https://www.lewrockwell.com/2020/01/lew-rockwell/working-around-leviathan/

Here is what strikes me as a profound political paradox. The US government is larger, more consolidated, more powerful, and more intrusive than it has ever been in its history —indeed our sweet land of liberty is now host to the most powerful leviathan state that has ever existed.

Never before has a government in human history owned more weapons of mass destruction, looted as much wealth from a country, or assumed unto itself the power to regulate the minutiae of daily life as much as this one. By comparison to the overgrown behemoth in Washington, with its printing press to crank out money for the world and its annual $2.2 trillion dollars in largesse to toss at adoring crowds, even communist states were powerless paupers.

At the same time — and here is the paradox — the United States is overall the wealthiest society in the history of the world. The World Bank lists Luxembourg, Switzerland, and Norway as competitive in this regard, but the statistics don’t take into account the challenges to mass wealth that exist in the US relative to small, homogenous states such as its closest competitors. In the United States, more people from more classes and geographic regions have access to more goods and services at prices they can afford, and possess the disposable income and access to credit to put them to use, than any other time in history. Truly we live in the age of extreme abundance.

What is the relationship between the rise of big government and the rise of American prosperity? It seems that people on the right and left are quick to confuse correlation with causation. They believe that the US is wealthy because the government is big and expansive. This error is probably the most common of all errors in political economy. It is just assumed that buildings are safe because of building codes, that stock markets are not dens of thieves because of the SEC (Securities and Exchange Commission), that the elderly don’t starve and die because of Social Security, and so on, all the way to concluding that we should credit big government for American wealth.

Cause and Effect Commission

Now, this is where economic logic comes into play. You have to understand something about the way cause and effect operates in human affairs to understand that big government does not bring about prosperity. Government is not productive. It has no wealth of its own. All it acquires it must take from the private sector. You might believe that it is necessary and you might believe it does great good, but we must grant that it does not have the ability to produce wealth in the way the market does.

Lasting prosperity can only come about through human effort in the framework of a market economy that allows people to cooperate to their mutual advantage, innovate and invest in an environment of freedom, retain earnings as private property, and save generation to generation without fear of having estates looted through taxation and inflation. This is the source of wealth. This is the means by which a rising population is fed, clothed, and housed. This is the method by which even the poorest country can become rich.

Now, does this system as described characterize the United States? Yes and no. This is, after all, the country that recently jailed Martha Stewart, the world’s most successful woman entrepreneur, for the crime of having not disclosed to the inquisitors every last detail about the circumstances surrounding her choice to sell a stock before its bottom dropped out.

Some of our most successful magazines celebrate entrepreneurship, but recently enacted laws, such as the Sarbanes-Oxley Act, empowered the federal government to oversee the books of every publicly listed company and even manage their methods and operations in every detail. Some have compared this act to FDR’s National Industrial Recovery Act.

This is a country with cradle-to-grave security promises that just recently added a benefit of low-price prescriptions for seniors that is going to cost hundreds of billions over time. This is a country that, when faced with a problem of airport security, created a whole new federal bureaucracy to gum up the workings of every airport in the country.

These are incredibly bad policies, enterprise killers in every way. Why, then, does enterprise continue to thrive? The answer is complex. In many ways we continue to live off the borrowed capital of previous generations. Some economic sectors benefit too greatly from an artificial injection of created credit, making prosperity seem more real than it is in sectors such as housing and perhaps stocks. There is a bitter irony at work here too in that the larger the economy is, the more there is to tax, and so government grows as an aftereffect of economic growth.

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