on income that has not been earned yet鈥uch of it by people who do not even exist yet. Government, again favoring live voters over those who are dead or unborn, goes along. In the case of the US, the newborn child in 2010 faces about $170,000 worth of bills 鈥� his share of the net financial obligations of the federal government.
Good luck getting him to pay up!
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